Advice to Foreigners Wanting to Buy a Condo in Thailand

A good rule of thumb to follow when looking for a condo to buy: It is better to buy the worst condo in a quality building, than the best condo in a poorly maintained building.

Buying a condominium in Thailand is actually a very straightforward process. However, there are a few things you need to be aware of before you start.

The Thai government recently changed the rules governing condominium ownership. Previously, foreigners were only allowed to buy up to a 40% stake in any condo building. This was recently increased to 49%. This means that more condo units are now available on the market.

If you find a condo you would like to buy and the foreign ownership quota has already been filled, there are still ways to become an owner. The most common one is to form a company conforming to Thai law. Your lawyer will be able to help you do this. We don't advise you to try and set up a company on your own without sound legal advice, as you are sure to run into trouble, and you may even lose the deal as a result. It may cost you some money (on average 30,000 to 60,000 Baht) to retain a good lawyer, but this is always money well spent.

We highly recommend the legal services of :
Somphob & Associates Law Office Ltd:
Mr Somphob Kongwan
Managing Partner
16th floor, Silom Complex Building
191 Silom Road
Bangkok 10500
Ph: +66 2632 1050 up to 4
Fax: +66 2632 1055
Email: somphob@somphoblaw.co.th

Their fee for a standard property transfer deal is 40,000 Baht. They have years of experience, and they understand the business. They can give you valuable advice that will save you time, effort and money.

What steps do you take on the road to buying a condo?

First, and most importantly, make sure you retain an experienced and ethical agent to take you around and show you a range of condos. Once you have found a unit you like, ask these questions:

1. How old is the building? If it is more than 20 years and you are buying for a long term investment, or you plan on living there, anything over 20 years old may be too risky to buy into. It may not be adequately maintained. It could be scheduled for demolishing sometime in the near future. Anything could happen, so consider carefully before making a buying decision. Ask the owner/management of the condo what their future plans for the building are. Having said that, buying into a slightly older building can actually be beneficial. Management will have a proven track record which you can check with existing tenants. And you can see how well it has been maintained. Like any purchasing decision, you need to be armed with all the facts before committing yourself.
2. How much will you be required to pay for the maintenance contract each year? This is usually calculated by the square meter. For example, it could be 25 Baht/SqM.
3. Has the condo management set up a Sinking Fund? This is often a one time payment made upon transferring ownership and it ensures that the condo will be well maintained. Some condos require a sinking fund payment each year, and others require it 'on demand'. Make sure you know in advance what their policy is and how much it will cost you.
4. Has the condo management set up an annual insurance premium, and how much is it?
5. How long has the condo management team been looking after the building?
6. Who pays the transfer fees? In most cases, the owner should pay them all. But some owners will ask you to share the costs 50/50, or to pay them yourself. You should ensure you understand who is required to pay, and calculate how much the fees will be before you sign up to buy. If in doubt, ask your lawyer to present you with a full schedule of the fees, including any income taxes outstanding on the property. At the moment, in Bangkok and Pattaya, the transfer fee is 2% of the purchase price, Property business tax is 3.3%, and Stamp duty is 0.5%. However, this is subject to change, so make sure you check before agreeing to pay any transfer fees.
7. You will need to bring in ALL purchasing funds from overseas. The minimum amount set by the Thai government is $US10,000. The best policy is not to bring the money into the country until after you have found the property you wish to buy. Just bring in enough to put down a minimum deposit of 20% or 30%. (see Note below)
8. Make sure you know whether you are buying leasehold or freehold. Your lawyer will check this for you. Leasehold means you will never own the property. You will merely lease it from the land owner. Freehold gives you full ownership rights. Obviously, freehold is much better.
9. If you plan to rent the unit out after you have bought it, and you will not remain in Thailand, you will need to appoint an agent to manage the unit for you. Make sure the agent has a clearly written contract that spells out the conditions of management, including the percentage they will charge you, their responsibilities, the amount they will spend on advertising, etc. For example, an agent may be willing to spend up to 1 or 2 months of potential commission income on advertising, and then the owner will be expected to pay for any further advertising if needed. The amount of commission you pay the agent from the rental will also determine how much money the agent will spend on advertising. Make sure you check before signing any agreement.
10. How much is the booking fee (deposit)?
11. How soon do you have to pay the full price after paying your deposit?

Note: When you bring in money to buy a condominium, have your lawyer accompany you to the bank so that he can get you a T.T.3 form. This form will state that the money you have imported into the country is to buy property. When you sell the property you need to show the T.T.3 form to the bank to export the funds, plus profit. Of course, you will have to pay standard income tax on the profit.

Once you have made a decision to buy a condo, the purchase steps are very simple.

1. Make an appointment with the seller to meet you at your lawyer's office and describe the purchase terms and conditions to the lawyer. He will ask the right questions (or your agent will) to ensure you know exactly what will go into the Sales & Purchase Agreement. Take your passport and bank account details with you. You will also have to give the lawyer your Mother's and Father's names.
2. You should bring a bank (cashier's) cheque for the deposit, and hand this over in exchange for a receipt stating the terms and conditions of the deposit. These will usually be:
1. The deposit will be forfeit if the buyer pulls out of the deal for any reason, except for #2
2. The deposit will be refunded in full if the Due Diligence report does not come back positive.
3. If the owner pulls out of the deal for any reason, the buyer will receive the deposit back in full, plus a penalty to be determined and agreed on beforehand.
3. The seller will give the lawyer a copy of the land title deed so that the lawyer can conduct a Due Diligence check. End of first meeting.
4. The lawyer will send someone to the land office to check who the true owner is, and that there are no outstanding debts, liens, or encumbrances on the deed.
5. The lawyer will inform you if all is well. You then meet once again at the lawyer's office to sign the S&P agreement and hand over the deposit. The desposit will be held in an escrow bank account by the lawyer until the Due Diligence check is completed. If the report is positive, the lawyer will hand over the deposit, less any fees agreed on in advance. The deposit is considered part of the full price and the lawyer will ensure that it is credited to the full price for you when he accompanies you to the bank in the next step.
6. The lawyer will prepare the sales documents. This usually takes from 3 to 5 days -- time enough for you to bring in the rest of the payment to your bank account from overseas. When everything is ready the lawyer will send a lawyer to accompany you to your bank to get a cashier's cheque and a T.T.3 form certifying that the money is to be use to purchase a condo.
7. You return to the lawyer's office and sign all the papers. Then you, the seller, and the lawyer go to the land office to complete the land title deed transfer. This can be done within a few hours at the land office, although it can sometimes take up to a week or more to complete, depending on the circumstances. Your lawyer should advise you in advance if he anticipates any delays. When the transfer procedure is complete, you hand over the final payment and receive the title deed in exchange.

That's it. It's a very straightforward procedure.

You CAN own property in Thailand. But to ensure you are getting the best deal that is to your advantage, always employ professionals with plenty of experience in the business to help you with your property search and purchase.

Last edited and updated: 1 March 2006

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