Sale and Purchase Agreement

Sale and Purchase Agreement for Real Estate in Thailand: What Buyers and Sellers Should Know

Buying or selling real estate in Thailand-whether a house, land, or condominium requires a Sale and Purchase Agreement (SPA). This legal document is essential for protecting the rights of both the buyer and the seller before the official transfer of ownership at the Land Office.

Key Elements of a Sale and Purchase Agreement

Key Elements of a Sale and Purchase Agreement

1. Parties and Property Information

o Names and addresses of both the buyer and seller

o Detailed information about the property: land title deed number, size, location, and other relevant data

2. Purchase Price and Payment Terms

o The agreed purchase price

o Payment structure: deposit amount, payment installments (if any), and deadline for full payment

3. Taxes and Transfer Fees

o Specifies which party will be responsible for fees such as:

• Transfer fee
• Specific business tax
• Withholding tax

4. Warranties and Representations

o The seller guarantees that they legally own the property and it is free from encumbrance or legal disputes

o The buyer may accept the property as is or specify conditions for acceptance

5. Breach of Contract

o Clearly outline the consequences if either party fails to comply with the contract

• For example, forfeiture of deposit, refund of money paid, or claims for damages

6. Additional Clauses

o Agreed date of ownership transfer

o Penalty terms

o Language clause (specifying which language version is legally binding, if bilingual)

Key Applicable Laws

Key Applicable Laws

• Civil and Commercial Code (CCC)
• Section 456: Sale of immovable property must be in writing and registered with a competent official.
• From Section 1299 onwards: Transfer of ownership in immovable property.
• Land Code, B.E. 2497 (1954)
• Governs land transfers, registration of rights and juristic acts.
• Foreign Business Act, B.E. 2542 (1999)
• Sets restrictions on land ownership by foreigners and foreign companies.
• Taxation Laws
• Specific Business Tax
• Stamp Duty
• Withholding Income Tax (for individuals or juristic persons)

Land Purchase and Sale Process

Land Purchase and Sale Process

1. Preliminary Agreement (Optional)

o May include conditions and a deposit.

2. Due Diligence on Land Documents

o Title Deed (Nor Sor 4 Jor)

o Easements, mortgages, court orders, etc.

3. Signing the Sale Contract and Registration at the Land Office

o Both parties must be present, or one may act through a power of attorney.

4. Payment of Taxes and Fees

o Transfer fee: 2%

o Specific business tax or withholding tax, depending on the sellers status

Cautions for Foreign Buyers

Cautions for Foreign Buyers

• Verify the property legal status: Ensure there are no lines, mortgages, or restrictions attached to the property.
• Have the contract drafted or reviewed by a qualified lawyer: Especially important for foreign investors unfamiliar with Thai law.
• Specify the binding language in bilingual contracts to avoid interpretation issues.
• Make payments via bank transfer with proper documentation for legal and tax purposes.
• Understand ownership rights: Foreigners can legally own condominiums (up to 49% of the total floor area in a project) but cannot own land outright under Thai law.