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Selling your Condominium Unit in Thailand
Foreign ownership of condominiums in Thailand is in the
increase as it is by far the easiest way for foreign
nationals to own a property here. Purchasing this type of
property may be relatively simple but potential
complications may arise should the time come when you
decide to dispose of the property. The problems faced are
much like the sale of properties anywhere in the world
but it may require a bit of drafting know-how to protect
you from any potential financial damage, or in the least,
any further disappointments. A number of things can go
wrong in a sale of your condominium, the worst being the
failure of your buyer to complete.
Unlike some jurisdictions elsewhere in the world, there
are no set standard terms in the contract for the sale of
property. Contracts come in a variety of forms from a one
page document to an all-embracing Boston type contract.
Despite this being the case, there are some general
precautions that should be present in any sale of
property contracts. Certain mechanisms should also be put
in place to prepare you for an unexpected outcome.
Using a Real Estate Agent or Broker
As a first step, you have to consider whether it is
worthwhile for you to use a real estate agent or a
broker. A reputable agent or a broker may make it easier
for you to find your buyer either locally or
internationally. They have a greater access to the market
and are able to vet the potential buyers saving you some
time in accommodating casual inquiries. They are also
able to assist with the negotiation, provide advice and
guidance on the deal and obtain the best price they can
for the property. Agents in Thailand normally take up to
3% of the purchase price as their commission for this
service so this is something you have to take into
consideration as well.
The Price is Right
Setting your asking price is important. You may have an
idea from observations of recent sales of units within
your condominium or other similar condominiums around
your area. Alternatively, you may wish to have your
property evaluated by a number of surveying and appraisal
firms around town. An agent or broker can help you with
the pricing, too. Be sure to set a reserve price aside as
well. This is the minimum price of the property you are
willing to accept.
Other Pre-contractual Considerations
Make a checklist of any defects on the property which
should be disclosed to your potential buyer. Keep in mind
of any liens or debts you have on the property as this
should be included in the contract. It is good to have a
full and open disclosure of all physical aspects of your
property and state this clearly in the sale and purchase
agreement. There is no legislative requirement to do so
in Thailand but it goes a long a way in preventing any
potential problems with your buyer in the future,
particularly if your buyer is used to having these terms
being standard in their own home jurisdiction. It also
helps to give a good impression to any potential buyers
and makes for a much less complicated transfer.
Also, Thai law retains the general principle of freedom
of contract. This means that parties have the freedom in
concluding any agreements as long as it is not against
the law or against public morals. The principles of
contract laws are regulated by the Civil and Commercial
Code of Thailand which is largely based on continental
European civil law concepts. However, you have the option
of selecting a jurisdiction to govern your contractual
obligations and this is useful if you or your buyer is
more familiar with those particular sets of laws.
Vendor’s Remedies when a Sale Goes Bad
There are some crucial elements to protect yourself when
you prepare a sale and purchase agreement for your
property. Firstly, it is important to protect yourself in
the event that there has been a failure to complete. Once
a contract has been signed, a contractual obligation
between the parties is established. As a rule, you should
have some or all of the following clauses in your
agreement to limit your injury when your buyer cannot
complete. Therefore, you may state that at the
termination of the contract, the vendor may:
a. keep or recover the deposit;
b. keep certain funds paid under the contract for
security;
c. sue the purchaser to recover damages for a breach of
contract.
As a further precautionary step to suing for breach, it
may be valuable to include a further clause which can
recover the deficiency on resale and the reasonable costs
and expenses arising out of the purchaser’s non-
compliance with this agreement. This ‘deficiency on
resale’ concept arises out of the difference between the
contract price and the market value of the property as
well as any other damages which may arise out of the
breach. Therefore, if there is a deficiency on a resale,
you would take the difference between the contract price
and the resale price and make the necessary adjustments.
Alternatively, you may wish to use the following
calculation in your agreement whereby you take the
difference between the contract price and the value of
the property as at the date of the breach and add on any
consequential damages plus interest. The consequential
damages may include items such as advertising fees, legal
fees, rent costs and removal expenses.
This concept is not regulated by Thai law nor by any
court precedents but having a term such as this is not
uncommon in many jurisdictions elsewhere. If drafted into
the agreement, it makes it much clearer what damages can
be claimed for in such an event.
Summary
Certainly we all hope that a sale of a property will
proceed smoothly and most vendors are happy to cut their
losses and proceed in finding the next buyer if something
goes wrong. This is due to the high fees and the
considerable time involved in court proceedings in
Thailand. It is always a good idea to have an alternative
dispute resolution clause in your contracts as
arbitration or mediation will most definitely be a
cheaper and faster alternative to attaining any damages
if you happen to find yourself in a quandary. There are a
number of other minor problems which may arise when
selling a property but this article is too short to cover
them all. If you are in doubt, your agent or broker may
assist you or you may wish to seek some legal advice on
the matter.
Siam Legal
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Legal on the web at www.siam-legal.com/realestate where
you can read over 15 related articles regarding the legal
procedures for real estate transactions in Thailand.