The need for due diligence
Before investing heavily in Thai real estate, it is always prudent to do due diligence. This is due to the fact that you acquire not only real estate, but also the obligations that are associated with it.
Some buyers prefer to use the services of a seller's lawyer, but if the developer is reliable, then there is not much risk. However, no matter who or what you are buying from, we recommend that you use an independent lawyer from a reputable organization.
Let's now discuss what points to check in due diligence—quite often, people are limited to simply checking that a title deed issued by the land department confirms ownership in favor of the seller without any liens. However, this is only a basic check and not a thorough due diligence process.
How Due Diligence actually works:
- Conduct a comprehensive assessment of the title document. It is necessary to determine the legality of the document, as well as to study its history. Having a title deed does not necessarily mean that it was legally issued. An invalid document may be issued with violations.
- Make sure that the ownership is not encumbered with any restrictions or encumbrances (mortgages, loans, pledges, etc.).
- Make sure that the seller (for example, the developer) legally owns the property and that third parties are not named in the title documents.
- Check the legal right of access to the property and make sure it can be found within the specified location and size, with all access points identified.
- Check for illegal or "dirty" land that may have fallen into private hands as a result of fraudulent schemes or scams (for example, forest land). Although this rarely happens, it should not be overlooked when conducting an inspection.
- Be sure to check the rules and laws pertaining to the use of land for construction if you plan to build a villa (if already built, make sure you have a valid building permit). If it turns out that this permit was issued in error, it will be canceled and such structures are subject to demolition.
- When buying condominiums—check that you have an environmental impact assessment (eia) permit and that you have the appropriate licenses, such as a condominium license or a hotel license.
This is just the tip of the iceberg when it comes to real estate transactions. Depending on the type of property and the type of transaction, there are other complexities that an experienced lawyer can explain to you. Consult with him for more details.
