The property due diligence in Thailand

The investment in undeveloped land or a villa in Thailand is obviously a risky business. A foreign buyer or long-term tenant is neither protected against the typical problems by the laws of Thailand nor by contractual arrangements. Therefore, it is for him essential to exactly know what he gets for his money before the deal is closed and the money is handed over.

In a first step, the documents involved in the transaction have to be carefully reviewed. This includes the formal correctness and completeness of the land documents (land title, Chanote and others), existing lease agreements, superficies and usufructs, mortgages, building permits, if any, and much more.

In a second step, it has to be examined whether the documents are correct. The formal correctness is no evidence for the content-related correctness. Thailand’s land documents can be doctored, can base of illegal acts including corruption, or on errors. In all these cases the foreign buyer can’t acquire and keep the property through his foreign investment scheme. Sooner or later he will lose his whole investment amount.

In a third step, the laws have to be examined. Frequently Thailand’s legislation and regulations do not allow to erect a building on the land, or at least they restrict size and scope. Even if building permits have been granted, such government acts can be revoked at any time.

The fourth step is the site visit combined with a visit at local government authorities to learn more about the land, its history, and potential future.

The property due diligence report gives the investor a clear picture which legal aspects of his property investment have been clarified and green-lighted, in which areas certain risks exist and whether there are red lights which result in a failure of the due diligence.

Would you like to know more? Contact the Bangkok investment law firm for a consultation.