Contract Review (Property)

Sale and Purchase Agreement

When you intend to purchase a property in Thailand, the most important contract in this transaction is a “Contract of Sale” or “Sale and Purchase Agreement&”. In most cases, the Seller will provide this contract upon payment of the initial deposit. A Sale and Purchase Agreement binds you in the real estate purchase process. It is a transaction between the two parties: the buyer and the seller. The agreement finalizes the terms and conditions of the sale and it culminates the negotiation of the sale.

Lease Agreement

If you plan on leasing land with the purpose of building a structure on it, it is important to make sure that you are allowed to build a structure, i.e., a house, on the land. This is commonly referred to as the "right to superficies". Foreigners are under Thai law are allowed to lease real
estate property for up to 30 years. In a long-term leasehold interest in a real property by foreigners in Thailand the lease could be structured with ownership over the structures upon the land. A lease that is for more than three years or for the lifetime of the landlord or tenant shall be made in writing and registered at the competent land registry office, otherwise it is enforceable only for three years. Thus, it is always advised to have your lease agreements reviewed by professionals to determine its validity and enforceability.

The contract may be in English or Thai. Prior to affixing your signature in this contract, it is always recommended that both parties review it carefully as a matter of legal prudence.

Importance of Contract Review

It is not always advisable to rely on the documents presented by the seller or the landlord. While it may be true that the title deed for the property determines the right of ownership of a land, house or a condominium unit, the sales or lease contract describes accordingly the terms, conditions and procedures on how the real estate transactions are to be perfected and how transfer of ownership or leasehold rights is effected. In Thailand, the usual contract of sale or lease contract only lists basic rights and does not list all the rights and obligations of the seller and the buyer in a Share Purchase Agreement or the lessor and the lessee in a Lease Agreement, in case of possible contingencies such as default by either party or force majeure. The terms and conditions set forth in the contract should not in any way impair the rights of both parties. In any contract, the interests of both parties shall always be put into consideration.

A contract review will enable both parties to:
1. Make the real estate transaction effective and efficient.
2. It saves both parties’ time, money and effort. A well-reviewed terms of the contract will lessen the occurrence of possible controversies which may arise in the enforcement of the contract.
3. Allows both parties to fully understand the provisions of the contract before they bind themselves to it.
4. Prevents costly litigation arising from contractual obligations.