How Can Property Buyers Be Protected Under Thai Law
By Ponthep Werachon

“To be or not to be” protected, should be the question before buying property; –

However, most farangs ignore this concept, and most farangs will sign a bunch of documents in the Thai language, usually in which they are absolutely illiterate. How about the Thai ladies beside them” They just want their farang to be optimistic, as prudence always means a delay for these Thai ladies to have their anticipated fortune.

After nearly two years of working in Pattaya, I now understand more and more why farangs have such a profound passion of this place. As a Thai national with Thai educational background, I may frankly say that I migrated from Bangkok to Pattaya with the common reason shared with the farangs who migrated here. We all came here “Not for the price, but for the value of happiness” and the government could easily introduce a new term, –  “GDH” (Gross Domestic Happiness).

In Bangkok, most of my clients are corporate entities with an international business background. They are always protected by the sophisticated mechanism or know-how they have, which is in the form of specialized legal knowledge. They can buy a big factory of many hundreds of millions of baht without being defrauded. How about Pattaya” – Farangs are cheated easily by the many vultures having the linguistic ability to make these farangs believe. Many are their compatriots, and a lawyer will be engaged only once they find no way to get out of a problem, and they are caught between the “Devil and the Deep Blue Sea”. Many farangs have a prejudice with the Thai legal system because of the biased explanations of consultants, who are not qualified by any professional institution. Thailand is the land of tolerance and you may see many legal or tax consultants who do not have any professional licenses or qualifications in Thailand or their native countries. Thai laws are all written in Thai legal language and it is not easy even for Thai native speakers having a Thai university educational background to understand or correctly interpret these laws. So I am always skeptical.

“How Can People Who Are Illiterate In Thai, Be Expected To Understand Thai Law and Give Advice to other Farangs,” without seeking professional advice.  To be a lawyer in the USA, UK, Germany or France, you are strictly regulated by their legal Bars or Law Societies. I have an American client having “Jurist Doctor” (JD) from USA, who never states that he is an expert on Thai laws, even though he is familiar with some of the legal mechanisms.

It is a dilemma for farangs, who often choose to believe either their Thai Wives or their Farang Friends, instead of seeking expert legal advice from qualified lawyers.

The concept of a “Due Diligence Check” could be introduced into Pattaya for all juristic acts and transactions, because if you are aware and prudent, nobody can cheat you even for one dollar.

In Bangkok, if you want to buy a house, you can shop around many “Mooban Jadsan” projects (Housing Estate Development Projects), which are mushrooming in the Kingdom of Thailand. Most “Moobans” have licenses for housing estate development, which must be approved by the Housing Estate Committee. To obtain the license, the developer will have to provide the plan or location map of all plots of land with the common areas, public utilities and infrastructure, (e.g., swimming pool, club houses, street, recreational and sport areas, etc). The developers are required to arrange for a guarantee by a financial institution for the infrastructure and public utilities. The most important requirement is that the “Purchase and Sale Contracts” Must Be On a Standard Form. These standard contracts are drafted by the “Office of Consumer Protection,” which is attached to the Thai Government. Any conditions different that are in contradiction with the standard from, and cause a disadvantage to the buyer, will not be enforceable. All licenses and title documents must be publicly displayed in the relevant sales office, and all documents can be checked at the Land Office. In addition, the Mooban under the license will be checked by a committee, that is appointed to look after the Mooban, and this committee is a juristic body under Thai law.

In the beginning, the developer will be responsible to set up a committee, until more than half of the houses in the project are sold, after which the owners may jointly set up a committee to take over all rights and responsibilities of the first committee. There is no tax for transfer of public areas and infrastructure to the committee; – this tax exemption will also include the membership fees. The committee will manage the Mooban by the resolutions of all of the owners, according to the “By-laws.” of the committee. The resolutions may be by a majority vote (over 51% or more), according to the By-laws of the committee.

“Section 4” of the Housing Estate Development Act (2000), requires a project having from 10 plots of land or more to apply for a License for a Mooban Jadsan (Housing Estate Development Project). That is to say, if you buy a house in a project having less than ten plots, you may not seek the protection under the above Housing Estate Development Act. However, this does not mean that these small projects will cheat you; – it simply means that you just have less protection under the Thai law. The Pro”s  for buying a house from small projects is the lower price, but the Con”s are mostly the fact that a company who sells and receives your deposit, is not always the same person whose name is recorded on the land title deed as the owner.

Mooban Jadsan with the license is deemed a juristic person under Thai law as well as a condominium juristic person. In the beginning, the developer will be responsible for management to look after all common areas and utilities. After all houses are sold, the developer may alternatively transfer the public areas and utilities to a municipality, or transfer to the committee set up by half of owners of the houses in Mooban. The latter case is quite advisable because the owners can maintain their privacy in the community especially Pattaya whereby people cherish their environments.

The management of  Mooban can be carried on by the real owners who will look after their interests. The By-laws can be jointly drafted by the owners, which can be bilingual. All incomes from membership fees and common expenses can be controlled by efficient accounting system whereby the balance sheet or financial statements can be made by a qualified accountant and audited by a Chartered Public Accountant (CPA) at the end of the year.

What you should do is to be more prudent and conduct a “Due Diligence Check” by engaging a qualified lawyer before making any payment. The questions you should verify are : –

(a)    To whom does the land really belong.

(b)    Make sure all title documents are authenticated.

(c)    Who will pay for taxes, transfer fees and other costs.

(d)     A standard contract should be used, with a copy in your own language.

(e)    The payment should be always be made by a cashiers cheque, or other verifiable method of payment.
If you follow my advice, “to be or not to be” Defrauded, will not be a question in your mind because you will not be likely to have any problems with such important business transactions as the purchase of property in Thailand; – Ponthep Werachon

Rotary Club of Pattaya (Bilingual Club), Board Member & Secretary
(Meeting Every Monday, 18.30 hours, Town “In -Town Hotel, Pattaya Klang)