Do you plan on purchasing a property in Thailand? If yes, then you have come to the right place. Sometimes what happens is that people enter into sale and purchase contracts without reviewing the contract properly, which results in their interests not being taken care of. It is always important to review a contract before signing it. In this article, we will be discussing the importance of conducting a contract review in order to prevent the other party from doing fraud with you. In addition to this, we have also laid down the top five things that one must keep in mind when conducting a contract review in Thailand.
Sale and Purchase Agreement
There are two parties in a legal contract: a buyer and a seller. Sale and Purchase agreements are binding and are also known as legal contracts between these two parties. Such an agreement is also known as a sales contract. The seller has to transfer his right of ownership in the property when he enters into a sales contract with the buyer. It must be noted that the sales contract has a binding effect on both the buyer and the seller. The contract consists of all the terms and conditions that both the parties agree on in relation to the concerned property. Once the buyer makes the final payment or consideration to the seller, then the right of ownership shall be transferred from the seller to the buyer. A sales contract must always be reviewed properly by the parties in order to avoid any issue in the future. The language of the agreement can be either English or Thai. In case any party is unable to understand the language of the contract, then the same shall be translated to him, and the contract will be executed in both languages.
Why is it important to conduct a Contract Review?
It is incredibly important to conduct a contract review when purchasing a property from another person. People often get confused between a title deed and a sales contract. Both of these are different. The title deed of an immovable property contains information regarding the location of the property and who has the ownership of the property currently. A sales contract contains the terms and conditions on the basis of which the seller will transfer his right of ownership in the relevant property to the purchaser. It is also mentioned in the sales contract that how and when the right of ownership in the property will be transferred from the seller to the buyer. Sales contracts made in Thailand usually contain only the basic rights of the parties and do not mention the exhaustive rights and obligations of both the parties that are mostly mentioned in the sales contract of other countries. It is crucial to note that the interests of both the buyer and the seller must be kept in mind when drafting a sale and purchase agreement.
In some cases what happens is that a sales contract is so poorly drafted that the rights of one of the parties are not taken into consideration, which is why it is incredibly important to always conduct a contract review before entering into a sale and purchase contract.
By conducting a contract review both the parties will be able to ensure that the sale of the land takes place without any problem. In case a contract is missing any important provision, then by reviewing the contract you can add or remove any provision in order to avoid any problem in the future.
Sometimes what happens is that people take sale and agreement samples and make only a few changes to them. The parties must make sure to thoroughly review the contract and customize it according to their terms and conditions.
Things to consider when reviewing a contract
Now that you know how important it is to conduct a contract review when entering into a sale and purchase agreement to transfer the right ownership in a property from the seller to the buyer, you must be wondering what things one must look into when reviewing the contract. We have described below the five most important things that both the parties must check for when reviewing a contract:
- Make sure that the information mentioned in the title deed and the sales contract is the same. Sometimes what happens is that the information is not the same, which leads to legal issues in the future. Make sure that the property mentioned in the title deed and the sales contract is the same. Also, check whether the land and the building made on it adheres to the zoning and environmental regulations of Thailand, and has been granted all the relevant permits by the government authorities.
- You should always check for the original assessed price of the property by verifying it from the land department. Some sellers tend to ask for a higher price for the immovable land from the buyer than the property is actually worth.
- The seller must check that the title deed was legally transferred to the seller and that the owner of the property did not acquire the property through illegal means. Both the parties must also ensure that the other party is a Thai national and not a foreigner since a foreigner is not permitted to own immovable property in Thailand.
- When reviewing a sales contract, both parties should make sure that all their rights and obligations are correctly mentioned in the contract. Never rely on the basic rights mentioned in a sale and purchase agreement sample, and always make sure to negotiate and customize the contract according to your own requirements.
- The parties must also check the payment schedule before signing a sale and purchase contract. A lot of times due to typographical errors, the date, and place that is fixed for making the payment is not correct in the contract which can lead to a problem. In addition to this, the parties must ensure that the mode of payment and the duration in which the buyer will make the payment to the seller is stated correctly in the sales contract.
Thailand Property Lawyer
Siam Legal International is a full-service law firm in Thailand that offers various services that are designed to protect the rights and interests of foreigners wishing to acquire or buy property in Thailand. Our firm offers a wide array of property-related services to best suit our foreign and Thai clients’ property needs. Should you have any questions relating to the property contract review or issues that need to be addressed, our team of Thailand property lawyers invites you to contact us through the link below: