How to Purchase a Condo in Thailand

What you need to know when closing on a property in Thailand

This article focuses on the settlement and due diligence process of purchasing a property in Thailand.

We will cover the things that you need to be thinking about when you are considering making an offer on a property; and then what happens, and what needs to be done between making the offer and transferring the property deed on settlement day.

If you are interested in other topics related to owning property in Thailand, such as foreign ownership rules, taxes, ongoing costs, risks and so on, we have a comprehensive guide here.

Buying property in foreign country can be daunting and confusing. There is a certain process that needs to be followed to ensure there are no nasty surprises and all parties walk away happy. To assist with this, we recommend engaging the services of a lawyer in Thailand. Get in touch here if you would like to talk with our expat-friendly lawyers in Thailand.

How to make an offer on a condo in Thailand

After you have found a condo that you like, this is a good time to engage your lawyer and bring them into the process.

You will then make a conditional offer on the property.

The first thing to do is agree on the sale price for the condo itself. You then also need to agree on who will cover the fees on the transfer of the property and any taxes that may be owed. A 50/50 split between the buyer and the seller is relatively common, but it is all negotiable.

Once the price and the transfer fee split has been decided, your lawyer will start getting busy drawing up the contracts. We recommend getting all documents transcribed in both English and Thai language.

It can be a good idea to pay a small booking fee before you pay the actual deposit. The booking fee will usually be between THB 10,000 – 50,000, or 1% of the purchase price of the condo.

Next, you can have your lawyer draw up a reservation agreement which includes a clause that states that the booking fee is to be credited against the deposit for the property, upon the completion of a satisfactory due diligence report.

What is involved in the Due Diligence report?

It is a necessity to have a due diligence report carried out on the property before you commit serious money to it.

The due diligence report will cover items such as:

Legitimacy of the title deed

Confirm the seller is rightful owner

Confirm availability of foreign quota

Outstanding common area (CAM) fee

Confirm there are no unexpected obligations

Check seller’s bankruptcy and status of being put in receivership

Other items as deemed necessary

The due diligence report can take up to 5 days to be completed. This timeframe will need to be taken into account in the main purchase contract, also known as the Sales and Purchase Agreement (SPA). For example, often the date that the main contract will be signed and entered into, will be 7 days after signing the reservation agreement.

The Sales and Purchase Agreement (SPA)

Once the due diligence report has been completed and you are happy to proceed with the sale, the SPA will be signed and the balance owing on the deposit will be paid.

The deposit is usually 5% of the total purchase price. The booking fee will be deducted from this.

The settlement/transfer date will be stated in the SPA agreement. It is common for the transfer date to be 30 days after signing of the SPA, although this is negotiable. You may even want to have an option in the contract to bring the transfer date forward if you are able to get your funds together quicker than expected.

You may also want to have a clause in the sale contract that allows you to defer the transfer date in case you experience any difficulties or delays when transferring your funds from abroad.

Of course, all clauses will need to be agreed to by both the seller and the purchaser.

How to transfer the money into Thailand from abroad

There is a certain process that has to be followed when transferring funds into Thailand to purchase a condo as a foreigner. If you don’t follow the correct process, the sale could be jeopardized and your deposit forfeited.

The first step is to open a Thai bank account, if you don’t already have one.

To open a Thai bank account, you will need the following:

• Your passport
• The Sales and Purchase Agreement (SPA)

As part of the foreign ownership laws for condo purchases in Thailand, the buyer must obtain an FET certificate (foreign exchange transaction form) from the Thai bank where your foreign money has been received into. This will usually be your personal Thai bank account, but it may be your lawyers client account if that is where you sent the money.

The FET certificate proves that the funds have been sent from outside Thailand. This is a condition required for foreigners to purchase property in Thailand. The money has to have come from abroad.

The funds must be sent to the Thai bank account in foreign currency, not in Thai baht. If you’re Australian, you will be sending AUD. If you’re American, you will be sending USD. The important part is that you don’t have your bank in Australia or the US convert the money to THB before sending it.

The Thai bank will receive the foreign currency and convert it into THB on their end.

The money has to be sent as an FTT transfer (foreign telegraphic transfer). In order for the transfer to be marked as FTT by the bank, you need to enter a payment description when making the transfer such as: to purchase a property in Thailand / to buy a condominium. Its best to check the exact wording required for the payment description with the receiving bank prior to making the transfer.

The FET certificate has to show that you brought in an amount that is at least equal to the purchase price of the condo.

If you used money that was already in Thailand, or money from a Wise account to pay the booking fee and the deposit, this will probably not have an FET certificate attached to it. If this is the case, you will need to transfer in a higher amount than what is owing at settlement so that the FET certificate covers the full purchase amount.

Its okay to do multiple transfers if your sending bank has a transfer limit.

Once the money has been received into your Thai bank account, the bank will issue an FET certificate. You will usually have to obtain the FET certificate from the same branch where you opened the bank account. Keep this in mind in case you are now living in a different part of Thailand to where you opened your account.

The FET certificate is required on settlement day. You/your lawyer will need to present it to the land office when transferring the property title over to your name.

With the process for sending money into Thailand from abroad being quite complicated, we suggest not leaving it to the last minute. Most banks will clear the transaction within 3-5 business days. But give yourself plenty of time just in case you experience delays.

What happens on settlement day (transfer day)?

The final step to closing the deal is the transfer of property title on settlement day. On the transfer day you will attend the land office with your lawyer, the seller, and also the real estate agent.

Bring the following items with you to the land office:

Passport

A check made out to the seller for the balance owing on the property

The FET certificate

The land office will transfer the property title into your name and give you the actual property title to take with you. It goes without saying that the property title is a very important document, so take care to store it appropriately.

You will also get a receipt for the title transfer, and the house registration book (known as the blue book).

There will usually be a photocopy machine at the land office. Use this to make copies of your passport and the title transfer receipt. You should need to sign the copies to certify them as genuine copies. These are often required when transferring the electricity meter into your name.

Once settlement and the title transfer has been completed, you will usually attend the condo building with your lawyer, the real estate agent, and the seller. They will show you around, explain how things work, and introduce you to the juristic officer (similar to a home owners association or body corporate).

Connecting and transferring utilities into your name

Transferring the electricity meter into your name can sometimes be done online, but you may need to attend the utility providers office in person. Depending on where you are located, this will be the MEA or PEA utility office in your district.

If you purchased an apartment in a condominium building, the water will be billed to you directly by the juristic office. So you won’t need to attend the water utility office in this case.

That covers the general process of purchasing a condo in Thailand as a foreigner.

We provide all levels of service to foreigners buying property in Thailand. For assistance with any part of the process, get in touch.

Congratulations. She’s all yours.