The Need for Due Diligence on Thai Property PurchaseJan 20, 2014
Unscrupulous individuals hound would be property acquirers, be it in Thailand or in another country, depriving them of their rights for a fair deal on property acquisition. Nonetheless, interacting with these unethical individuals as well as the possibility of getting an unfair property deal can be avoided if property investors would do the proper safety checks when acquiring properties and one of these is Due Diligence.
The interested party must know, in detail, the background of the property, its attached documents and the seller or developer prior to any contract negotiation and this is best done by conducting due diligence.
The process of due diligence involves a multidimensional approach in investigating the property because apart from conducting a Title Search, it also involves a thorough physical inspection, documentary and seller or developer research.
- Physical Inspection
The accessibility of the property must be established first if it is connected to a public road or not, to determine if the route in reaching the plot is ensured. Also, the boundaries of the property must be cleared in relation to the boundaries of the surrounding properties by conducting a visual inspection and relating the results with the figures on the title deed.Conducting physical inspection would also uncover the names of the owners of the properties adjacent to the property in question and how these properties would relate to the zoning ordinance of the locality where they are located as there can be a possibility that development is not permitted in the area per zoning ordinance.
- Documentary Inspection
Aside from the type of title deed the property has, if it is a development, the developer needs to obtain particular documents such as the construction permit and the Initial Environmental Examination (IEE) among others.The IEE must coincide with the construction plans of the developer as changes can occur after being issued by the Office of Natural Resources and Environment. The application for the same document must be properly filed.Also, per Thai law, there is a minimum number of parking spaces in every new condo development and any discrepancy between the law and the records that pertains to the number of parking spaces would be uncovered through due diligence.
- Seller or Developer Research
The background of the seller or developer must be established too to verify if the said entity is not involved to any court litigation filed against it by disgruntled buyers.If the property is sold off plan, the financial capacity of the developer to finish the project on time and in accordance to the advertised terms must also be uncovered so that the chance of a property not being turned-over to the buyer or the property remains to be unfinished on the stipulated time can be avoided.
In conclusion, when parties decide to invest on properties and get in contact with property sellers or developers, risks in varying degrees would surface. Yet, these risks can be addressed appropriately if these interested individuals would conduct due diligence through reputable property lawyers in the Kingdom. Through due diligence, minor issues can be corrected and the major ones can be ultimately avoided thereby ensuring a pitfall free purchase.
- Physical Inspection