Sample condo contract payment terms
FOR A RESALE OR OFF-PLAN CONDO IN THAILAND
In case of the sale of an existing condo unit/ apartment in Thailand (as opposed to off-plan) the purchase price for the unit could be paid by cashier's check to the seller at the time of transfer of ownership of the condominium at the land office (standard practice). The buyer pays when his name is registered as the new owner of the unit. In this case the foreign buyer of the condo must obtain a cashier's check AND the foreign exchange documents (FET form) from his bank in Thailand. The foreign exchange transaction form is required for registration of foreign ownership under Thai condominium laws.
The conditions under which a seller will complete a sale of a condominium usually stipulates that a deposit as part of the total purchase price is paid directly to the seller at the time of signing the sale and purchase agreement for the unit. As deposit payments are usually unsecured payments it is recommended to keep this to a relatively small amount, say in the current market up to 1% of the total purchase price. The seller could ask a higher deposit (up to 5%) when the period between the signing of the sale and purchase agreement and transfer of ownership is more than 3 weeks. The buyer could demand a smaller deposit when there is a shorter period between the signing of the contract and transfer of ownership of the unit.
Sample clause in the sale and purchase agreement:
DOWNLOADABLE CONTRACT: TERMS OF PAYMENT (for a condo apartment unit)
- On the execution of this agreement, the buyer agrees to pay a holding deposit of __ numbers _____ (__writing___) Thai baht (the ‘deposit’) to the seller to secure the purchase of the condominium unit.
- The remaining balance of the purchase price in the sum of __numbers_____ (__writing___ ) Thai baht will be paid by the buyer to the seller by a cashier cheque on the settlement day at the Land Department at the time of registration of the transfer of ownership.
In some cases the purchase price is paid into the condo seller's bank account prior to transfer of ownership procedure (not recommended). In this case the seller is responsible for obtaining the foreign exchange documents for the buyer. The clause in the sale contract would be something like:
Sample condo payment terms (II)
(with payment instructions for transferring money into Thailand for the purchase of the condo unit)
The buyer shall pay the purchase price to the seller by 2 installment payments as follows:
- Upon the execution date hereof, the buyer shall pay a deposit as part of the purchase price in the sum of baht___.- (__ thousand baht) to the seller.
- The balance of the purchase price of baht__.- (__ million __ hundred __ thousand baht) shall be paid by the buyer to the seller within 30 (thirty) days following the execution date of this agreement.
- The buyer shall make payments to the seller by remitting funds from abroad into the seller’s designated bank account in Thailand, with details as follows:
- Account Name:
- Account No.:
- Swift Code:
- Message : “Purchase of Condominium Unit No. ____ in _____ Condominium by ________purchasers name____".
- The name of the remitter must be the same as the buyer as indicated herein. The buyer shall fill in full name and address of the remitter and the beneficiary. The purchase price shall be transferred as foreign currency. The buyer shall not to convert the purchase price into Thai baht before making funds transfer. The conversion into Thai Baht will be done only by the beneficiary bank in Thailand.
- The buyer shall be liable for any remittance fee associated with the transfer of funds. The seller or its representative shall issue a receipt for each and every payment made under this agreement by the buyer.
- In the event payment of the purchase price has been made by the inward remittance of foreign currency into the seller’s designated bank account as above-mentioned, then it is agreed that the seller shall be responsible for obtaining evidence representing such inward remittance issued by the bank and provide the same to the buyer immediately upon request. The parties agree that as long as no payment of the purchase price has been made in full as required herein, the ownership and various rights over the condo unit shall continue belong to the seller, regardless as to whether or not the buyer has access to and resides in the purchased condo unit.
Purchase terms for an off-plan condo unit
Foreigners buying an off-plan condo under the condominium law in Thailand will usually have to comply with a purchase payment schedule during the construction of the project. A common payment schedule in a condo project is a first deposit of 10 to 20% of the total purchase price on the execution date of the sale agreement (less the reservation fee, if any) and periodical monthly installments during the construction with a final installment of maybe half or less of the total purchase price upon completion and registration of ownership of the unit. The payment schedule for an off the plan apartment unit could be:
CONTRACT PAYMENT SCHEDULE
The buyer shall pay the purchase price of the unit as follows:
- On the execution date of the reservation agreement, the buyer paid a deposit to the seller in the amount of ___ baht. Such amount is deemed as part of the purchase price.
- On the signing date of this agreement, the buyer agrees to pay the seller the amount of ___ baht. Such amount shall, after including the deposit under clause 1, equal to twenty percent (20%) of the purchase price.
- During the construction of the condominium, the buyer shall pay the seller another thirty percent (30%) of the purchase price, or ___ baht, in 12 equal monthly installments, each of which shall amount to ___ baht and shall be made on the ___ day of each month. The first installment payment shall be made on ___________.
- For the remaining amount (50% of the purchase price) of ___ baht, the buyer shall pay such sum to the seller on the date of the registration of ownership transfer of the condominium unit.
Payments under this payment schedule are made directly into the developer's bank-account. Any buyer who pays deposits and installments directly to the developer in Thailand puts himself in a weak legal position and takes the risk of loosing his payments. Should the developer default, become insolvent, bankrupt or simply runs with the deposits payments you lose your money. When you pay upfront as the buyer of an off/plan condo you take all the risks and in fact are financing the condominium project. It is recommended to arrange that payments are made under an escrow arrangement, under the Thailand Escrow Business Act 2008. Only in this case upfront payments made by the buyer are secure.