Pre Construction Purchase

Transcription

1 Pre Construction Purchase Kert Stavorn BA LLB Kert Stavorn is a senior legal adviser for Siam Legal International. Kerts practice primarily focuses on real estate, construction and corporate matters.

2 Pre Construction Purchase Siam International Legal Group is one of Thailand s premier full-service law firms headquartered in the Bangkok Metropolis. With complementary offices strategically located throughout Thailand particularly in Chiang Mai, Pattaya, Hua Hin, Samui and Phuket and international offices in London and Los Angeles, we at Siam Legal offer an extensive range of professional legal, corporate and real estate services accessible to clients both domestically and internationally. Our more than 40 multinational legal staff with a track record of providing highly effective legal solutions to both local and international clients delivers a high degree of expertise at reasonable cost. Keeping ourselves abreast with the latest business developments in Thailand and building networks with other business companies, we are an active member of both American Chamber of Commerce and British Chamber of Commerce in Thailand. Pre Construction Purchase Purchasing a condominium in a tropical paradise is a dream for many foreigners who wish to escape the cold winters and the high cost of living in their home country. Thailand offers the foreigner many benefits including beautiful beaches, tasty food, friendly people, world class health care and inexpensive property. is the most secure method Many foreigners come to Thailand to purchase a condo for various reasons: for their retirement, as a second residence or for investment purposes. For those who desire to stay longer in Thailand, the ability to acquire property is an important issue. Many foreigners prefer to reside in a condominium since there is less maintenance involved for the owner. You can simply close and lock the door until your next stay. Projects in Thailand offer 24 hour security so you can feel safe that everything will be as it was when you left. From the perspective of a Legal Advisor, I would like to share with you the process so you ll feel secure of your purchase of a condominium in Thailand. Legal Structure In Thailand, a foreigner may own a condominium 100 percent in his/her own name. Freehold title for the condominium purchase of ownership for the foreigner. If the project is over the 49 percent quota for foreigners, you may need to draft a lease contract for your transaction. In Hua Hin we do not find this problem since Thai owners are the majority in most condominium projects.

3 Bangkok Offices Siam International Legal Group Bangkok - Head Office 246 Times Square Building, 25th Fl, Sukhumvit 12th - 14th Rd., Klongtoey, Bangkok Tel : Fax : Bangkok Office 45 Sukhumvit Road, Soi 24 Klongtoey, Bangkok Tel : Fax: Commercial Services: Litigation Services Corporate Law Investment Law Foreign Business Law Board of Investment & Amity Treaty applications Property Services: Real Estate Transactions Project Development Property Leasehold Project Licensing Immigration Services: Thai Immigration Citizenship Permanent Residence Retirement Visa Marriage Visa Legal & Financial Planning Before you sign any deposit agreement or contract, you should sit down with a lawyer or solicitor to discuss the legal process. You need to know the correct legal process in Thailand for the foreigner to purchase a condominium. Remember that you are spending part of your life savings to acquire this property and you must carefully plan your steps in the process. Some banks will offer up to 70 percent financing to foreigners for purchasing a condominium. The repayment term can be as high as 20 years. Siam Legal offers free legal consultation to potential property buyers. You should get the legal facts of the property and contract laws in Thailand before you deposit any money. Title Investigation done. You need to verify that the Seller has clear and legal title of the land before you enter into a contractual agreement. The title search will trace the land to its first possession. Don t take the word of anyone who tells you it has been checked before. The lawyer conducting the title investigation will provide you a full report and a copy of the title deed in the English language. Due Diligence Every financial transaction requires some sort of due diligence on behalf of the purchaser to verify that it is a sound investment. When you purchase shares of a company listed in stock market or a mutual fund you will generally research the profile and performance of the company or fund. The same is true when you purchase a property from a developer. quality and time frame of construction. If you don t have the time to spend on checking the history of the developer, a local lawyer near the development will know or can check the project, its directors and their reputation. Deposit When you feel satisfied with the property and it meets your expectations, you will be asked to make a deposit to show your good faith to continue the process. In return, the Seller will reserve the unit for you and start the process by drafting the contracts for purchase. Unless you write specifically a getout clause in the deposit agreement, for example subject to clear title or subject to agreement on the contract terms, the money deposited is nonrefundable. Visa Services: Thai Visa applications UK Fiancee / Spouse Visa US K1 & K3 Visa UK Tourist Visa US Tourist Visa A comprehensive examination of title deed recorded at the Land Department should be You should check with the previous buyers to see if they are satisfied with the

4 Construction Contract 4. Late Completion There are some fundamental elements which should be included in every contract. These are, among others: 1. Time name Penalties should be given to you if the completion is late. This is normally deducted from the final payment due upon completion. Penalty rates vary greatly in Thailand although for condominiums there is a daily An agreement should have a minimum penalty of 0.01% of time frame which stipulates the total unit price. clearly the starting date for construction as well as its 5. Assignment completion date. Check for any extension clauses which Many things can happen in the normally give the future so it is useful The funds developer a few extra to have an exit clause transferred will be months to complete should your plans in foreign currency without incurring any change. An assignment and converted by penalties. clause allows you to the Thai Bank to transfer the obligations Thai Baht. 2. Payment Penalties of the agreement to a third party. Note the Check that the administration fee due penalties for default of to the developer for this action. payment are not too An assignment clause may also burdensome on you. Terms allow you the option to flip the such as immediate rescission property should the market be of contract and retaining the conducive. money you have already paid are not uncommon but there How to Pay should be a period given to you to remedy this default. You will transfer funds into Thailand from overseas for the 3. Developer s Default purchase. The funds transferred will be in foreign currency and Ensure that you have some converted by the Thai Bank to recourse to a full refund in the Thai Baht. A British couple for event that the developer does example will transfer Sterling not complete the construction from their London bank and wire due to insolvency or for any to the bank in Thailand. other reason. Branches Nationwide Phuket 41-9 Rat U-Thit 200 Pee Road, Patong Beach, Kathu Phuket Thailand Tel : Pattaya 6/56 Moo 6, North Pattaya Road, Banglamung, Chonburi Thailand Tel : Koh Samui 142/17 Maret, IT Complex, Building Suite 309, Lamai Beach, Koh Samui, Thailand Tel : Hua Hin Hua Hin Market Village 234/1 Unit S101 Petchkasem Road, Hua Hin, Prachuabkirikhan, Thailand Tel : Chiang Mai Changkran Plaza- Suite 7, 191 Changkran Road Muang Chiang Mai, Chiang Mai, Thailand Tel :

5 The Thai bank will convert the funds into Thai baht and deposit it into incentives offered by the developer to the early buyers. local bank account. The Thai bank will issue a Foreign Exchange Form to confirm the transaction. The bank will only issue this form if the transaction is over $20,000 USD. When you wish to repatriate the funds back to your home country, you will need to show the Foreign Exchange Form and supporting documents. Your lawyer Some condominium projects can sell out very quickly upon the launch if the condominium units are reasonably priced and in a good location. For example, Baan San Pluem condos by SanSiri Plc. which is located beachfront opposite Hua Hin Market Village, reportedly sold or solicitor in Thailand can act as an escrow agent and disperse the payments to the Seller per your instructions. There are distinct advantages to buying during preconstruction such as the relatively discounted price 80 percent of the units in just a few weeks from the Grand Opening earlier this year. The local Thai buyers saw this project launch as a great opportunity to purchase beachfront condos at Pre-Construction Purchase the attractive pre-construction prices. The pre-construction real estate acquisition is the practice of buying a property very early on in the construction process. Developers are selling these future condominium units to customers in order to finance the development itself. The customers, on the other hand, are banking on the appreciation of the property once the infrastructure and amenities have been put in place. There are distinct advantages to buying during pre-construction such as the relatively discounted price, the choice of selecting a more appealing unit within the project or other added Handover of Condominium At the conclusion of the construction period, you will receive notification from the Seller that your condominium is ready for inspection. You or your representative will go to the property site and conduct a thorough inspection for any defect in construction or materials. Once you have accepted the condition of the property, you will go to the Land Department for the transfer or registration process. If you are not able to appear in person, a lawyer or third party can represent you by means of a Power of Attorney. Q &A Q: What are the main advantages of buying into a preconstruction project in Thailand? Rog e r Perth, Australia A: Like any pre -construction project buying off plan comes with the advantage of having a lower price tag than buying a completed unit. Q: Why do developers sell off plan and why do people buy off plan units? Kel ly Lon d o n, United kingdom A: Developers are selling these future condominium units to customers in order to finance the development itself. The customers, on the other hand, are banking on the appreciation of the property once the infrastructure and amenities have been put in place.