Conducting Property Due Diligence
Any time a person acquires a property, it must be kept in mind that you may have to deal with certain legal risks. It does not matter whether you acquire the property through a merger or acquisition or through simple land purchase, legal issues can arise in any case. There are some common legal issues that many people have to face when acquiring immovable property in Thailand. Therefore, it is incredibly important to conduct due diligence before purchasing a property to make sure that the person selling you the property is the legal owner of the property and has the right to sell you the property. In addition to this, you should also make sure that there are no legal encumbrances attached to the said property. Normally, purchasers hire attorneys or property practitioners who conduct a legal background search of the property by reviewing the copies of the documents attached to the property and also conduct a land title search in Thailand. So, if you are planning to purchase a property in Thailand, then make sure to prepare a due diligence report in order to avoid any liabilities or losses in the future.
What is meant by Due Diligence for a Property?
Due diligence for a property can be defined as the research and analysis carried out of a company or a person in order to prepare a business investment. It amounts to the extra precaution that any reasonably prudent person would take before entering into an agreement with another party. Therefore, acting with due diligence when entering into a transaction with another material can save you from risks and liabilities. When acting with due diligence, you need to make sure that all the particulars of the agreement or transaction are not in contravention with Thai law, and that all the facts mentioned in the agreement are not false.
Importance of Due Diligence for Property Purchase
When it comes to purchasing a property in Thailand, it is extremely crucial to make sure that you are acting with due diligence in order to avoid having to face any harmful consequences. Since investing in property involves a huge amount of money, you cannot risk it all by not acting with due diligence when entering into a transaction with another party. It is important to note that there are many fraudulent dealers nowadays that manage to illegally take money from investors who don’t review their contracts with due diligence. Reviewing a contract when purchasing a property and considering due diligence can save you from mental, legal, and financial distress.
Things To Consider when conducting a Thai Property Review with Due Diligence
There are a variety of things that one must consider when carrying out a due diligence review of an agreement with another person regarding the selling or buying of a property in Thailand.
- It must be noted that the construction of the building is in compliance with building control regulations and environmental regulations. To do this, you should check whether buildings constructed on the land have received construction permits.
- You should also check whether there are any litigation cases in process against the owner of the land that has any link with the property that you are willing to purchase. In case there is any debt on the owner and he has his land mortgaged, then it is better to avoid purchasing the land.
- Under Thai law, a land can be leased for more than three years if it is in writing and registered. When purchasing a land make sure that the land is not leased to another person or that no tenancy rights are attached with it. Doing this is necessary because a lease is not extinguishable on the transfer of property from one person to another.
- It is important to check whether the person selling you the property has the legal right to do so. You need to be sure that the seller holds the property under true ownership, and is not doing fraud with you. Therefore, the land descriptions in the title deed must be the same as stated in the records held by the Land Office.
- Make sure to include a map in your due diligence report. This map will show the land and its surrounding area.
- You should also verify the history of land ownership in the said property. Make sure that the ownership was transferred to the owner legally.
- Make sure that the property you are planning to purchase has access to the public road, otherwise it can be really troublesome for you. In case the access is through someone else’s land, then the right to access must be registered to avoid any issues in the future.
- It is incredibly important to know about the official assessed price of the property that you are willing to purchase from the seller. A lot of times what happens is that the seller tells a higher price of the property to the buyer than the property is actually worth for, and without conducting any research, the buyer ends up paying the money to the seller. In such situations it is crucial to act with due diligence to prevent the seller from doing fraud with you. You can contact the relevant government authority to confirm the official accessed price of the property since it must be registered in the land office.
- You also need to make sure to have a clear understanding of the rights and duties of all the properties that are involved.
- In addition to all the things mentioned above, it is also important to survey the site and add information regarding it in your due diligence report. Observe the land location to make sure that it is the same land that you agreed to purchase, and that the seller is not doing fraud with you. The land location must match with the one mentioned in the land documents.
Hire a Thailand Property Lawyer
Siam Legal International is a premier law firm in Thailand that offers various services that are designed to protect the rights and interests of foreigners wishing to acquire or buy property in Thailand. Our firm offers a wide array of property-related services to best suit our foreign and Thai clients’ property needs. Should you have any property questions or issues that need to be addressed, our team of Thailand property lawyers invite you to contact us through the link below:
