“Why when I pay my money can’t I have my title document?” is a question that arises quite often from buyers unfamiliar with off-plan purchases or the Thailand property market.

Sometimes this question may also be asked by those who are experienced in real estate but recognise when something can be practically completed and when it cannot. This edition, I set out a few examples of many situations where a developer or seller may delay title transfer to a buyer.

When a developer builds a condominium, it must comply with the Condominium Act and apply for registration as a condominium. That status is granted by the authorities subject to statutory time limits.

Arguably, a developer should know how many days from completion, if an application for registration is also complete, by which condominium title will be available for transfer.

However, the authorities have been known to not turn around applications within time or there may be variations of opinion on what constitutes a complete application from government office to government office.

Therefore, in an off-the plan condominium sales contract, a buyer will get the benefit of secure title – once it is granted, and that may be some time after completion.

There are developers who still apportion the final payment in staged payments fairly so that the buyer retains some money until title is transferred. Leases can be straightforward in terms of title transfer if the property is not encumbered.

When construction is complete, all the ‘rent’ has been paid by the buyer – with a remaining balance, the lessees name can be inscribed on the title document. However, what if there are numerous units and potentially a large number of leases to register?

For purposes of efficiency and to reduce legal and administration costs, a developer may delay registration of leases until all or almost all units are sold so that the leases can be registered at the same time.

This may leave a gap between final payment, occupation and legal leasehold title. This also applies where there is shared share ownership by a lessee in a Thai company which owns the land underneath a project.

Another scenario where title may be delayed is when a title is mortgaged. Most responsible developers will be more than willing to admit there is a mortgage on the title and will do so in the sales contracts as this can be checked if registered. Having a mortgage registered is not particularly more risky for a buyer than paying staged payments in relation to an off-the-plan purchase.

However, there is the matter of private loans against title when the property is not mortgaged. Developers with a cash flow crisis could use the title and the promise of further sales in a development to obtain additional credit to fund construction costs.

A credible developer will not do this without informing its buyers, but the way development interests are sold sometimes involve distress of the developer, which is why sales contracts will not prohibit the developer from assigning its interest to a third party.

At the stage of crisis, when a private unregistered loan is ‘called upon’ there may well be a delay before any buyer’s titles are properly registered. A title may be delayed in registration in the event that the buyer is still negotiating ‘finishing’ points or ‘snagging’ points in construction.

Although the buyer may have retained some monies, ultimately most developers will have the lion’s share of payments and some kind of settlement on such issues will be necessary in order for a buyer to obtain its legal title.

Finally, the best and most secure land deals in this author’s experience (although not necessarily the most financially rewarding) are those which involve two actions both occurring on the same day – payment of the total purchase price by the buyer and transfer of title to the buyer.

Developers are best protected in such situations although there is no protection from being beaten by another bidder. In relation to buyers of units, sometimes it may be necessary to wait to receive that title document.

Desmond Hughes is a partner in Belmont Limcharoen.
Tel: +66 (0) 76 342 882-4
Fax: +66 (0) 76 342 885
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desmond@belmontlimcharoen.com
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