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Sale and Purchase Agreement
A sale and purchase agreement is an instrument signed by the purchaser and seller before the purchaser takes ownership of the unit under his name.
It's highly recommended to conduct due diligence before signing any agreement obligating you to purchase or sell a property. In this regard, a sale and purchase agreement should also clearly and completely identify the property being sold. The title deed and house registration, construction permit or other required documentation should be attached.
While a thorough due diligence requires inspecting the title deed on file at the Land Office, the copy attached to the sale and purchase agreement can be compared with the property itself and the official documents.
Finally, the agreement should also specify what will happen in case of late payments or transfer of title or default.
Thailand has similar property laws and regulations as western countries as the Thailand Civil Code is based on the mainland European civil law system and copied aspects from common law countries.
Foreign nationals (natural and juristic persons) may have ownership of a condo (apartment unit or flat) but cannot own land in Thailand. A foreign national who wish to purchase a condo in Thailand, should meet the following requirements:
a) The condominium should have an available;e quote of foreigners, which means that not more than a percentage of 49% of the total unit floor area in a condominium can be foreign owned, the remaining 51% must be owned by Thai natural or juristic persons (i.e. in case of 100 equal apartment units in a condominium building only 49 can be foreign-owned), and;
b) the foreign national should bring into Thailand foreign currency at least equal to the total purchase price of the condo and having exchanged this amount into Thai baht inside Thailand.
Finally, in order to register at the land the department the ownership transfer of a property its required the payment of the following taxes: transferring fee, withholding tax and the stamp duty or Specific Business Tax (SBT). Which they must all be paid by either the buyer or seller when a property is purchased. Although every Sale and Purchase agreement differs, the buyer is usually responsible for the transfer fee, while the seller pays the stamp duty or specific business tax and the withholding tax.
Transferring Fee: 2% of the registered value of the property; this is paid at the Land Office on the day of the transfer of ownership
Stamp duty: .5% of the appraised value of the property or the purchasing price, whichever is the higher
Specific Business Tax (SBT): 3.3% of the appraised or actual price of the property, whichever is higher; This is only Imposed if the property is transferred less than five years after its purchase (If the SBT is levied, stamp duty will not have to be paid.)
Usufruct contract refers to the agreement and the right to use or occupy another's real property for a term up to 30 years but in any case not exceeding the life of the person granted the right of usufruct. A right of usufruct in Thailand gives the right to use and manage a real estate property during a person’s natural life. The right in the real estate property exists so long as the usufructuary (the holder of the usufruct right) is alive. After his or her death the real estate property reverts back to the owner. Often a usufruct is given to a family member such as a foreign spouse with the idea that the foreign spouse is protected in the event of death of the Thai spouse (owner).
A usufructuary is not allowed to sell the property (this right remains with the registered owner of the property) and under sections 1417 to 1428 of the Civil and Commercial Code the usufructuary has the obligation to maintain the property and take normal care of the property. If the usufructuary fails to do so and the property would lose value or becomes in a poor state of repair the owner has the right to terminate the right of usufruct.
The usufructuary is liable for loss of value or destruction of the property unless he can proof that damages are not caused by his fault. The creation of a usufruct could in certain circumstances be an effective option to protect a foreign spouse during his marriage in Thailand and upon death of his or her Thai spouse, however in some case a usufruct is not the best option.