The unfamiliar term Due Diligence literally translates as “proper diligence.” In legal practice, it means a set of actions aimed at obtaining comprehensive information about the asset in which you plan to invest money.
Do you need Due Diligence services when buying an apartment or a house in Thailand. To answer this question, it is necessary to understand what these services include, whether you can do without them, and how their cost compares to your risks.
What does a lawyer check when purchasing a completed apartment or a land plot.
A Due Diligence package usually includes.
- Verification of the title deed.
Who is the owner.
Whether the property is free for sale, including absence of mortgages, leases, or other encumbrances.
Whether the area matches the declared size.
Cadastral value and taxes payable upon registration.
- Review of the sale and purchase agreement.
Whether the data matches the title deed.
What the actual and cadastral value of the property is.
How costs are allocated between the parties.
Whether there is mutual liability for breach of terms.
How well the buyer’s rights are protected.
- In case of land purchase.
Verification of plot boundaries, including markers and boundary posts.
Presence of legal or illegal structures.
Use of the land by third parties.
Availability of public access roads.
- If construction is planned.
Whether it is possible to obtain a construction permit.
What restrictions apply regarding building height and type.
The cost of Due Diligence depends on the type of property and the transaction amount. It can be evaluated by comparing the level of risk with the level of protection it provides. Considering that all documentation is in Thai and real estate agents do not have legal education, involving a lawyer significantly reduces risks.
What about buying property at the construction stage.
If you enter into a contract with a developer and the apartment has not yet been built, different risks arise. In this case, Due Diligence includes.
- Verification of land rights.
Whether the land belongs to the developer.
Whether the land is free from encumbrances or mortgages.
- Verification of permits.
Availability of EIA environmental approval.
Availability of a construction permit.
- Verification of developer information.
Corporate documents, including shareholders, directors, capital, and registration date.
Financial statements for previous years, including shareholder investments and land value.
History of previous projects, including construction timelines, quality, commissioning issues, and changes in shareholders.
- Review of the sale and purchase agreement.
Whether it complies with the standard contract approved by the Ministry of Interior of Thailand.
Whether it is prepared in Thai and English or Russian.
Whether it includes copies of developer documents, the director’s passport, land title documents, and marketing materials, which are also considered part of the contract.
Why is this important.
The primary market is often attractive in price but carries additional risks. Refusing professional verification and relying on statements from agents and developer managers may result in financial losses. The amount of legal work before signing a contract is significant, but it ensures the legality of the transaction and protection of your interests.
Our recommendation.
Risks can be minimized through Due Diligence.
Author: Alexandra Agapitova.
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