Contracts with developers in Thailand: how to protect a buyer's rights

Two types of development - different levels of protection

In Thailand, projects fall into two broad categories, and which category your property belongs to directly determines how much the law will be on your side.

• Licensed projects. These are condominiums registered under the Condominium Act B.E. 2522 (1979) as amended, as well as larger residential developments covered by the Land Allocation Act. Such projects go through government approval, obtain permits, and are required to use contract forms approved by ministerial regulations.
• Private developments. Smaller villas and apartment buildings that do not obtain a full licence. Here, compliance with building standards depends on the developer's good will, and the buyer has far fewer statutory remedies.

The key practical takeaway: a licensed condominium inherently offers the buyer more protection, because the law sets minimum contract standards and brings in the provisions of the Consumer Protection Act B.E. 2522.

Where consumer protection applies - and where it does not

This is a trap that foreigners discover too late. Contract standards and consumer protection apply to freehold sale-and-purchase agreements (full ownership) - that is, to quota units that a foreign national may own within the 49% floor-area quota of the building (Condominium Act §19 bis).

Leasehold agreements (long-term lease), however, fall entirely outside those standards. They are drafted by the developer, and drafted to sell. Hence the promises that look solid on paper but, in practice, are not.

The classic example is a '90-year lease' constructed through renewal options. Under Thai law, a lease of immovable property (hire of property, Thai Civil and Commercial Code §540) is registrable and enforceable for a maximum of 30 years. Everything beyond that consists of contractual promises to renew, which carry no legal guarantee and depend on the future good will (or solvency) of the lessor.

Moreover, Thai lease law as a whole is written in favour of the lessor: there is no developed lessee-protection framework comparable to European systems. Any protection for the lessee must be specifically negotiated and built into the contract structure.

Freehold vs leasehold: comparison

Funds from abroad: the FET requirement

To register a freehold unit in a foreign national's name, it must be demonstrated that the funds arrived from abroad in foreign currency. The bank issues a Foreign Exchange Transaction certificate (FET form, formerly Tor Tor 3) for transfers equivalent to USD 50,000 or more. Without this document, the Land Department will not register the transfer of title to a quota unit. Plan your transfers in advance, stating the purpose in the payment reference (purchase of condominium unit, plus the address).

Stages of the contractual relationship and off-plan risks

Purchasing at the construction stage (off-plan) almost always follows a chain:

1. Reservation agreement with a deposit - fixes the unit and the price. The critical question here is whether the deposit is refundable.
2. Main Sale and Purchase Agreement with a payment schedule tied to construction milestones.
3. Handover and title registration at the Land Department.

The principal off-plan risks are: delayed completion, the finished property deviating from the plans, changes in floor area, incomplete construction, and developer insolvency. Thai legislation does not require mandatory escrow for all projects - the Escrow Act B.E. 2551 (2008) exists but is applied on a voluntary basis. As a result, buyers' funds most commonly finance construction directly rather than sitting in a protected account.

Warranties and defects

In licensed condominiums, the standard contract form includes warranty obligations on the part of the developer - typically a period for rectifying latent structural and engineering defects. In private projects, the warranty is only what you negotiate and write into the contract yourself. Document the finishes, fittings and equipment, the timeframe for remedying defects, and the handover procedure in writing.

What to check and what to watch out for

• Project type: licensed condominium or private development. This determines the level of protection.
• Form of title: freehold within the 49% quota, or leasehold. Remember: 30 years is the real, registrable maximum for a lease.
• The land beneath the project: it must not be agricultural or protected land; there must be a building permit and the developer must have rights over the land.
• Title integrity: a current extract from the Land Department confirming no encumbrances or mortgages on the building.
• Payment schedule: tranches tied to actual construction milestones, not to calendar dates.
• Deposit terms: the circumstances under which the deposit is returned.
• Completion deadlines and penalties for developer delay (liquidated damages, right to terminate and obtain a refund).
• Defects warranty: the period and procedure for rectification.
• FET form: confirm that your bank will issue one for each transfer required for freehold registration.
• Contract translation: the Thai version takes precedence - a certified translation and an independent lawyer are essential.

Before signing any agreement, engage an independent Thai lawyer with no connection to the developer and conduct thorough due diligence on both the property and the developer company.