Financial Resource

to install electric gates which will only open if management fees have been paid and are up to date, where prevention of access to a property in such circumstances is actually illegal. Any such activity should be challenged, as you should have unrestricted rights of access to your property. Please also note that rights can be registered against land titles, but if you are ‘leasing’ the property, then your lease should contain reference to those rights, and the references must provide sufficient detail on the rights, what they apply to. For example – rights could be limited to pedestrian, not vehicular access. Overall, most properties have good access, but of course you should exercise caution and not overlook an obvious point to check due to over-confidence.

Taxes and Other Expenses – Budget for Investment

If you are purchasing property from a development company or from an individual you should create a budget in a simplified spreadsheet of the costs you will incur in addition to the actual purchase price.

In certain transactions, it is actually possible to reduce tax liability, but you should not attempt to reduce liabilities without checking if the method is legal or not. You cannot alter the standard tax rates, such as Stamp Duty, Lease Registration Fees, Building Transfer Fee, or Land Transfer Taxes.

In a managed estate, certain management costs will be fixed. You should have regard as to how these might be increased in the future, and who controls on what basis these fees will be increased. Control and supply of utilities can also be important, especially where some management companies seek to make a ‘profit’ on aiding supply of essential utilities. Back-up generator facilities may or may not exist, and the pest control and rubbish collection facilities should also be examined for adequacy. Potential variable costs should also be assessed, and the use and management of a sinking fund.

Developers Tax Programs

The approach that a developer’s tax regime is not the concern of the buyer can lead to issues should there ever be a dispute over the transaction. Therefore, be mindful and wary if you are asked to make substantial offshore payments relating to a transaction onshore, and be aware that if your monies do not come into Thailand, then if you do have a dispute, you may have to file a legal claim not only in Thailand but other jurisdictions, thereby creating a large barrier cost to ever filing a claim. Such an example is quite extreme and rare, but nevertheless, there is an element of common sense to be applied to what you are asked to do in terms of transfer of monies by a developer or seller. Rather than second guess, you should ask your advisers to give you an opinion on any structures and how they relate to you.

Using a Foreign Offshore Company for your Investment

A popular practice has emerged in recent years of interests being acquired through an offshore company to facilitate a tax efficient re-sale of the company and the assets it holds in the future. Re-sale of a foreign company does not generally trigger a taxable event in Thailand. However, tax is not a topic which can be simplified with a one-solution-fits-all approach and you should seek advice which will consider your nationality; your tax domicile; where your funds are coming from; what you will do with the funds if you ever sell the interest. This is an element of planning which can sometimes be forgotten or pushed to one side in the excitement of a purchase or investment.

Transferring Funds into and Outside of Thailand

Special rules apply to purchasing a condominium in the foreign quota title. On your remittance form, you should stipulate that the funds are being transferred ‘for the purpose of purchasing a foreign condominium unit in Thailand Unit No. X’. Note of course, that if you change the unit number, you will need to change the form, in order to procure registration at the land office.

For other types of acquisition, you should keep all remittance slips and acknowledgements and keep all receipts received from the developer. Please note that in order to transfer monies out of Thailand, you will be asked to provide evidence that all appropriate taxes have been paid and accounted for.

Furniture and other items

Casual verbal agreements on furniture and contents of property often causes problems which cannot be remedied without great expense after the purchase. Therefore, to avoid doubt and problems, if you are purchasing a property you should have a schedule of damage that you accept exists in the property (this will be very straightforward to produce, if you conducted a survey)  and you should itemise all contents and furniture you intend to acquire as part of the purchase. If for any reason the seller should like to keep these items separate from the main property purchase, you should still insist on a separate contract relating to the furniture and other items. This will in practical terms serve as a checklist when you take possession of the property following the acquisition of it. You should remember to take possession of all of the instruction manuals and take a set of the electrical and other construction drawings of the property so that if you do decide to renovate or you need to conduct a repair in the future, you are able to provide the plans to the contractor.

Insurance

Quite simply, from the moment that you have paid a reservation fee, and certainly when you pay the balance of the purchase monies, make absolutely sure that the property is insured against the normal risks with a reputable insurer and that the policy you have has been checked and the ‘exclusions’ on the policy are reasonable. Insurance companies will not generally negotiate their standard policies much, but if a policy is so unreasonable as to not represent value in terms of paying the premium, then a different insurance company can be used instead.

Off the Plan Acquisition

Off the Plan developments may be supported and backed by the finances of public companies, or they may be backed by the finances of private individuals or limited liability companies. Whatever the case, you should conduct credibility and financial due diligence of the key personnel and directors of the company you are dealing with. When you have reached an appropriate comfort level, associated with your own risk profile (between low risk and high risk), you should then move to formal  due diligence of the off-the-plan project.

As in pre-built property purchases, you need to check the land title of the property as explained above. The common issues to consider are whether or if:

the marketing materials will match the delivered product
the contracts are fair and have regard to Consumer Protection Rights
the management of the property post completion has been planned properly and professionally. Attaching a branded name to a project does not mean it will be managed properly – evidence of budgeting and planning should be sought.
The timing for construction, remedying of defects, and handing over the property is realistic
The payment terms are suitable and allocate risk appropriately
The developer has access to funds other than buyer’s purchase monies
Any project finance is managed properly and will be used exclusively for the project you are buying in
The status of the Owners Committee and implementation of rules, so that this is not entirely controlled by the developer, unless it is proposed the developer will exclusively manage the property
Any overdraft facility has been completely used or what the status of drawdown is
The contractor has been properly appointed and whether there are any issues with the contractor
You have inspection rights throughout the building process
You can vary or not vary the plans in any way to suit your own planned use of the unit and whether materials can be changed or substituted by the developer or you

There are many more items to consider, and this list is not an exhaustive list

Resort or Hotel Managed Property

Typically, purchasers will buy units in a resort or hotel managed property for investment and capital appreciation, revenue return or revenue sharing with the owner/operator with limited interest in usage rights of the property. However, there are some buyers who actually wish to live in resort or hotel property, to be able to use the hotel facilities in their daily life. Whatever the reason, there are some unique legal matters to be checked which include

The length of term of operation by the branded operator
The contingency plan should the operator decide to exit early and not manage the property anymore
The substance and backing of any ‘guaranteed’ rental return
The usage rights of owners, in comparison to ‘guests’
Any restrictions or impediments on re-sale of the property
Insurance of the resort, and your unit
Estate Agents, Brokers and Intermediaries

Lawyers like estate agents, because they may refer business to that law firm. However, law firms must remain independent of brokers, as one of the principles of legal advice is independence. Brokers are motivated by commission, but are bound by rules in Thailand relating to providing a service and representation. Therefore, choose a professional, reliable, and friendly agent, who is prepared to allocate time to you before you register with that agent. If you are in doubt about information supplied to you by an agent, you can contact a developer or third party to verify that information, and the agent will not be able to allege that your circumventing their agency, so long as you do not breach the terms of any registration with that agent.

Pay close attention to re-sales, and try to establish if there are any third parties other

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