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Pratical Legal

Buyersguide; how to buy, how to pay etc

FAQ

Condominium Laws in Thailand

BUYING A CONDO & LEGAL FOR FOREIGN OWNERSHIP

PURCHASE, SELL, RENT, OWN AND MANAGE A CONDO IN THAILAND - legal topics for foreigners. What is a condo, buying a condo, who can own a condo, transfer tax, inheritance, management of a condo, leasehold condo, sale and purchase and more. Common legal questions, Answered by Thai lawyers. 

Condo in Thailand

There are two types of residential apartment buildings in Thailand - condominiums registered and licensed with the Land Department offering outright ownership over the individual units, and apartment buildings NOT licensed as a condominium and therefore not offering individual ownership over the units. On the outside these buildings could look the same but legally they cannot be compared. Condominiums registered and licensed with the Land Department must comply with the legal structure as laid down in the Condominium Act which is built around individual unit ownership, joint ownership of the common areas and joint management of the building by all the unit owners. Unregistered apartment structures are not regulated by specific condominium laws and the developer of an apartment building can sell possession (not ownership) of the units in the building under his own terms and conditions. There are various contract structures under which these units are sold which vary from time-sharing schemes, mere apartment leases to leases combined with shares in a holding company. Beware, these apartment projects do not offer individual freehold ownership of the units and the purchasers do not find protection in the law as with registered condominiums. The contract structures and intention of the developer should be triple checked (e.g. the content of the lease structure, management system of the building, and ongoing financial costs through maintenance and management contracts)

The Condominium Act does not specify in any detail the specific requirements necessary in order for it to be identified and licensed as a condominium. As long as the building is able to hold ownership separately according to the area, whereby each area consists of private ownership in the property and joint ownership in the common property (section 4 Condominium Act). There are no specifications in the Condo Act outlining height or space requirements, nor are there any specifications outlining the minimum amount of individual units necessary within the building, but the City Planning Act and Building Control Act puts a limit on what can be built in a location. Technically a condominium can also be a group of attached low rise units (villa condominium). The legal definition of a condominium and requirements for condominium development can primarily be found in the Thailand Condominium Act.

Condominiums are regulated by 1 - its rules and regulations (internal), and 2 - the Thailand Condominium Act (external). The Condominium Act specifies for example the procedure and requirements for a multi unit apartment building to be licensed as a condominium. The internal regulations (set of Bylaws) of a condominium for example regulate how the building is run (e.g that the units cannot be used as a business or company address, rental restrictions and matters relating pets). The rules and regulations of the condominium are amended by voting of the unit owners in the condominium general meetings.

Every condominium must be maintained and managed and for this each owner pays condo fees which are based on the square meters of each apartment (section 18 Condominium Act). The fees/ expenses of juristic condominium are paid in advance according to the condominium regulations and/or according to a special resolution of the General Meeting. Condo maintenance fees are charged monthy or 2 monthly or with longer intervals and are each owner's share in the common expenses and maintenance of the condominium. Condos can also have a special reserve fund for repairs and upgrades of the building. Condo management and management fees, the size of the reserve fund (sinking fund) and possible future major repairs could be an additional financial burden to consider before buying a condo.

Every condominium shall have at least one manager who is appointed in the general meetings of the joint owners. Learn more about the responsibilities of the condominium manager, the condominium committee, procedure for meetings and expenses of the condominium in the condominium handbook.

In case of a condominium building with 100 equal units, each having the same floor area, not more than 49 of the units can be foreign owned, at least 51% of the condo building must be Thai owned. Between April 1999 and April 2004, as a temporary measure and an attempt to reduce the number of empty and newly developed condos for sale, foreigners could under certain restrictions and in specified areas own up to 100% of the units in one single condominium building. This has since (without excemptions) been amended back to 49% of the total floor area of all units for private ownership in a condominium building combined.

There are no restrictions on nationality and every foreigner who can enter Thailand legally (there are no visa-class requirements) can buy and own a condo unit within the foreign ownership quota of the condominium, but every foreigner must personally qualify for ownership under section 19 of the Condominium Act. Usually this means that the purchase price for the condo must have been transferred into Thailand as foreign currency and exchanged into Thai baht by a licensed financial institution inside Thailand. Foreign ownership and the foreign ownership quota is governed in the Condominium Act by section 19.

Since the initial 2006 Land Office regulations issued by the Land Department and Ministry of Interior preventing the misuse of Thai nominee shareholders by foreigners and a serie of new regulations this practice in less common. A company set up to circumvent foreign ownership restrictions (buying a condo in the Thai side of the condominium) and dormant holding companies are not allowed under Thai law. Even though generally considered illegal this structure is often still pushed to sell the remaining units to foreigners in the Thai side of expensive condos in the tourist resort areas of Thailand.

The right of foreign ownership of a condo in Thailand is granted to the individual foreigner and not also to his foreign successors. Any foreigner who receives a condo in Thailand by inheritance or through a gift must again individually qualify for ownership of the condo under section 19 of the Condominium Act, or he must (section 19 under 7) sell the unit within one year of acquisition by inheritance. Ownership can be passed on to foreign heirs, but generally they cannot register ownership and must dispose of the apartment unit within 1 year.

When the foreign freehold ownership in a condominium reached the limit of 49 percent the remaining units may be leased to foreigners under a 30 year lease agreement. One of the major disadvantages of Thai property law is that Thailand does not know lease or leasehold laws as a real property right, but only lease as a hire of property contract with limited real rights associated with it. Under hire of property laws a condominium leasehold purchaser in Thailand in essence becomes a tenant with a pre-paid tenancy contract and having a personal right of use and possession of the unit for the registered term of the contract. Similar to a condominium under a usufruct a lease contract in Thailand is not freely transferable during the term of the lease and as a tenant the leasehold purchaser has no vote in the joint owners meeting and matters relating to management of the condominium. In addition, as a personal tenancy, a leasehold contract is under Thai law terminated upon death of the lessee and not automatically transferable to the heirs of the lessee. The financial drawback of lease is that it is a diminishing asset and creates through the contract a yearly rental tax for the lessee.

Time-share and fractional ownership schemes almost always sell an interest in unregistered leasehold apartment buildings and not in a licensed condominium building offering individual apartment unit ownership. Time-share and fractional ownership apartment or hotel buildings are usually unregistered leasehold (holiday) apartments.

Foreign juristic entities (e.g. a (BVI)-company) can register ownership within the 49% foreign ownership quota of a condominium just as any natural foreign person. A minutes of meeting is required approving the purchase, company documents of incorporation must be prepared, notarized, translated and submitted with the land office (all or specific company documents, depending on the local land office requirements), together with documents such as a foreign exchange transaction form, as when a foreign individual is buying a condo in Thailand.

When the condo is registered in your Thai wife's name or both your names as joint ownership between husband (foreign) and wife (Thai) this will count as full foreign freehold ownership of the unit. A condominium apartment purchased by a Thai national married to a foreigner falls within the foreign ownership quota of the condominium, unless there is a legal document (like a letter of confirmation) that the money expended on the condominium is personal property of the Thai national. In this case the condo falls within the Thai side of the condominium. Some condominium sale contracts offered to foreigners married to a Thai national are worded as an 'and/or contract'.

FET form means Foreign Exchange Transaction form, previously known (and for some still) as Thor Tor 3 (Thor Tor Saam). An authorized financial institution (bank) inside Thailand dealing with the exchange of foreign currency exceeding 50,000 USD (or an equivalent in any other currency) must under BOT banking regulations prepare a FET-form and report this transaction to the Bank of Thailand. For foreigners buying a condominium an original copy of this form with their name either as the receiver or sender of the foreign currency is part of the required documents for registration of foreign ownership at the Land Department (proof of compliance by the foreigner with section 19 of the Condominium Act).

For the exchange of foreign currency in amounts less than 50,000 USD the bank does not need to prepare a FET form and therefore will not issue a FET form copy. In this case foreigners can request from the bank a confirmation letter for the transfer of foreign currency and exchange into Thai baht. This letter contains the same information as the FET form (e.g the transferred amount in foreign currency, the exchanged amount in Thai Baht, the name of money sender, the name of money receiver, the purpose of transferring the money) and can be used as proof of compliance with section 19 of the Condominium Act. This proof must be submitted to the Land Department when registering foreign ownership.

The most common problems foreigners encounter when buying an off-plan condo unit in Thailand are; the developer goes bankrupt or becomes short of money (often because of failing sales), a substandard product is deliverd, the project takes far longer to complete and finish than originally planned. In off the plan property developments in Thailand the developer usually requires that during construction all payment under the sale and purchase agreement are made directly into his bank-account and not into a third party escrow account. Payments into the developer's bank account as opposed to an escrow account (i.e. money held in the account of a licensed financial institution in Thailand that receives and disburses money depending on the escrow agreement) has serious risks and disadvantages for the buyer.

Price per square meter is one of the key elements to determine the value for money and is the basis to compare affordability of projects in an area. In case of and existing condo the price for the condo usually paid at the time of transfer of the condominium at the land office by cashier's check (a check issued and guaranteed by your bank in Thailand - i.e. the bank that will also issue your foreign exchange documents). In case of an off-the-plan condo the purchase price is usually paid to the developer's bank in Thailand in installments with a final payment at the time of transfer (note importance of escrow arrangements). Payment terms in the contract are negotiable.

There are no general property taxes in Thailand. There is a very low local maintenance tax, with as tax object land and a land and house tax. Land and house tax will not apply to owner occupied properties (condo or house). There are approved plans to introduce a more general (yearly) property tax for land, land and house or condominium apartment with a tax rate of 0,1 % of the appraised value (government assessed value) if the unit is used for residential purposes and a higher rate if put to commercial use.

Unless restricted in the bylaws of the condominium (the adopted rules and regulations of the condo) a foreigner is free to rent out his unit. Only if it is considered operating a business of renting out properties in Thailand by a foreign investor the foreign owner would be restricted by the Foreign Business Act (list 3) and possible the Foreign Employment Act. A non-resident individual (foreigner in Thailand) is subject to tax only on assessable income from Thai sources, regardless of payment location. The received rent is subject to personal income tax (Revenue Code section 40 under 5) and over properties put to commercial use or rented out by the owner 'housing and land tax' must be paid. 

When you sell your condo taxes must be and are paid at the Land Office at the time of transfer. This includes transfer fee, business tax or stamp duty and income withholding tax. With the land office tax-receipt, sale documents and documents confirming the previous transfer of foreign currency into Thailand, the bank is allowed to transfer the full amount received from the sale of a condominium by a foreigner out of Thailand without any deductions.

There are a variety of taxes and fees involved when transferring a condominium unit in Thailand; transfer fee, stamp duty, withholding tax (personal or corporate) and specific business tax (if applicable). How these costs are divided between the buyer and seller in a re-sale depends on what is agreed in the sale and purchase agreement and can vary from buyer pays all to seller pays all. When buying in a condominium development the seller (developer) can under consumer protection laws only pass on up to half of the 2% ownership registration (transfer fee) to the buyer.
The government program to stimulate condominium sales business by reducing the transfer tax and fees ended in 2010.

Each apartment unit in a condominium building has an ownership title deedissued by the Land Department. The title deed must among others contain the following information: 1 - position and location of the land and area of the land of the condominium 2 - position and location, area and plan of the apartment showing the width, length and height 3 - ratio of ownership of common property (ratio of voting rights) 4 - name and surname of the person having the ownership of the apartment 5 - index for the registration of rights and juristic acts (if there is for examp a mortgage registered it will show on the backside of the title deed and should be removed prior to the transfer of ownership) 6 - signature, position and seal of the Competent Official. Transfer of ownership of a condominium and amendment on the title deed always takes place at the land department.

A house book or blue book or Ta Bien Baan is a residential address registration book issued by the local government municipality. It states the location and apartment address and registers the Thai persons having their legal residence (domicile) at the address. For foreigners a house book (tabien baan) is not an important document and is less relevant as it is not an ownership document but merely a house and resident registration document, and, unless a foreigner is a resident in Thailand, he is not registered in the (blue) house book. In official registration procedures foreigners can use a letter of residence issued by the local immigration to proof their address in Thailand or the owner of the condo registered on the condo title deed can use the (empty) blue book together with the condominium ownership title to proof his residential address in Thailand.

The sale and purchase agreement for a condominium specifies in detail the responsibilities of the buyer and seller of the condominium. A sale and purchase agreement covers among others the agreed price and payment schedule, transfer date, exact details of the condominium, responsibilities for transfer fees and taxes, warranties and matters relating to due diligence. A sale and purchase agreement with a developer in a condo development is a contract controlled business (not the leasehold sale agreement), and the standard sale contracts must comply with the condominium act and consumer protection laws. For a re-sale of an existing condominium the parties do not have to make a sale and purchase agreement but making a sale and purchase and specifying in detail the responsibilities of the buyer and seller is strongly recommended (template contract). Transfer of ownership takes place at the provincial or local Land Department's branche office and at the time of transfer a second official Thai script land office sale agreement is signed and transfer fees and taxes must be paid.

Normal mortgage financing from a Thai bank for the purchase of a condo is generally not an option for foreigners in Thailand. Basically only foreigners with residency, income and an employment history inThailand can, depending on the bank's policy, obtain a mortgage for the (part) finacing of a freehold condo (and then only for a real condo as this is the only immovable property foreigners can obtain outright ownership of in Thailand). But even if the foreigner meets the criteria Thai banks are generally reluctant to lend money to foreigners. Banks will not give a mortgage for a condo to non-resident foreigners. Foreigners can also not register ownership without having complied with the Condominium Act section 19 which usually means having transferred foreign currency into Thailand for the purchase of the condo. If the foreigner is married to a Thai national the bank's requirement could be that the condo is registered as apersonal property of the Thai spouse where the foreigner is merely the guarantor of the loan without ownership rights in the condo.

The apartment price in the contract for a not yet completed condominium is based on the size of the condo according to the plans of the building with a price adjustment based on the final size of the unit. Saleable area in the sale contract means the area on which the contract price is based, and registered area (upon which the final price is based) means the exact floor area upon completion of the condo as measured by the Land Department surveyor. The final size of the unit mentioned in the unit title deed could be significantly larger than the size mentioned in the contract which is based on the building plans. A maximum price adjustments should be agreed in the sale and purchase contract for the condo.

When buying an existing or re-sale condo the seller must supply a letter of guarantee issued by the condominium juristic person that the condo unit falls within the 49% foreign ownership quota of the condominium and a letter that there are no outstanding fees for the unit to the condominium juristic person. Other documents required at the transfer are among others the ID-cards or passports, a marriage or divorce certificate (if applicable), a land office Tor Dor 21 power of attorney if you are not going to the land office yourself for the transfer of ownership, check guaranteed by a bank for payment of the balance of the purchase price to the seller (if applicable) and cash to cover the transfer fees and taxed.

Information, tips, checklists and facts about real estate deals in Thailand (FAQs)

Facts about real estate deals in Thailand (FAQs)

Buying a Condo

•Ask about the "foreigner's quota" of the condo. It's important for you to know whether you can purchase a unit in your own name. Make contact with members of the condo administration. See if they give out information willingly.
•Each condo has its owners' administration, and once a year there should be an owners' meeting. It is a legal requirement that minutes are being kept of the administration meetings as well as of the owners' meetings. Take a look at these to gain an insight into the actual problems of a particular condo and the ways those problems are being solved.
•Read the condominium law. Read the house rules of the condo. They are an official document which can be scrutinized at the land department. Check whether the house rules are being observed.
•Talk to as many residents as possible who are not involved in the administration.
•Ask for the condo's balance sheets which should be signed by a professional accountant.
•Make inquiries about maintenance work and what is being done to maintain the condo in good condition.
•Is there a sinking fund, and is it sufficient?
•Check the condo's insurance policy regarding commonly owned buildings and areas (these do not cover fixtures and installations within a condo unit).
•What is the annual owners' contribution to the cost of maintaining the building (maintenance fee)?
•Check all security measures and installations.
•Can someone be contacted at any time should there be an emergency?
•Is the condo well secured, or can anybody walk in without being checked? Is the area around the rubbish bins clean? How often is rubbish being collected?
•What kind of telecommunication systems are in place? This is most important for internet users. Not all internet services are available in all areas. What costs can be expected?
•Which companies provide cable-TV services? Is it possible to install satellite dishes?
•What are the charges for electricity and water?
•What communal facilities are there, and what is their condition?
•Are these facilities open to non-residents?
•Looking at the building can you detect empty lots or old buildings, where some day new structures could be erected that could block your view?
•The parking area is usually common property and there should be no specific allocation of parking spots.
•Check how long you have to wait for a lift during holiday periods.
•How many units of the condo are empty?
•How many units are currently offered for sale or rent?
•If the condo administration offers a sales or rental service, what are the costs of this service and what does it comprise?
As checklists go, this one, too, does not pretend to be complete, but it represents a good start so that one can feel comfortable even outside one's own four walls.

In Thailand a condominium is defined as “a residential building that can have its individual units sold to private people for personal property ownership” The occupants of a condominium share ownership of areas of common use, i.e. swimming-pools, garden areas, a fitness center, the lobby area and so on.
The main difference between condos and single homes is that there is no individual ownership of the land. All the land in the condominium project is owned equally by all the unit owners. Usually, the exterior maintenance is paid for with fees collected from the unit owners which should be managed according to strict rules. The exterior walls and roof are insured by the condominium association, while all interior walls and items are insured by each unit owner.

Buying a condominium would be the simplest and easiest way for foreigners to buy property. Purchases of condominiums by foreigners come under the jurisdiction of the Condominium Act B.E. 2535 (1992).
Foreigners can own Condominiums in their own names, provided that the total number of foreign held units does not exceed 49% of the total number of units in a particular condominium block.
The money used to buy the condominium should be remitted from abroad in foreign currency to a bank in Thailand, (in the name of the person that will be registered on the title deed), with the remark „to purchase a condominium“. The prospective buyer should also obtain a “Thor Tor Sahm” form from the bank where the transferred money arrives.
The owner of each condominium obtains a certificate of unit ownership.

Service charges are rather low in Thailand. They are used to maintain the common areas of the building like lifts, pools and corridors.
Also the sinking fund that is set up when the condo units are initially purchased, is in many cases replenished by the service charges which are payable every year.
Service charges are quite moderate, however, they vary considerably according to the degree of luxury provided by the existing infrastructure.
Buying a house / a plot of land

Here we have developed a list of checks that anyone, who wants to invest in a second home in Thailand, should undertake.
Once you have found your ideal home you can engage the services of an independent consultancy that shouldn't have any connections with the builder, in order to have a good chance to recognize right from the start any "skeletons in the closet". Usually the consultancy commissions an official examiner who will look into all aspects of the builder's business.
The checking process consists of a legal and a financial examination. Looking at the financial side of things, it has to be established that the builder is running a sound business while one should also enquire about future developments in the property market, as these can greatly influence the value of a property at a later date.
As the word suggests, the legal examination is concerned with all legal aspects of an intended transaction. To show that everything is above board the builder should provide the following documents:
A detailed description of his company, its standing in the market, and a list of law firms and tax consultants it is dealing with. 
•Exact data regarding the object that is supposed to be invested in, i.e. who the architect, the agent and the bank is that extends the finances.
•A correct description of the object's location as well as a quality assessment of its soil.
•Is there any security guarantee for payments made before the transfer of the property?
•Any payments made in advance should ideally go into a trust account. Only after the transfer of ownership should those amounts be released to the builder.
•Have all existing laws been complied with, especially the building and environmental regulations?
•Is the object located in an area that is officially designated as a building and residential zone?
•Are any guarantees given for the completion of the project, and are they backed by the architect and engineers associations?
As always, we cannot claim that this checklist is complete, but it should be of some help to potential investors.

Land ownership is governed by the Land Code BE 2497 (1954), the Civil and Commercial Code, the Land Reform for Agriculture Act BE 2518 (1975) and the regulations issued by the Ministry of the Interior.
 
Although you can own a house or structure in your own name, Thai law does not allow foreigners to own the land the building is erected on.
 
However there are a number of ways in which you can circumvent this rule:
•Invest in a private Thai limited company. This involves the incorporation of a private company of which the foreigner holds a maximum of 49% of the shares. The remaining 51% of the shares must, according to Thai law, be held by Thai nationals.
This is the method that has been adopted by tens of thousands of foreigners who protect their property ownership with this "legal framework". The author is not aware of any case where such a contract has been revoked, as long as certain basic rules have been observed. All steps of this process are legal within themselves and have been approved by all authorities concerned. All foreigners who have bought their properties in this way, can rest assured that their ownership will never be disputed, because Thai laws cannot be retroactively amended. Should you consider this option, the consultation of a competent legal advisor/lawyer is strongly recommended.
However, we would like to draw your attention to a few more noteworthy points:
Any company with more than 40% foreign interest that purchases land could, under Section 74 of the Land Code, be investigated by the Central Land Office in Bangkok to ensure that the company has not been set up solely for the purpose of circumventing the rule that prohibits foreign land ownership. This results in the foreign ownership of the company being restricted to 39%, but with the recommended changes to the Articles of Association, the foreigner can become the only director of the company, and the only person in that company who can undertake any contractual dealings - effectively giving the minority shareholder control over the company. The company must submit an annual balance sheet and there will be a tax obligation, but the costs are minimal and your lawyer should be able to assist you with the above.
•Become a Thai resident or citizen
•Invest in a new export oriented Board of Investment (BOI) approved company. The most you can currently own freehold is one Rai of land (1600 sqm.)
•Make an approved investment of 40 Million Baht or more, which has to be maintained for a specific number of years.
•30 year lease with the option of renewal. This can be done by taking out a registered 30 year lease (residential) to the foreigner in the foreigner’s own name with pre-paid options to renew for two further periods of 30 years each. The foreigner could also be given the option to purchase the land, in case the law in respect of foreign land ownership rights changes. Under Thai law, a foreigner can own the building (for example a house) erected on the land. In order to be enforceable, any lease for a period of more than three years must be registered at the respective land office. There is a registration fee and stamp duty applicable, based on a percentage of the rental fee for the whole lease term. The originally registered lease remains in force and effective even if the property is sold.

Under the strict application of the law, it is actually prohibited for foreign individuals or juristic persons (e.g., foreign majority-owned companies or partnerships), to own land in Thailand. However, there are exceptions to this rule which can be found in the law itself, as well as other methods of effectively purchasing land and buildings.
The Land Code has been changed to allow foreigners to own land if they meet the following requirements: 1) The land is strictly for residential purposes. 2) The land area does not exceed one Rai. 3) No less than 40 million Baht is being brought into Thailand for investment in approved BOI projects. 4) Foreigners must abide by the Ministerial Regulations governing the nature of the business that the foreigner wishes to undertake, the period of time for maintaining the investment, and the location of the land owned. 5) Permission has to be granted by the Minister of the Interior.
According to article 97 of the Thai Land Law, the definition of a foreigner also extends to a Thai registered company or partnership in which more than 49% of the capital is owned by foreigners or of which more than half the shareholders or partners are foreign nationals.
So to all intents and purposes foreigners are prohibited from owning freehold land and for that reason the three above mentioned methods of structuring ownership and control have evolved.

Although Thai law does not allow foreigners to own land in Thailand, foreigners have the right to own buildings (See "purchase of condominiums". Foreigners have no right to freehold land ownership). If foreigners want to purchase land in Thailand in order to build a property, they have two options, either to form a joint venture limited company with a majority Thai ownership or to secure a long term lease with a right of renewal.

The Board of Investment (BOI) may grant a foreign-owned company permission to own land if the proposed use of the land is for any activity promoted by the BOI. Prior to the purchase, the BOI must inspect the land and the construction plans, and agree that the land is suitable for the promoted activity. After the land has been bought, it may only be used for that activity and, in the event that the business conducting the activity stops operating, the land must be sold within one year of that date. Another benefit of this BOI promotion is that businesses which have been granted the right to own land under these conditions may also be eligible to conduct other business activities that would otherwise be restricted to foreign individuals and juristic persons.
General legal info and Q & A

Buying a property in Thailand
Buying a property in Thailand is actually much easier than in other countries. Land offices are efficient and the documentation required for ownership transfer is relatively simple to prepare. Although it usually takes 30 to 60 days, a purchase can be wrapped up much quicker, especially when a newly built property is being purchased. 
This is mainly due to the conditions in the Thai market. With a high proportion of cash buyers and much of the property in the Kingdom being relatively new, the process is generally less complicated than in other countries. However, due diligence is still advised. It is therefore sensible to undertake a complete check of the property being purchased.
The buying process
Once a suitable property has been chosen an inspection can take place. The initial viewing should give the observer a good indication of the condition of the property and its fittings and fixtures. For previously owned properties it is wise to undertake a more thorough inspection that should include a structural check, a valuation, and, in case of a condo or a house in a developed area with shared facilities, a check of the common area and its maintenance history.
It is an agent´s primary function to find a buyer for the property to the satisfaction of the seller’s instructions, and to inform the seller immediately when any offer is received by the agent. The agent will oversee all negotiations with the aim of ensuring that both parties come to an agreement. When dealing directly with a developer, although some discounts may be offered in the current market, most prices are usually fixed, while concessions take normally the form of free extras like air conditioners or built-in furniture etc.
Once both parties have agreed on a price, a lawyer can be engaged. Some agents offer to take over the preparation of contracts and other paperwork themselves, but it can be a good idea to hire your own lawyer so that your interests are managed independently. On the other hand, it can happen that a local lawyer asks the agent for a commission for having recommended to his client to sign the deal.
Normally the lawyer will draw up the contract, hire a surveyor and have a look at the land records. If everything is in order, the contract can be signed and a deposit paid. This will usually be a previously agreed amount of ten percent and the contract will usually specify, that this amount is forfeitable if either party fails to complete the transaction. Although very often the deposit is paid to the seller as an advance payment of the sale price, it can also be held in trust.
It will be stipulated in the contract at which time the balance is payable. Usually it's between 30 and 90 days, though it can be earlier. For a purchase made directly from a developer, it can be agreed that the deposit will be paid in stages over several months or even years, especially if the dwelling is still under construction.
On the agreed date the transfer can proceed. Both parties or their respective lawyers, will go to the land office to arrange for the land documents to be updated with the new owner's data. Transfer of the remaining balance usually takes place at the same time, with a receipt being issued to verify that the sale has been effected.
Allow about one day for the property transfer to be processed, but if the land office is not too busy, the entire process could be completed in just one hour. When this is done the seller will receive his funds, and the buyer will be the new holder of the property.

Property purchases by foreigners in Thailand are simple but there are some restrictions. These restrictions, however, don't apply to condominium units which can be bought freehold in one's own name. In fact foreigners can buy as many of them as they like. The only rule is that in an apartment building Thais must own at least 51 percent of the units, while the other 49 percent can be owned by foreigners.
Assuming you arrive before the quota that is allocated to foreigners is sold out, you will have no problem to buy a unit outright. Resale and transfer is no problem, as you own the property on a freehold basis. A unit owned by a foreigner can be sold to either another foreigner or a Thai national. Should the latter be the case, it will mean that the percentage of ownership will change, freeing up the availability of another local owned unit in the building to be sold to a foreigner.
Remember, you must show that the money for the purchase has come from overseas by way of a foreign currency receipt and/or a letter from your bank. (This is a relatively new regulation, intended to prevent money laundering). Ownership papers will be issued in your own name.
When it comes to buying a house, or just a plot of land, a foreigner cannot become the owner of that land, so you can do one of three things:
a) You can find a Thai national and use their name (e.g. get married to a Thai citizen). In this way you are entitled to use the property as long as you don´t have a disagreement with your Thai partner. Doing it this way, you will never really own the property. The Thai partner will be the owner.
b) You can lease some land or a house. Leases usually run for 30 years, but can be renewed. A 30 year lease means that although you won’t really own the property, you will gain control of it for at least 30 years. Similarly you could arrange a 30-year lease with two 30-year extensions. However, extensions of 30 year leases much depend on the willingness of the lessor, and you will have little chance of success when trying to legally enforce an automatic renewal of such a lease.
The best way to achieve this is to adopt step (a), and buy the property in your Thai friend’s or partner´s name. Then a legal document must be drawn up whereby this person leases the property to you for both the first 30-year period plus any additional renewal periods. The contract must show that all rental moneys for the lease(s) have already been paid in advance. Make sure that the current lease is registered at the land office.
This method of securing ownership appears to be perfect. However, in order to resell the property one must ensure that the current owner can transfer the title deeds to the new owner and return the cash from the sale to you. This is by no means guaranteed. And there could be another problem: if the owner passes away and the property is transferred to his next of kin, then the renewal may be contested.
c) You may form a company, which means using Thai shareholders, and then transfer the house into the company's name. The company can then grant you the right to reside at the property, and as director you can arrange to obtain majority voting rights in that company even though you are a minority shareholder. However, you will not own the property (the company will) and your share holding in the company must remain at 49 percent or less in order to maintain the company’s status as a Thai limited company. If the company owns property your holding should remain at 39 percent or less.
The company can be set up by a lawyer or even by the developer’s legal experts prior to a property sale. Often the Thai shareholders will be nominees used by the lawyer who sets up the company. Since it is rather unlikely that you will choose the nominees yourself, it is advisable to at least keep track of the nominees in order to assure that they are independent from any other party involved in the property deal. While this is technically illegal, it has become a common practice among ten- if not hundred thousands of foreigners.
Even some condo developers have tried to sell condominium units by way of company ownership, trying to circumvent the 49 percent foreign ownership rule, but the resale of such a condo would be just as difficult as selling a Thai owned unit. It is therefore not advisable to buy a condo in a company's name unless you get a significant discount compared to a similar unit under foreign quota.

For Thai nationals, mortgage financing has not suffered such a sharp tightening as has been the case in many other countries. After the 1997 Asian financial crisis banks may have been a little more conservative and therefore have not had the same exposure to the housing market as their western counterparts. Although this means that a Thai person has a good chance of gaining approval for mortgage financing, it does also mean that in recent times the requirements have become more stringent than they may be in the rather lax Western markets.
Furthermore, since Thai banks are all too aware that the process of repossession can be a long and drawn out affair lasting many years, there is less importance given to the valuation of a property as security for a loan, but more emphasis on simply ascertaining that monthly repayments will be made on time. In other words, lenders in Thailand look for a stable backdrop, like a stable employment history, as well as pay slips and other documents to support future employment outlook.
In most cases it would be difficult to obtain bank financing of more than 70 percent of the purchase price, so to insure a smooth process one should have a substantial deposit in hand.
For foreigners it is almost impossible to obtain financing in Thailand. Nevertheless, some foreigners who have a work permit, and can show a stable history of employment as well as a healthy deposit, can obtain mortgage finance from a number of Thai banks. While these banks observe the current foreign ownership restrictions, they usually extend loans only for the purchase of condominium units sold on the basis of freehold foreign title. For those foreigners looking to finance the purchase of a property while they are still working in their home countries, the options would be limited to finance by the developer or the owner, or to obtain a personal unsecured loan from a bank in their country of residence.
Owner financing
Lately the practice of “owner financing” has become very popular in Thailand:
A property owner who doesn't immediately need the entire proceeds from the sale of his property, may be willing to offer payment in instalments charging interest comparable to current bank rates.
Buyer and seller agree on a selling price and a down payment as well as the time frame in which the money owed has to be paid in full, including the interest rate payable.
The terms and conditions can be freely discussed and must be agreed to by both buyer and seller.

•The title deed for the property (Chanoot).
•Document from the juristic person of a property where there are common areas (i.e. all condominiums) stating that all maintenance fees are paid up.
•Copies of the passport or other identification documents of both the buyer and the seller.
•Copies of the entry stamp (in passport) of the buyer and/or the seller, if foreigner(s).
•Purchase agreement.
•Thor Tor Sahm document from the buyer's bank indicating that funds have been brought in from another country. (for purchases in the name of a foreigner only)

Since a foreigner is not restricted from purchasing real estate, one of the most effective ways to acquire land with an existing structure is to acquire temporary possession of the land with a 30-year leasehold and an option to extend that lease for subsequent 30-year periods. Leases are limited to 30 years, except on land that is used for industrial purposes, which can be established for 50 years. Similarly, lease extensions are restricted to three terms of 30 and 50 years respectively before renewal of the lease would be required. However, the renewal of a 30 year lease is a tricky matter and promised perpetual renewals are simply not possible or cannot be enforced in case of a legal dispute. Possession of the land leased for an already owned building is protected because the building sits on the land; ownership of the building is separate from the land ownership and cannot be seized by the lessor once the lease expires. Leases with the duration of more than three years are enforceable only for three years unless they have been registered with the Land Department. That means that a 30-year lease must be registered with the Land department. In addition, a lease remains valid even in the event of the land being sold.

A Thor Tor Sahm is a bank document that is issued by the receiving bank when you deposit foreign currency into a/your bank account in Thailand.
You must ask the receiving bank for a Thor Tor Sahm when you are remitting funds to Thailand for the purpose of buying a condominium, and the Thor Tor Sahm must state that the remittance is only for the purpose of purchasing a property - Code 5.22.

Yes, they are called “Chanood” or “Nor Sor Sie Jot” or with a slightly minor “quality” “Nor Sor Sahm Gor” and are the only documents which can be described as land title deeds, because they alone confirm ownership of land. The land is properly surveyed and its area and boundaries are established using GPS or conventional measuring devices. Land parcels can also be partitioned into smaller plots.
For areas not surveyed, there are other documents to prove possession such as evidence of the right to utilize the land.

Before 1998 any Thai woman married to a foreigner lost her right to purchase land in Thailand, but she could still retain land that was in her possession prior to marrying the foreigner. That has now changed. According to a ministerial regulation decreed in 1999 Thai nationals married to foreigners can purchase land, but the Thai spouse must prove that the money used to buy that land is legally hers and has not been provided by a foreigner. This can be achieved if the foreign spouse signs a declaration, declaring that the funds used to buy the property belonged to the Thai spouse prior to the marriage and that the foreigner has no claim to it.

Purchasing property through a company with limited liability has so far been the most popular method for foreign investors. The regulations vary throughout Thailand, but the Land Office generally requires that Thai nationals must hold a majority interest in order to be able to purchase land legally. In the light of recent government directives it is most important to seek competent professional advice on the implications of obtaining land ownership by this method.

The promise of a guaranteed return should be viewed with caution, as returns are subject to the market situation, which nobody can predict accurately. Another question is, what is actually being guaranteed. Some developers offer a net return, others offer a gross return or a profit sharing scheme. The latter is very difficult to control. Especially first time developers are often not in the position to calculate such a rental guarantee and the tax issues related to it. If a well known management company offers the guarantee, chances are that they can deliver. If you have doubts about those promises, decline the offer and ask for a price reduction instead.

It is obviously more risky to buy off plan from a first time developer than from someone with a long standing reputation and a record of completed projects. Although this practice is not very common in Thailand, the use of a trustee, - a lawyer, for example - will definitely reduce your risk. A trustee is an impartial third party used to secure the completion of a transaction between a buyer and a seller. He acts as an intermediary and collects documents and funds to be delivered to the appropriate parties after the transaction has been completed.When buying into a housing project, one can ask the developer to transfer the ownership of the land or register a lease agreement on the buyer's plot after having paid a reasonable deposit. This option is not possible when purchasing a condo, because the condo license and therefore the individual titles can only be issued after having completed 90% of the construction.Make sure the payment terms are in relation to the stages of construction which must be completed before payment is due.

Whenever a property in Thailand is bought and sold, there are four taxes you should be aware of.
1. Land registration (transfer fee) at 2 percent of the assessed value of the land.
2. Stamp Duty/Fee of 0.5 percent of the assessed value or the sale price - whichever is higher.
3. A specific Business Tax of 3.3 percent of the assessed value or the sale price - whichever is higher - this tax will be applied to all sales by companies and to private sales that take place within 5 years of the date of purchase.
4. Income Tax. This is calculated on a very complicated formula based on the assessed value of the property, the length of time it has been owned and the applicable personal income tax rate. In practice, this will work out to less than 2 percent of the price for low to medium value properties, and up to 3 percent for properties with a higher value.
The Thai system of taxing property is based on an arbitrarily assessed value, which is determined by the local Land Department, rather than the true market value. There are no specific rules as to who pays for which taxes. It is just another part of the bargaining process when purchasing property in Thailand.

There are no property taxes that could be compared to the property taxes in the West. However, comparable taxes on properties in Thailand would be the Land Tax and the Building Usage Tax. The Land Tax levied on land is so low, that in reality the body charged to collect it, rarely bothers to do so, and if it does, it usually waits several years until the amount accumulates. The other tax, the Building Usage Tax, relates only to buildings and is collected by the municipal office or district office. It is only applied to properties used for commercial purposes.

Foreigners generally cannot obtain a mortgage when buying properties in Thailand, however, most of the financial institutions in Thailand provide loans to Thais and Thai companies for the purpose of buying real estate.Very often real estate developers arrange for their customers to be granted a financing package from a financial institution. It should also be noted that in most real estate development projects a down payment can be made in instalments stretching over a period of up to 24 months. After the down payment has been made, the sale contract will be drawn up and the remaining balance is paid through the loan which is financed by a financial institution. The financial institution requires you to mortgage the property as collateral.

Thai land mortgage documents must be drawn up in writing and registered with the Land Department. Any buildings built on the land after the mortgage date are not included in the mortgage, unless this was agreed upon prior to signing the mortgage documents. Furthermore, buildings and other permanent structures can be mortgaged separately and should be registered with the Land Department or local Amphur.

If so, we recommend a book written by the law expert Rene Philippe R. Duboit, titled “How to Purchase Real Estate in Thailand”, It can be bought online at Amazon or in Thailand at Asia-Books stores. The ISBN number is: 978-974-613-509-2
Recommendation
If you consider doing a property deal (purchase/sale) it is highly recommended to consult a professional law expert.
Exemption of liability
All articles published on our website, Thai Home Invest, have been carefully researched and are the work of trustworthy and professional sources.
However, Thai Home Invest does not guarantee that all contributions are absolutely true and correct or that they represent the latest status of the law or commonly employed practices. Thai Home Invest specifically wishes to point out that these contributions are in no way to be seen as any form of personal or legal advice or as a recommendation.

 

Why Should you Buy a Condo in Pattaya?

Here are everything you will ever need to familiarise yourself with the Pattaya Property Market: the buying process, invaluable tips on how to choose the best real estate agent or to give you enough confidence to go for it alone, how to purchase a condo in foreign ownership, likely pitfalls, the legal issues, in short, everything you will need to make an informed and wise decision on what may be the most important purchase you have ever made. We even give you a detailed breakdown of that often mysterious process known as 'due diligence', which we consider imperative on three counts: firstly, conscientious research will fully acquaint you with the character of the Pattaya Property Market, what is available and at what price; secondly, it will impress the real estate agent that you are a serious buyer; and thirdly, it will give you sufficient self-confidence to obtain the best possible deal.

 

Why Buy a Condo
The Steps to Buying a Condominium
Smart Buying
Due Diligence Check-list

If your version of a dream home doesn't include owning a lawn mower and cutting the grass, then you should consider buying a condo. Condominiums are ideal for first-time home buyers and older people who are ready to downsize. Condos are normally smaller and less expensive than a typical family house, and most often include attractive amenities, such as swimming pools, fitness facilities and security.

In beach resort locations like Pattaya, Thailand, where housing space is limited, you can expect to pay inflated prices for a plot of land to build a house. Condos, however, are an excellent way to live in a popular or expensive area, because they're cheaper to build and they're a lot more affordable than traditional houses, particularly if you're a first-time buyer or buying a second holiday home. The condo stock in the Pattaya and Jomtien areas is some of the best and most modern in SE Asia, built to Western standards, with attention to style, quality fixtures and fittings and amenities to make your condo a home from home. In addition, being a buyer's market, currently, many developers and private sellers are offering attractive inducements, like partly or fully-furnished units, substantial discounts and even motorcycles and cars to attract you, their valued customer. Because of their value for money, condos are always in high demand from buyers, so once you've bought one, you can always be sure of being able to sell it at a later date, usually at a substantial profit.

 

Less maintenance.
The price of your condo includes the cost of maintenance, so the benefit to you is that you won't need to perform it yourself. Jobs like mowing the grass, repairing broken fixtures and cleaning the swimming pool are all taken care of for you.

 

Community environment.
As you get older, you almost certainly will not want to become isolated from your community. Maybe you've got an empty nest now the children have left home and are feeling lonely, living in a condo you will be among your neighbours, in close proximity, have help at hand should you need it, and have common areas to share with others.

 

Facilities you couldn't afford otherwise.
Most houses will cost a lot more if they include a swimming pool, home gym, or sauna. Buying a condo usually means you have the convenience of having these facilities right outside your door.

 

Modern construction.
If you purchase a new condominium, then you can expect your condo to be built to new construction standards and will feature many modern conveniences. Buying a brand new house or villa may give you the same benefit, but with a much bigger price tag!

The Steps to Buying a Condominium:

a) Decide what you want – create a Wish-List and tailor it to your exact requirements. This will help clarify the exact dimensions, type, location and price range of your dream condominium, which you can also take with you on your inspections for your records, as well as defining your Buyer's Profile for the benefit of your chosen real estate agent so he knows exactly what you are looking for.

b) Determine what you can afford – financing. The Pattaya Property Market has traditionally operated with cash payments, either one-off or by instalments. You will have your own funds or have to borrow. Borrowing or a mortgage bond can be arranged via Bangkok Bank Singapore, but other banks are also considering lending to foreigners. Currently, you will need a work permit and at least a year's visa. Alternatively, many developers are now offering developer financing to their customers. This can range from 0% interest to up to 50% of the purchase cost. Finally, seller's finance is another option where available. Having sorted your finances you are now in a position to know the price range of condominiums to look for. If you have decided to buy in your Thai spouse's name, she/he may be able to raise a bank loan if employed or possessing a healthy bank account. Condominiums bought in the Thai 51% are normally cheaper than those bought in the foreign 49% quota. Escrow law, whereby the buyer's right are protected by depositing purchasing funds in an impartial account until transfer of the property, has not yet been formalised in Thailand, but it is on the books. Income evaluation - can you actually afford to buy? Create LIVING COSTS WORKSHEET so you know exactly how much you have to spend after taking care of you daily living requirements.

c) Foreign ownership - buying a condominium is the most straightforward way of owning freehold property in Thailand, with the dual provisos that one must abide by the 49% foreign quota and that funds for condominium purchase must be sent from overseas and registered on a Foreign Currency Transaction Form - Tor Tor Sam (TT3) by a Thai Bank. After that the condominium owner is issued with a certificate of ownership, which also lays out the owner's degree of rights over the condominium building's common areas. The other preferred way to ownership is via a joint-venture company, with majority Thai ownership, and the proviso that the foreigner's minority interest, which must not usually exceed 38% (or 49% in some cases), is adequately protected. Ownership rights via this method belong to the company, not the individual, however. The other alternative is ownership via a Thai Spouse, where he\she must prove that funds employed for condominium purchase are legally theirs alone, the husband/wife having no claim to it.

d) Perform due diligence – this involves investigating the details of a potential investment for yourself, including market price, community features, searching for your dream condominium and even assessing the developer's track record if that is your route to buying. This way you gain an excellent appraisal of the property market, its variations and special qualities. This process is normally started well before the prospective buyer makes an offer, but the offer will normally have provisions allowing for you to review (and approve) certain documents and have certain inspections conducted before you close on the property. You will need a 'Home Seekers Kit', consisting of a tape measure, notebook, pen, and camera before you start your search. Current market prices can be found by consulting us, perusing the property sections of the local press or dedicated property magazines, or by asking your real estate agent. Check out our detailed Due Diligence Check-list in the last section.

e) Pitfalls to avoid when buying Thai property: no title search, failure to conduct due diligence, buying without a lawyer, buying without an estate agent, not having transferred the purchase price for the condominium in foreign currency into Thailand, putting the deposit down too early, buying in a mismanaged project, not considering the surrounding area, choosing on the basis of price alone, forgetting your heirs, not having clearly agreed in an off-plan purchase agreement that the purchase concerns a freehold purchase and not a leasehold purchase, these are but some of the snags that can hold up your purchase and invariably cost you money. Forewarned is forearmed; by not committing these mistakes, you will not only save yourself time and money, but be able to sleep peacefully, knowing that you have done everything possible to facilitate your condo purchase and have not bought a pig in a poke.

f) Shop for a condominium: decide whether you want to go it alone, (unless you are a first-time buyer & if so, never go solo!) through a real estate agent or via a developer. If going solo, take your short-list garnered from notice-boards, or adverts in the press. Make appointments and visit properties. Ask the seller why they're selling their condominium and how soon they expect to move. Also ask the initial purchase price paid by the seller and consider any upgrades which may have added value. Don't appear too over anxious, stay calm and keep focused. Be sensitive, if the property appears overpriced, with obvious flaws, discuss this matter politely with the seller to see if they're willing to either repair the flaw or reduce the price. If working through a real estate agent or developer, ask them questions from the real estate agent or developer's evaluation sheets. When satisfied, ask them to draw up a short list of properties that conform to your buyer's profile for you to see. Don't forget to ask about restrictions, maintenance and sinking funds.

g) Make an offer: it is essential to establish rapport as the basis of a good business relationship with both the real estate agent (if you are going through one) and the seller. Have your finances in order and transferred into a Thai bank account so that you can move quickly if required and to prove your genuineness as a buyer and as financially qualified. Be prepared to compromise and make concessions to reach that agreement, with the goal of obtaining the condominium at an agreeable price and under agreeable conditions. Also be aware and dynamic, being ready to finalise the deal if a mutually acceptable agreement can be reached, or prepared to walk away if not. Remember to keep your cool and be adamant; don't settle for anything less than you are really willing to, there is always a new day and plenty more condominiums for sale.

h) Inspection and insurance: ask permission to conduct both a personal and professional inspection, being prepared to renegotiate price in the event that either inspection reveals hitherto undeclared faults. Ask for a copy of the Sale and Purchase Agreement, which will specify the selling price, and terms and conditions of the sale, so as to have it thoroughly checked out by a lawyer. Inquire about fire, theft and home contents coverage insurance.

i) The final closing: assuming all the conditions are in order, and everything necessary has been checked by qualified professionals, sign the Sale and Purchase Agreement. Payment terms normally demand a deposit of 50.000,- Thai Baht so as to reserve the right to purchase. This is followed by first payment, normally a down payment of 25% or 30% of the total condominium price, depending on the sales agreement. There may also be some payments to be made between the down payment and the transfer date. Following the final payment and delivery of condominium, the seller will transfer the condominium ownership into you, the buyer's name. But don't forget, the registration fee, stamp duty, and withholding tax must be paid at the time the transfer of ownership occurs.

 

Smart Buying:

Due Diligence Check-list
Don't forget to take your 'Home Seekers Kit' - tape measure, notebook, pen, and camera – to record and take notes on the various properties that appeal to you.

 

Neighbourhood Research:
Look for a suitable location in which to live
Find out the current market prices of your chosen condominium size
Find out the current market prices of condominiums in your chosen locations
Question the neighbours, both in the condominium building and nearby.
Buying route:
Go it alone
Use a real estate agent - qualities expected in your ideal agent
Buy direct from a developer - discounts, track record, time-schedule, recommendations.
Legal Aspects:
Title search - discover if the title is good by researching the status of a land on which the condominium is built.
Establish that the owner is who they claim to be
Find out if there are any debts and encumbrances on the property
Interior Inspection
Find out if there are/is any:

 

Any empty apartments listed as rented.
Any pest problems.
Missing, old or broken appliances.
Any water or fire damage.
Any obvious "problem tenants."
Anything that will need repairing soon.
Exterior Inspection
Check:

 

Roof condition, age and problems.
Electrical and plumbing systems up to date, and to codes.
Heating, ventilation and cooling systems - age and condition.
Paint and trim condition.
Common driveways and parking areas.
Common area landscaping and irrigation systems.
Service Agreement Reviews
Know what contracts and agreements exist, and if they will transfer. These might include:

 

Property management agreements.
Pool cleaning.
Cooling system maintenance.
Laundry machine contracts.
Cable or satellite television services.
Alarm system services.
Landscaping services.
Anything else.
Government Compliance Check
See if the property is in compliance with codes, zoning, etc:

 

Ask about any permit problems.
Ask local authorities about zoning violations or encroachments.
Check into fire code violations
Inspect for environmental problems (asbestos, mould, lead paint, radon gas).
Books and Records – if possible
Get 24 months income and expense statements.
Look for any unusual things in the books, like expenses too low.
Review service agreements and whether you have to assume them as the new owner.
Look at utility bills for the last year.
Call public utility companies (water and electricity) and enquire if increases are due.
Follow Up
Get an accountant to review any suspect documents.
Have your lawyer review your offer and other paperwork.
Ask your lawyer about any other due diligence you should do.
Take notes on any problems, and list repair costs to be used during subsequent negotiations.

 

Insurance Needs

In the process of buying and selling real estate, you should consider insurance as one of your priorities. Insurance is required for a variety of reasons and purposes such as :
  • Building Insurance
  • Contents Insurance
  • Burglary Insurance
  • Moving Insurance

Once you have purchased your new home, you should take out insurance to protect your investment. So how much coverage should you have on your new home? What does a basic policy cover? What happens if there is a fire or flood?
 
You should take out a cover note on the day you settle on the property. If you are building a home, you should ensure that it's covered from the day construction begins.
 
There are basically two levels of insurance cover:
 
  • Replacement cover - reinstates your property to it's former condition in the event of it's being destroyed, i.e. new for old. Do not confuse replacement value with how much you paid for the property. A home bought for THB 4,000,000 may cost THB 6,000,000 to replace. It is much cheaper for a builder to build several houses at a time, than to construct just one.
  • Indemnity policy - reinstates or repairs the property but depreciation is taken into account, i.e. old for old. You will only receive a portion of the amount it would require to replace it.

 

Unlike car insurance, there is little that is standard about home insurance. Premiums can vary greatly depending upon the size of your home, it's features and location, and the construction material. Do you have a security system, keyed locks on all windows and doors?
 
Quick Tips
Maintain your home: Check for loose roof tiles, electrical fittings and etc.. Good maintenance reduces the likelihood of damage or injury.
 
Many insurance policies in Thailand do not cover your properties against "Acts of God", such as lightning, hail, earthquakes and floods.
 
It is important that you check your policy carefully before an unexpected event occurs.
 
Depending upon your policy, the coverage is replacement value or actual cash value. For example, if your THB 8,000 sofa is destroyed, full replacement ensures a new sofa. Actual cash value would only give you the depreciated value, say THB 6,000. Not surprisingly, full replacement policies are more expensive than cash value policies.
 
In many cases, the contents of a home are valued at 50% of the structure's replacement value, e.g. on a THB 4,000,000, contents could be as high as THB 2,000,000.
 
Quick Tips
It is a good idea to keep receipts for major purchases and detailed inventory records for insurance purposes.
 

Bear in mind that the standard content policy in Thailand does not cover you against burglary and theft of your valuables, e.g. video recorder, computer, jewellery - for those items you will need a burglary and robbery (special risks) policy.

 

In order to cover your valuables against burglary and robbery, it is advisable to take out a 'Special Risks' policy. For this type of insurance coverage, you will need to provide a detailed list of all items to be included.
 
Quick Tips
As well as keeping receipts for major purchases and detailed inventory records, many companies recommend taking video records or photographs of your valuables. Limit your small claims: pay for minor losses yourself and rely on your policy for more serious, expensive claims.
 
Check out the various ways to improve your home security.
 
Your possessions should be insured under your existing policy at your current home and should be covered again when you have moved into your new home and have notified your insurer. However, they are usually not covered during the move between the two locations.
 
Check whether your removalist offers 'in transit' insurance cover as part of their quote. If not, ask them to arrange it for you or take out a policy yourself.
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