How to buy a Condominium in Chiang Mai / Thailand
Buying a Condominium in Chiang Mai
Buying a condominium in Thailand makes you a co-owner of the condominium building so make sure that the building you choose is properly managed. However, the process is comparatively straight forward but be aware!
Thai Law (see Condominium Act) states that foreigners are only allowed to buy up to a 49% stake in any condo building, if the condo you like has already reached its quota , there are still ways to become an owner, but we strongly recommended that you obtain legal advice before proceeding with any alternative options. Should you wish to retain a lawyer, we can highly recommend an excellent English speaking lawyer based here in Chiang Mai.
A condominium title is a legal title to part of the building or buildings with multiple owners, and a fractional interest in the land which will always have a Chanote title attached, and other common areas such as a swimming pool and stairwell or lobby. The title will state the floor area of your personal apartment, the ground area of the common area and the percentage interest which that apartment has in the common property. This percentage also represents the value of voting interest within the Condominium Act.
Before submitting your offer to purchase a condominium in Chiang Mai, consider the following:-
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How old is the building? If too old, it may be poorly maintained, however the building may be undergoing regeneration. 8-10 years the management may have a proven track record, new – if reputable builder, everything should be set up properly.
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Ensure that you check how much the monthly maintenance fee and sinking fund are. These should be in all contracts for new condominium units although some units in the secondary market may omit this in their documents. Ask the seller or the condominium management to provide you with this information..
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Ensure that the condo management has set up an annual insurance premium.
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Read section Rules and Regulations or By-Laws of the Condominium for any restriction.
Rules and Regulations or By-Laws of the Chiang Mai Condominium
You should obtain a copy of the Rules & Regulations of the Condominium before you decide to buy. According to the Act it should at least include:-
- Name of the condominium’s juristic person;
- Objectives;
- Location of the office;
- The amount of sinking fund an owner must pay;
- Other common properties;
- How the common and individual properties would be used;
- The ratio of each unit in terms of space;
- The procedures for the general meeting;
- The ratio of the maintenance fees;
- Procedure for managers and their appointments.
There
are other points that should be considered when buying so as to reflect
expectations and lifestyle. Some rules may be so restrictive that you
would not have bought the unit had you read the Rules & Regulations
beforehand. Like most legal documents it can be long and convoluted but
you should take the time to read it.
As a general rule, things to look out for may include the following:
- Restrictions on pets;
- Restrictions on age of children who can use the pool or other facilities;
- Restrictions on parking any vehicles or boats;
- Restrictions on types of floor-covering materials, drapes or window hangings, screenings or closing in open balconies;
- Limitations on use of recreational facilities in the common areas;
- Sound or noise restrictions.
Decision made!
Below
is a table of the different property taxes to be paid to the Land
Department in relation to the purchase and sale of a property. Some
fees are either handled solely by the seller or the buyer or shared by
both. It depends on the actual Sales Purchase Agreement.
| Transfer Fee Stamp Duty Withholding Tax Business Tax |
Either Buyer or Seller depending on the provision in the Sales & Purchase Agreement. Either Buyer or Seller Seller Seller |
2% of the registered value of the property 0.5% of the appraised value or actual value of the property - which ever is the higher. 1% of the appraised value of the property. 3.3% of the appraised value of the property. |
You
or your solicitor may contact the Land Office to ask about the
registered value of the property as quite often this is different to its
market value. The registered value is most of the time under declared
so this an important consideration in the calculation of fees.
A lawyer can assist with negotiating with the seller for certain taxes to be paid so saving yourself paying unnecessary taxes.
Prior to going to the lawyer’s office try and ascertain how much is the deposit and who holds deposit monies. When will the balance of the purchase price have to be paid? If you are bringing money into the country to fund your purchase, you will need to go to the bank to obtain a Foreign Exchange Transaction form(FET) as proof of the remittance. This form will be issued by the receiving bank and is filed at the Land Department when a foreign purchaser registers their purchase. The amount of money fixed in the FET form must cover the whole of the condominium price. Should the remittance be less than $20000 USD, the bank will issue a "credit advice" in English which is not acceptable by the Land Office as proof of remittance for the condominium purchase. In this case, the purchaser has to ask the bank to issue a "letter of guarantee" as evidence of remittance.
Then you will be required to make:
- An appointment with the seller to meet you at your lawyer's office. Purchase terms & conditions can then be agreed to ensure you know exactly what will go into the ‘Sales & Purchase Agreement’. Have your passport and bank account details to hand as copies need to be made and you will also have to give the lawyer your Mother's and Father's names.
- The seller should provide the lawyer a copy of the land title deed so that the lawyer can conduct a Due Diligence check.
- The lawyer will send someone to the land office to check who the true owner is, and that there are no outstanding debts, liens, or encumbrances on the deed.
- The lawyer will inform you if all is well. You then meet once again at the lawyer's office to sign the S&P agreement and hand over the deposit.
You will be required to bring a bank (cashier's) cheque for the deposit, and hand this over in exchange for a receipt stating the terms & conditions of the deposit. These will usually be:
- Deposit will be forfeit if the buyer pulls out of the deal for any reason, except for #2 & #3.
- The deposit will be refunded in full if the Due Diligence report does not come back positive.
- Should the owner pull out of the deal for any reason, the buyer will receive the deposit back in full, plus a penalty to be determined and agreed on beforehand.
The deposit will be held by the lawyer or agent until the Due Diligence check is completed. If the report is positive, the lawyer will hand over the deposit, less any fees agreed in advance. The deposit is considered part of the full price and the lawyer will ensure that it is credited against the full price for you.
The lawyer will prepare a sales document which usually takes from 3 to 5 days. If you need to bring in further monies to your bank account from overseas then action this immediately. When everything is ready the lawyer will send a lawyer/agent to accompany you to your bank to get a cashier's cheque and a F.E.T. form certifying that the money is to be use to purchase a condo.
On your return to the lawyer's office all final papers are signed Then you, the seller, and the lawyer/agent go to the land office to complete the land title deed transfer. This can be done within a few hours at the land office, although it can take up to a week or more to complete. depending on the circumstances. You should be advised in advance if any delays are anticipated. When the transfer procedure is complete, you hand over the final payment and receive the title deed in exchange.
Don’t sign anything until you understand everything , You don’t want any nasty shocks later on.