DAVID TAN asked:




Question

I expect to buy a condominium unit in two months time and the seller is asking me to sign a Sale Contract now. Before I sign the Contract, what contractual conditions should I look out for?

Answer

First of all, this Contract is not a sale of condominium unit (“Condo Unit”) contract, not in the eyes of the Thai civil law. It is a contract whereby the seller promises to sell you the Condo Unit in two months time and you promise to buy the Condo Unit in two months time, better known as a TO sell and TO buy contract. The Contract will provide for all the binding conditions between the seller and you until the time of ownership title transfer i.e. in two months time.

Furthermore, under Thai civil laws, a sale of a condominium unit only takes effect upon payment of full purchase price to the seller and the registration of ownership title transfer by an official of the Land Office. These have not taken place yet.

The main contractual conditions which you have to look out for are:

(1) The seller agrees to transfer ownership title of the condominium unit to you at a specified date. Otherwise, you have the right to claim for the damages for breach of contract. Also, any deposit money, first installment payment etc. paid towards the purchasing of the Condo Unit must then be returned to you;

(2) The seller covenants or gives warranty that the Condo Unit shall be transferred to you free and clear of any encumbrances, mortgages or charges;

(3) All drawing plans of the Condo Unit, building materials e.g. teakwood for walls in kitchen, brochures on the Condo Unit and other specifications of the Condo Unit are considered a part of the Condo Unit and this is defined in the Contract. (Note: This is now a requirement under the Condominium Act No. 4 B.E. 2551 (2008) Please see my article Contract Protection for Buyers of New Condo Units published in the Pattaya Mail newspaper on August 28, 2009; and

(4) The party that is responsible for payment of the transfer fee, income tax, stamp duty or specific business tax. If these are not specified in the Contract, then the parties to the Contract will have to comply with the provisions under the tax laws i.e. you, the purchaser of the Condo Unit, is only responsible for 50% of the transfer fee.

If the seller is a married person and the Condo Unit is marriage property, the seller will have to produce a letter of consent from his/her spouse consenting to the sale of the Condo Unit.

*Written by David Tan. David is a Lecturer of Business Law at Asian University and author of the book “A Primer of Thai Business Law (Second Edition)“, available online at www.chulabook.com . In Bangkok, the book is available at all Kinokuniya and Asiabooks bookstores. Any questions on condominium unit purchase, sale or development should be e-mailed to Business Legal Advisory Services at: blas.inter@yahoo.com

Evan Langsted asked:




Disputes between landlords and tenants can be some of the most difficult to settle from a legal perspective.  In landlord-tenant disputes, each party involved has certain rights which the law protects.  When one person or party infringes on the other’s rights, it is beneficial, and often necessary, to have a third party involved to help settle the issue.

There are also obligations each party must fulfill to retain their rights.  Neither party’s rights are more important or valid than the other, which can make this area of the law seem very murky.

Obligations of Tenants

Most tenants sign a lease or rental agreement when they take possession of a property.  Some lease agreements are more thorough than others, and the law may provide for a tenant to be held responsible for items not included on the lease.  Although lease and rental agreements vary between landlords, some common expectations are for the tenant to:

Pay rent when it is due Pay for other utilities as specified by the lease or rental agreement Dispose of garbage and waste properly Not cause damage to the property Notify the landlord of damage or wear to the property Not sub-lease the property without approval from the landlord Give appropriate notice if a lease will not be extended Pay for or make repairs caused by misuse or excessive use Adhere to home owner association rules or township laws Make repairs to the property caused by regular wear if outlined in the lease Obligations of Landlords

Although the landlord owns and controls the property being leased or rented, there are some obligations he or she must fulfill.  Commonly, a landlord may break the terms of a lease by failing to ensure the property is safely inhabitable, for instance, failing to repair a dangerous sidewalk, not addressing a gas leak, or allowing a roof to fall into disrepair.  Even if one of these happens, the law still provides a period of time for the landlord to see to these repairs.

Some additional obligations are for a landlord to:

Keep the property in good repair Remove or fix dangerous property hazards Provide contact information so the tenant can contact him or her with problems Give appropriate notice if a lease will not be extended Provide written notice if the property is sold Not to illegally discriminate Pay for or make repairs needed due to regular wear Fair Housing Act

The Fair Housing Act is a part of the Civil Rights Act of 1968 which prohibits landlords from refusing to lease, sell, or rent property based on race, color, national origin, religion, sex, family status or handicap.  This includes if a landlord changes the terms or conditions of sale or rental, provides different services or facilities, falsely denies that the property is available for inspection, sale or rental, and other discrepancies.

DAVID TAN asked:




The legal way for a foreigner to own real estate in Thailand is to buy a condominium unit(s) (“Condo Unit”). This was proposed in my last article on foreign land ownership. In Bangkok, Condo Unit purchases are now considered trendy among the younger generation of Thais as Condominiums are conveniently located in the inner city area and it is more economical to commute.

TIP

Whether you are going to buy a Condo Unit to reside or for investment purposes, I would like to walk you through the following due diligence steps:

(1) If you can narrow down your choices of Condo Units to 1 or 2 Condo Units, a physical inspection must be conducted by an expert or civil engineer on the Condo Unit and the condominium building. Are they as according to the promises made by the seller ? Checks should be conducted for water leakage in the Condo Unit, proper and safe electricity supply, adequate car parking spaces allocated, fire exits, correct building materials used.

(2) What is payable by an owner of the Condo Unit for up keeping e.g. common facilities fees, water charges, electricity charges. Who should they be paid to and how much are they? Find these out from the owner of the Condo Unit.

(3) If (1) and (2) above are satisfactory to you, request from the owner of the Condo Unit a copy of the Condo Unit Title Deed. Take this to the local district or Amphur Land Office and counter check with the original Title Deed kept there on: (a) Who is the owner of the Condo Unit ? This owner should be the person whom you are dealing with and signing the contract to sell you the Condo Unit. If the owner is a company limited, who can sign on behalf of this company ? Does the company limited have enough capital to complete building the condominium ? The answers to these questions can be obtained from the incorporation records of the company limited at the Ministry of Commerce; (b) Is the condominium building registered at the Land Office ?; and (c) Does the original Title Deed reveal any registered encumbrances, lease, mortgage or charges ?

(4) Have a lawyer peruse the conditions of the Reservation Contract or To Sell and To Buy Condo Unit Contract prior to signing it. Legally speaking, this Contract does not create any property rights for you yet because the Condo Unit ownership title will transfer to you at a later date. This Contract is binding only on the promises of both the seller and you that ownership title transfer and sale of Condo Unit will take place at the agreed upon later date. However, the risk exposure to you here is that, at the signing of this Contract, you are usually requested to place a deposit with the seller. If the seller does not sell and transfer ownership title of the Condo Unit to you at the agreed date, you will have to claim the seller in court for breach of Contract to get the deposit back. As a result, I do not recommend the signing of this type of Contract. You should make a 1 time payment of the whole purchase price at the sale and upon ownership title transfer of the Condo Unit to you. Alternatively, you could arrange for a neutral escrow agent to hold your money and hold the original Title Deed (Note: Under the new Escrow Business Law, effective on May 19, 2008, an authorized financial institution or commercial bank can provide escrow agent services).

(5) Clarify with the owner who is responsible for the ownership title transfer fee, income tax and specific business tax or stamp duties payable at the Land Office on the day of ownership title transfer. Unless agreed otherwise between the owner and you, you are only legally responsible for 50% of the ownership title transfer fee. Please note that the amounts payable here can be calculated for you by an official at the Land Office.

(6) Make sure that the owner have obtained from the Condominium Juristic Office the following: (a) A letter verifying that foreigners have ownership in condominium units not exceeding 49% of the total space of all units in the condominium building; and (b) A letter verifying that the owner has no outstanding debts owing to the Office.

(7) You have obtained the required bank document to verify that the purchase price for buying the Condo Unit was remitted into Thailand.

** Written by David Tan. David is a Lecturer of Business Law at Asian University and author of the book “A Primer of Thai Business Law (Second Edition)”, available online at www.chulabook.com . In Bangkok, the book is available at all Kinokuniya and Asiabooks bookstores. Any questions or comments should be sent to Business Legal Advisory Services at: blas.inter@yahoo.com