Steps to Purchase a Thailand Development Project - Off-Plan

Eight steps for a smooth transaction – When purchasing project from a Developer

You’ve found a project by a reputable Developer you like.  So, what’s next? 

Step 1 - Selection and agreement of terms and conditions 

Development pricing is usually set and there is little flexibility, although there may be some level of negotiation on the payment plans or a discounted or included furniture package. After choosing the house or condo you want it’s important that you understand the position of the unitin the project and what facilities/features that are included in the price.

All parties should understand and agree to the major transaction terms and conditions. For example:

• The purchase price.
• Reservation deposit amount that will secure the property and remove the property from the open market.
• Due Diligence: Will the buyer conduct a due diligence and what time frame?
• Will the reservation deposit be refundable? If so, what are the terms and conditions of the refund?
• What is included in the purchase price? A detailed list of what furniture, fittings, landscaping and artwork that are included in the purchase.
• Taxes and Transfer Fees: What taxes and feesare the buyer and seller responsible for? Is there an estimate of the tax and fees available?
• What is the payment schedule, dates and amounts, that will be required by the buyer?
• What is the projected completion date for the project? Are there penalties in place if the Developer does not finish the project in time?

Step 2 - Reservation Agreement

This document outlines the general purchase terms, conditions and timeline related to the investment.

Step 3 - Reservation Deposit 

A deposit of approximately 1% - 2% of the purchase price will secure the property and remove it from the open market. The deposit amount varies from developer to developer and market to market.  Usually, the deposit is held either by the broker, lawyer or seller. Deposits are usually non-refundable subject to legal due diligence. Be sure you obtain a receipt for the transfer.

If the buyer is not a resident of Thailand the funds must be transferred into the country from an overseas bank account.The receiving bank in Thailand provides a FET (Foreign Exchange Transfer) form. This form is a requirement of the land office when registering ownership for foreigners buying property here. When foreigners  sell their Thailand property they can show the FET form as proof of the funds coming into the country which is a bank requirement when repatriating sales proceeds out of Thailand.

Step 4 - Sales and Purchase Agreement

Generally, the buyer will have 30 days to review the terms and conditions of the Sales and Purchase Agreement. This agreement will contractually outline the complete overview of the project and details of the unit you are purchasing. During this period, buyers have the opportunity to designate an attorney to conduct a legal due diligence on the contract, holding company and or land title deed if so desired. 

Step 5 - 1st Contract Payment 

The first contract payment can range anywhere between 20-40% of the purchase price. If the buyer not a resident of Thailand the funds must be transferred into the country from an overseas bank account.

Step 6 - Payment Instalments

The next payment will be linked to milestones in the construction progress and depending on where the project is in the build cycle. Rough dates will be provided by the developer but a payment should be linked to completion of critical milestones in the project. All installment payments must come from overseas and proof with an FET that the money has been transferred into a Thai Bank from overseas.

Step 7 - Defect List

Prior to the handover of the unit, usually two or three weeks before, a punch list will be created to correct any defect items in the property. Most often, the items are minor issues, like scratches and markings on walls and floors from construction, but it may also include items that were done incorrectly and require rework.

Step 8 - Transfer

When the project is finished the Developer will serve a notice to complete. The remaining portion of the purchase amount is paid and the property is yours. Owners are not required to be in Thailand to complete the handover process. The handover can be completed by a 3rd party on your behalf. 

Now that the basics covered, your Siam Real Estate representative can assist you to find the best property in Thailand for you!