Common Real Estate Problems in Thailand

Real estate law in Thailand is not heavily regulated and this can lead to some unscrupulous activities. For example, foreigners are not allowed to own land outright but they can purchase condominium units.

More serious cases of property fraud involve encroachment on protected reserves or development of land that is illegally classified as state-owned. Less dramatic examples of real estate fraud in Thailand usually involve purchasers or investors who fail to perform basic contractual safeguards.

1. Encroachment

Encroachment is when a structure projects over and into the property line of a neighboring landowner. This could include a home, fence, or other building. It happens for a number of reasons. The shifts or erosion of property lines over time, the buildup of vegetation, or the lack of clearly marked boundaries all can contribute to the misapprehension about whose land begins and ends.

Having a minor encroachment with a neighbor may not bother you in the short term, but it can become an issue when it comes to selling your property. Potential buyers will be concerned and may not offer as much for your property. It also makes it difficult to obtain a mortgage and can create title problems. A property survey can help avoid these issues. It will also allow you to negotiate with neighbors on a mutually beneficial solution.

2. Liens

A common Thailand real estate problem is that foreigners get caught up in contracts for leased plots of land or property. Although foreigners are not allowed to own lands on freehold in Thailand they may still purchase leasehold plots that have been sold through various contracts for long term rental or usufruct.

This can be very difficult to correct and can cause the purchaser some significant financial problems. A good title search will uncover any mortgages, liens or other encumbrances on a plot before a sale. The purchaser will need to cooperate with the seller to have the liens removed from the title and will most likely be asked for a deposit during this process (a kind of escrow account held in trust by your lawyer). A leasehold contract is similar to a condominium under usufruct and cannot be sold to others and as a tenant the purchaser doesn’t get voting rights in the joint owners meeting or matters related to management of the condominium juristic person.

3. Bad Publicity

Bad publicity is detrimental to any industry, and the real estate sector is no exception. Whether it’s property agencies piling months or even years of listings onto established portals, or foreigners being told they can “get one free condo” by buying off-plan and flipping it to a long-term renter, these sales tactics aren’t doing Thailand any favours. And when leaseholds of landed properties and villas owned by foreigners start to expire en masse, the result will be bad PR for the whole market.

4. Due Diligence

Performing due diligence is a critical step to buying property in Thailand. It involves checking the history of a property and legal encumbrances. It also includes a thorough land title search and evaluation of building construction permits. This process can help save a lot of money and trouble in the future.

For example, a buyer could discover that the previous owner did not pay property taxes or that the building was constructed without proper permits. This can lead to expensive fines or even the need for costly renovations. Similarly, a buyer could find that a developer has financial problems, leaving them with a project they can’t complete.

The best way to prevent these common problems is to do your research before buying property in Thailand. This will help you avoid paying for a property that isn’t worth the price. For instance, performing a physical inspection of the property is a great way to ensure that it matches the description on the land documents.

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