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Issues for the Buyer - Buying a property in a high class development
Legal Matters: March - May 2007“What are the potential benefits for a buyer investing into a high class development?”
Most good developments will already have in place a pre-determined legal structure to assist with a purchase. Preparation of a marketable and accessible structure is a key part of the marketing and selling process and premium property buyers should get the benefit of a well prepared developer.
(Desmond Hughes, Partner)
“What documents should a diligent buyer and their lawyers' review?”
There are a variety of ownership structures available depending on its
style and legal status. A sale contract in a development should be
balanced and fair. Sensible developers will know that buyers do not
want to waste time and money trying to remove unreasonable provisions.
Developers will also want to secure the sale so should present a
reasonable contract. Additionally, developers should have in place
rules for the management of the estate; condominium or complex.
Management fees should be disclosed as part of the sales package, which
will demonstrate to a buyer that the developer is prepared and
organised. Any share structures in place relating to ownership and
management should also be disclosed at the outset. Finally, it may be
necessary to conduct a check of the history of the Seller's financial
and legal status.
(Kris Limcharoen, Partner)
“How much negotiation should there be in relation to the legal documents?”
Provided the documents are clear, uncomplicated and balanced, a buyer
shouldn't expect to spend a lot of time or money on the contracts.
Alterations to the property and price should already be dealt with and
mechanisms must be in the contract. Buyers who buy from less
experienced developers who have not pre-prepared documents from a
compliance perspective may get a better deal on price but may
experience a more lengthy deal settling the documents. Estate rules are
important for buyers because they protect the whole estate and
investment. These should actually be as strict as is possible under
Thai law with the level of protection high. Any worthy buyer will be
grateful for a well-protected estate and developers will want the
estate to be well run while they still have an interest.
(Desmond Hughes, Partner)
“Properties are often only built in accordance with staged payments and may not be pre-sale subdivided or registered - when should my lawyers conduct a title search?”
At the outset, there should be a full due diligence conducted in
respect of the title and surrounding area. Legal fees will be low
compared with the cost of the purchase so a search at the beginning and
later on prior to completion is not over-expensive and will comfort a
buyer. It is essential that even if the best title "Chanote" is
provided, that a full title search tracing the title back to its
origins is conducted even if that spans several decades or more. This
has become a hot issue in view of some recent high-profile land
scandals in Thailand.
(Kris Limcharoen, Partner)
“Howlong will it take to agree the contractual documents?”
If a developer is well prepared by their lawyers and the buyer is ready
to place a deposit the contractual documents can be agreed quickly if
necessary. A buyer's lawyer must protect their client but also ensure
that a purchase adopts a "want to do business" style given the fact
than a purchaser has already indicated a desire to buy.
(Desmond Hughes, Partner)
This article is one in a series of articles for Exclusive Homes and was co-written by Desmond Hughes (Partner) and Kris Limcharoen (Partner) based in the Phuket, and Bangkok offices of Belmont Limcharoen respectively and now with an office in Koh Samui.
Information supplied by:
Limcharoen Hughes Glanville (Phuket)
T: +66 (0) 7634 2882-4 F: +66 (0) 7634 2885
E: Phuket@Limcharoen.com
Limcharoen Hughes Glanville (Bangkok)
Tel: +66 (0) 2635 5071-3 Fax: +66 (0) 2635 5074
E: Bangkok@Limcharoen.com
Limcharoen Hughes Glanville (Samui) Co., Ltd
T: +66 (0) 7724 6185 - 7 F: +66 (0) 7724 6188
E: Samui@Limcharoen.com
Limcharoen Hughes Glanville (Ho Chi Minh City)
T: +84 938 8469021 E: HoChiMinhCity@Limcharoen.com
www.limcharoen.com
