company. If there is an advertisement offering
the sale of land to a foreign national, make
sure that the ownership structure is clear. This
means that investors should be wary of any
sale that purports to sell a freehold interest
in land to a foreign national or entity. Every
investor should be keenly aware of their
ownership rights in Thailand to avoid wasting
time and money.
Once a potential investor finds that perfect
investment, the next step is to determine
whether proceeding with the opportunity is
everything it seems to be. In order to determine the relative safety of a real estate investment in Thailand, the investor should conduct
comprehensive due diligence checks on the
property and the seller. Such checks should
include a search of the title history of the land
to determine whether the seller has legal
authority to sell it, whether the land has been
issued a legal title, and whether the land is free
of mortgages, liens and other encumbrances.
The last thing an investor wants to discover
after purchasing real estate is that the title
wasn’t issued legally, or the neighbour has a
right to build a road where the buyers were
planning to place their new villa. Furthermore,
investors should know whom they are dealing
with, by conducting a litigation check on the
seller and, if a Thai company, its directors, to
ensure there are no cases in which the land
could be used to satisfy a judgement.
Another key component in determining the
suitability of a particular real estate investment is whether the property has a legal right
of access. Even when the land title is issued
legally, investors should be aware of how that
property can be accessed. Investors should
understand whether the land is adjacent to a
public road, is granted a legal right of access
over another parcel of land through a registered easement with the local land office, or
whether such right of access is merely contractual, or by unwritten mutual understanding.
The most secure right of access over a parcel of
land is through a registered easement or direct
access to the public road. A contractual agreement or handshake agreement between two
or more landowners will not provide sufficient
security and could cause an investor years of
costly litigation.
After determining that the purchase of a
particular parcel of land is a safe option,
investors should consider whether a building
already constructed, or a proposed building
on the property, complies with local zoning
and national environmental regulations. Even
when the land title is issued legally, investors
should be aware of these restrictions and
make sure that the land can be used for the
envisaged purpose. There are many parcels
of land with perfect beach access or mountainside vistas that will not allow construction
of that dream villa or resort, due to zoning
or environmental regulations. Every investor
should carefully consider what the real estate
investment will be used for and monitor to
make sure that any existing or proposed
construction is in compliance with Thai law
and building permit requirements.
Before diving head-first into the Thai real
estate market, investors should carefully
consider current events, the real estate market,
and the relative safety of a particular investment. It is strongly advised that every investor
consult with qualified legal counsel before
proceeding with a purchase. Do not be fooled
by what other investors have done, or go
with a deal that sounds too good to be true.
It probably is. Be knowledgeable about the
investment and have a clear understanding of
the risks and challenges associated with real
estate in Thailand.
Paul Volodarsky is a senior associate with
Limcharoen, a regional law firm specializing
in property, hospitality, and corporate/
commercial matters in Southeast Asia. Paul is
based in Bangkok.
www.Limcharoen.com
www.theaddressmagazine.com
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