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Due DIligence on Thai Property Purchase

Property Due Diligence serves to confirm all material facts and legal parameters of the acquisition by investigating and evaluating a potential property investment in Thailand. It is the research and analysis of a company, organization, or individual done in preparation for a business transaction or investment. A reasonable person takes extra precautions before entering into an agreement or transaction with another party. This procedure prevents unnecessary harm because it basically helps identify potential risks and liabilities.


Why is Due Diligence important on Thai property purchase?

Investing in real estate certainly involves a huge amount of money. We cannot deny that there are some fraudulent dealers and developers taking advantage of novice investors. Therefore, investors must take extra precaution before finalizing any transactions. Due Diligence is a useful tool for estimating the status of a prospective project and the developer. Failure to conduct the necessary safeguard usually results in terrible consequences, such as serious financial and legal distress on the part of the buyer. This is why buyers must remember that almost always, after completing the transfer, the seller will not hold responsibility for problems they did not discover.

What are the important factors to consider in carrying out Property Due Diligence?

  • You need a guarantee that the seller is holding the property under a true title of ownership. Therefore, land descriptions contained in any Title Deed must match the records in the Land Department. It is necessary to prove that the Chanote or Title Deed is correct and legal.
  • Be aware of the burdens existing on the property. It is necessary to review the Register of Records stated at the back of the Title Deed.
  • Determine who holds the title to the property and may have full legal rights to sell the property.
  • Be aware of any pending or potential legal action involving the property.
  • Make sure that the developer has all the permits and legal documentation for a project that is not yet built.
  • You may have some minor concerns with the sale contract details, which you need to correct before signing to purchase.
  • Know the details and status of the developer. It is essential to know their credibility and the amount of their registered share capital.
  • Have a clear understanding of the rights and obligations of each party. This includes who pays which taxes and fees, when to pay the deposit and balances, how long the project will take to complete, and possible remedies if they do not complete the project on time.
  • Most importantly, it is advisable that you have a lawyer in Thailand review the contract drafted by the seller. They will make sure that it contains the proper terms and conditions. Furthermore, confirm that the contract does not contain any terms indicating any hidden costs or drawbacks. Your lawyer will also negotiate and discuss with the seller on your behalf any proposed changes until both parties mutually agree on the final contract, which is then set to be signed.

When should we conduct Property Due Diligence?

It is advisable to begin the thorough detailed due diligence before signing a binding contract.  The necessary title and background checks offer the fundamental foundation for confirming any secure acquisition. This ensures that both parties deal with each other in a fair manner.

How long does the procedure take?

The completion of a Due Diligence method differs depending on the scenario. Because it is all about research, you must set aside a decent amount of time to ensure that all vital topics are adequately covered. Your lawyer or consultant will assess and determine the time frames for carrying out due diligence.

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