Purchasing a property on the secondary market from a private seller can be summarized into 6 simple steps.
Step 1 - Agreement of terms and conditions
Ensure all parties understand and agree the major terms and conditions of the transaction such as:
- The purchase price
- Reservation deposit value that will remove the property from the open market
- Will the buyer conduct a due diligence?
- If so, will the reservation deposit be refundable? Subject to which terms and conditions?
- What is included in the purchase price? Any furniture or fittings?
- Taxes and transfer fees - what is the buyer responsible for and what is the seller responsible for?
- What will be the completion date for transfer of ownership?
Step 2 - Reservation Agreement
This document outlines the general purchase terms, conditions and timeline associated with the pending purchase.
Step 3 - Reservation Deposit
A deposit of approximately 5-10% of the purchase price (varies from market to market) will secure the property of interest removing it from the open market. It is common practice for this deposit to be held either by the broker, lawyer or seller.
Step 4 - Sales and Purchase Agreement
Typically you will have 30 days to review the terms and conditions of the Sales and Purchase Agreement which contractually outlines the conditions of sale. During this period, buyers have the option to appoint an attorney in order to conduct a legal due diligence on the contract, holding company and or land title deed.
Step 5 - Settlement & Transfer
Parties to the transaction (or their representatives - agent/lawyer) will set a transfer date at the government land department. The buyer will prepare funds for the balance of the purchase (minus deposit) and the seller will present the original ownership documents to facilitate the transfer. It is common for the buyer, seller or even both parties to appoint a representative through a Power of Attorney to execute the transfer on their behalf.
The mechanism of transfer at the Land Department (handover over ownership and payment) can either be through telegraphic transfer (typically to a legal representatives account) at which point a cashiers cheque will be drafted and presented by the buyer or their representative once the property has been officially transferred.
Step 6 - Handover
With the ownership now transferred, keys and ownership documents will be provided to the buyer. The new owners name and details will be registered with the PEA (Provincial Electricity Authority) and the building or projects Juristic Department (if applicable) for the next billing cycle of CAM fees/electricity.
Now that we've got the basics covered, time to narrow down the best market in Thailand for you!