Due Diligence on Thai Property Purchase
- Investing in real estate certainly involves a huge amount of money. We cannot deny the fact that there are some fraudulent dealers and developers taking advantage of naïve investors who can easily get victimized by unscrupulous deals. Therefore, investors are advised to take extra precaution before finalizing any transactions. It is essential to consider conducting Due Diligence as it is a useful tool for estimating the status of a prospective project and its developer. It serves to confirm all material facts and legal parameters with regards to a sale or acquisition by investigating and evaluating a potential investment, helping to identify potential risks and liabilities
The failure to conduct necessary precautions could result in terrible consequences such as serious financial and legal distress on the part of the buyer. Investors must remember that almost always after completing the transfer, the seller will not hold responsibility for problems the buyer did not discover earlier.
Important Factors to Consider in Carrying Out Due Diligence It is necessary to establish whether or not the Title Deed has been correctly and legally issued. Information contained in a title deed must match with the records in the Land Department.
Be aware of any encumbrances and liens currently levied upon the property.
You need a guarantee that the seller is holding the said property under a true title of ownership that may therefore have the full legal rights to sell the property.
You need to be aware of any pending or potential legal action involving the property.
You need to make sure that the developer has all of the required permits and legal documentations for a project that is not yet built.
You or your legal consultant may have some minor concerns with the sale contract details that can be corrected before signing to purchase.
You need to be informed of the details and status of the developer.
You must have a clear understanding of the rights and obligations of each party. This includes who pays which taxes and fees, when the deposit and balances get paid, how long the project will take to completion and what remedies there will be if the project is not completed on time.
It is recommended that you have a lawyer in Thailand to review the contract drafted by the seller to ensure it is prepared with proper terms and conditions that meets the standard terms as required by relevant laws and confirm that the contract does not contain terms of any hidden cost and drawbacks.
- The need for thorough detailed due diligence begins prior to the signing of a binding contract. The necessary title and background investigations provide the initial basis to confirm any safe purchase and ensure that both parties deal with each other in a fair manner.