Magna Carta Law Firm > FAQ Section > Due Diligence on Thai Property Purchase


Due DIligence on Thai Property Purchase

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


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 naïve 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.  The 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 said property under a true title of ownership.  Therefore, land descriptions contained in any Title Deed must match with the records in the Land Department.  It is necessary to prove if 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 who may have the 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 completion and possible remedies if they do not complete the project on time.
  • Most importantly, it is advisable that you have a lawyer in Thailand to review the contract drafted by the seller. They will make sure that it contain proper terms and conditions. Furthermore, confirm that the contract does not contain terms of any hidden cost and drawbacks.  Your lawyer will also negotiate and discuss with the seller on your behalf for proposed changes until both parties mutually agrees with the final contract then set to meet for signing.

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 investigations  provide the initial basis to confirm any safe purchase. This ensures that both parties deal with each other in a fair manner.

How long does the procedure takes?

Completion of a Due Diligence procedure varies with each situation.  It is all about research, so you must allot a reasonable schedule to make sure that all essential aspects are thoroughly addressed.  Your lawyer or consultant will evaluate and define the time frames in conducting the due diligence.