Contracts Required to Buy Land
Craig, who lives in the US, e-mailed to ask "Firstly, is
it necessary to have a land purchase contract when buying land in Thailand,
and if it is, at what point in the purchase process should it be drawn
up and signed? Secondly what is involved in a land title search? Can
I do it myself and how long would it normally take?"
At first glance the first part of this questions seems a very simple and rather obvious, with the simple answer "Yes". But as it is with many things in Thailand, the situation is never quite that straightforward.
First perhaps it is important to understand that the only legal form of land purchase contract, is a very simple pre-printed form contract that is completed on the spot by buyer and seller (or their representative acting under power of attorney) at the district (or provincial if you have a Chanott deed) land registry office concurrent to the moment of the irrevocable transfer of ownership of title to the land o the buyer (or property) and declaration of receipt of payment in full of the purchase price by the seller.
In theory that is all that is required - a willing buyer and seller
to show up at the land office, exchange payment and register transfer
of title - but in practice it is rarely that simple.
Most land purchases start of with a negotiation of price, payment terms and conditions, with such conditions being set down in what is commonly referred to as a purchase contract, but in the true local legal sense is really only an option to purchase (in as much as the deal is not irrevocable and either side has the potential to default on the agreement).
This purchase option agreement is required primarily because the purchaser rarely has liquid funds to effect the purchase immediately, or it may be that there are obligations of the vendor (such as subdividing a title or completing a building) or time requirements of the purchaser (such as create a new company or conduct due diligence) that need to be completed. As such each side of the deal needs to have a clear understanding (and usually some commitment from the other party) as to the process that is to be followed prior to both parties being able to close (officially record the transfer of ownership at the land registry office).
The purpose of the purchase option contract is to describe the intention of the parties and allow time for the effecting of that process. The possible combination of clauses that might go into a purchase option agreement are too many to discuss in any detail in this article, but principally they will describe the parties to the contract, the property to be sold, the price, the payment terms, the responsibility for payment of fees and taxes, issues regarding access or improvements to be provided by the vendor (if applicable), and most importantly (since this is only an option until registered) default clauses to prescribe procedures if either party fails to live up to the contract.
Conducting a title search in Thailand is a relatively simple process for all titled land (Nor Sor Sam or Chanot title). It's infinitely more complex for lower grade land claims (which I won't get into here). All titled land has a title document that is maintained in two duplicate copies. One copy is held by the owner of the property the other by the land registry. For any claim of ownership. or lien to be enforceable over land it has to be entered on both copies of the title deed. If it is not recorded on the deed it is not an encumbrance against the property. As such searching a deed is really as simple as reading and then comparing the owners copy of the deed with the copy held at the land office. These documents are in theory a matter of public record, but due to recent change in policy, you need either a written approval from a land owner to search his title or you need to ask a lawyer ( who requires no such approval) to do it for you. Properly qualified the process should take no more than say thirty minutes at the land office. But do bear in mind that the empowered office might well be out to lunch or away on official business when you show up, so come prepared (with your thermos flask of tea) for a longer wait.