Are you planning to buy a property in Thailand? Then you've come to the right place. Buyers often sign purchase agreements without thoroughly reviewing them beforehand. This means their interests are not adequately protected. In this article, we explain why a careful review of real estate contracts is so important to prevent the other party from taking advantage of you or even defrauding you. We've also compiled the five most important points to consider when reviewing contracts in Thailand.

Purchase agreement

A Sale and Purchase Agreement (SPA) involves two main parties: the buyer and the seller. SPAs are legally binding agreements between these two parties. The agreement sets out all the terms and conditions to which both parties agree regarding the property in question. Once the buyer decides to purchase the property and makes the final payment, the seller is obligated to transfer ownership to the buyer. This process takes place at the Land Registry, where both parties must pay the applicable taxes and fees for the transfer of ownership. Therefore, a SPA should always be carefully reviewed to avoid future disputes. SPAs can be written in either English or Thai. If one party does not understand the language of the agreement, it must be translated so that they, too, can understand its terms. In such cases, it is essential that the agreement be drawn up in both languages.

Why is a contract review important?

A careful review of a purchase agreement is essential to avoid unfair terms that disadvantage one party. Sometimes, a purchase agreement is so poorly worded that one party's rights are not protected. It can also happen that a contract omits an important provision. By reviewing the contract, you can add or remove missing provisions and thus prevent future problems.

Since foreigners sometimes encounter language barriers, they may confuse title deeds and purchase agreements. Therefore, it is important to understand the differences. In Thailand, the title deed for a property is called a Chanote (โฉนด). It contains information about the property's location and the current owner. The purchase agreement, on the other hand, is called a Sanya Ja Sue Ja Kai (สัญญาจะซื้อจะขาย) and stipulates the conditions under which the seller transfers ownership of the property to the buyer. The purchase agreement also specifies how and when the transfer of ownership takes place. Purchase agreements in Thailand typically only include the basic rights of the contracting parties and—unlike in some other countries—do not mention all the rights and obligations of both parties. It is crucial to note that when drafting a purchase agreement, the interests of both the buyer and the seller must be taken into account.

Sometimes, buyers use pre-made purchase agreement templates from reputable real estate websites and only make minor adjustments. The contracting parties should therefore carefully review the contract and tailor it to their individual needs.

Five things to consider when reviewing a contract

Now that you know how important a contract review is, you might be wondering what to look for when carefully reading the purchase agreement. Here are the five most important points that both parties should consider when reviewing a purchase agreement:

  • Make sure that the information about the property matches the details in the land registry and the purchase agreement. Discrepancies can lead to legal problems later. Also, check whether the property and the building erected on it comply with Thai building and environmental regulations and whether all necessary permits from the authorities have been obtained.
  • You should always verify the original appraised value of the property with the land registry. Although most sellers ask for a higher price than the appraised value, some go so far that the buyer ends up paying significantly more than the property is actually worth.
  • The seller must verify that the title deed was legally transferred to them and that the owner did not acquire the property illegally. Both parties must also ensure that the other party is a Thai citizen and not a foreigner, as foreigners are not permitted to own real estate in Thailand.
  • When reviewing a purchase agreement, both parties should ensure that all their rights and obligations are correctly outlined in the contract. Never rely solely on the basic rights stated in a template contract; always negotiate and adapt the contract to your individual needs.
  • The parties must review the payment schedule before signing the purchase agreement. Often, due to typographical errors, the date and place of payment are incorrectly stated in the contract, which can lead to problems. Furthermore, the parties must ensure that the payment terms and deadlines are correctly defined in the purchase agreement.

    • Thai real estate lawyer

    Siam Legal International is a full-service law firm in Thailand offering a range of services to protect the rights and interests of foreigners wishing to purchase real estate in Thailand. Our firm provides a broad spectrum of real estate-related services to best meet the needs of our foreign and Thai clients. Should you have any questions regarding the review of real estate contracts or any other matters requiring clarification, please feel free to contact our team of Thai real estate lawyers via the link below.

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