Legal due diligence in Thailand to the fore. Considering buy real estate in Thailand then consider the due diligence report as a good investment in the property. Property is not well regulated and you could lose your investment if you do not do a due diligence report. Note that there have been well publicised real estate scams in the past. Always speak to a lawyer in Thailand when dealing with property sales and rentals in Thailand.
Legal Due Diligence in Thailand
Due Diligence checklist
Firstly they will need to check the title deed of the property. The reason for this is that the house of apartment block might have been built on an incorrect title deed. See more on title deeds in Thailand for more information about title deed types. Note all title deeds in Thailand can be sold and many of them have limitations. The incorrect title deed will create problems later and you may lose your invest. Well known case was in Koh Samui where property was developed on land that was registered for forests. The owners of the villas were arrested and they lost their investment.
They also need to check the property title deeds for usufructs which might be registered over the property. This gives the person who holds the usufruct occupation rights over the property. There might also be servitudes which give a company rights to run a gas pipeline over the property. They will also check for any lease agreements registered over the property or mortgage bonds.
If you bought the property for a view of the beach then you need to inform your property lawyer in Thailand about this as they will need to check if there are high restrictions on property between you and the beach. This made news headlines 2 years ago in Pattaya where a property developer built a large and taller building in front of another property development.
They will also need to check that the person selling the property is the actual owner of the property. As stated property regulation in Thailand is very limited and these issues do occur from time to time.
Financial Due Diligence
They will also have to check the seller of the property to ensure that he is not in court for insolvency or being sued. This might be an issue if the owner is in the middle of litigation as the property he is selling might be wanted later to settle the dispute.
There also needs to be checks on zoning as well as checking for property restrictions. Note that most expats tend to live in a property before they buy the property to ensure that they actually like the area. Zoning is important as it might be located in an entertainment zone which means that nightclubs might be setup in the area later.
The sale agreement needs to be checked as well as the plans to ensure that it is correct. Certain property depending on location also needs a proper environmental assessment study which is normally attached to the development.
These are the basic steps to ensure that the investment in the property is sound as it would be very costly to recover money later as those during the financial crisis who simply walked away in the end.
