It is a positive sign when potential property investors in Thailand realize the need to conduct due diligence as the primary step in the series of steps in property acquisition. Some of them would resort to online research and then list down the things they are supposed to do when conducting due diligence.
While deciding to do things on their own is admirable, sadly it is not advisable as due diligence is a highly complex exercise that needs well-experienced professionals to conduct it and also, there are some areas of due diligence that would be off-limits to non-lawyers. Here are some things you need to take into consideration when buying Thai real estate.
Conducting Due Diligence in Thailand: The Basics
Conducting due diligence can be divided into several steps starting with the interested party consulting a reputable property lawyer in Thailand. Now, a highly experienced lawyer should be considered because the procedure would be very demanding and it also requires legal and technical know-how plus a good command of English and Thai.
And more about the language, all government issued documents in Thailand are written in Thai and so if the foreign individual would try to do things on his own basing on the checklist he made, he would likely to incur more expenses by hiring translators to interpret to him the contents of the documents. On the contrary, reality dictates that having lawyers to also act as translators would be very beneficial since, apart from accurately translating the contents of the documents, they also know how to translate Thailand’s property laws using terms that are more comprehensible to non-lawyers like the property buyer.
Investigating the Title Deeds
Since a reputable property lawyer is now involved, the next step the buyer and the lawyer would take is to delve more about the title deed the property has and check whether the contents found on the title deed do reflect on the information found on the copy possessed by the Thai Land Department.
A research about the title deed would also reveal if it is the real owner who is dealing the property and it also establishes the actual boundaries of the property in relation to adjacent properties.
With the help of his lawyer, the investing individual would also be able to review “register of records” of the title where the liens and encumbrances attached to the property are detailed. If there are issues on the register of records, a red flag could be raised and the property buyer may be advised not to pursue the acquisition but then again, it would depend on the circumstances and on the advice of his lawyer.
Checking All Permits and Certificates
Another step that the buyer and the lawyer would take is checking the required permits and certificates especially if the property is a development. In Thailand, not all areas are available for developments and to make sure that the condo the buyer is eyeing is built on an area open for such construction, due diligence would help him uncover this. Also, the development must have the appropriately obtained and developer plan-reflective permit and Initial Environmental Examination (IEE).
Researching the Seller’s or Developer’s Background
And lastly, thorough research about the seller or the developer’s background must be done and this would include researching court records as the former may be involved in court litigation as a respondent or even as a party to the proceedings.
The financial capacity of the developer should also be looked into to make sure that it is in financial capacity to finish the project especially if the interested party is buying a unit off plan. The same research would also uncover whether the seller already has a sizable amount of experience in development projects in Thailand and how the public and their current and former clients perceived the company as a whole.
If the seller is an individual, court records would also be looked upon to check whether he is also being a subject of a litigation proceeding in the past or at present.
Final Thoughts of Thailand Due Diligence
In closing, due diligence may require the investing party to shell out more money than what he intended but rest assured that such additional expense would bring about good dividends as it would help him decide whether he is purchasing a property which does not have any potential to be a cause for a court battle in the future thereby saving him more money.
If you are in the early stages of buying property in Bangkok and want to find the right advice on performing due diligence in Thailand, we can point you towards the best Thai property lawyers at Hero Realtor.
