DAVID TAN asked:




The legal way for a foreigner to own real estate in Thailand is to buy a condominium unit(s) (“Condo Unit”). This was proposed in my last article on foreign land ownership. In Bangkok, Condo Unit purchases are now considered trendy among the younger generation of Thais as Condominiums are conveniently located in the inner city area and it is more economical to commute.

TIP

Whether you are going to buy a Condo Unit to reside or for investment purposes, I would like to walk you through the following due diligence steps:

(1) If you can narrow down your choices of Condo Units to 1 or 2 Condo Units, a physical inspection must be conducted by an expert or civil engineer on the Condo Unit and the condominium building. Are they as according to the promises made by the seller ? Checks should be conducted for water leakage in the Condo Unit, proper and safe electricity supply, adequate car parking spaces allocated, fire exits, correct building materials used.

(2) What is payable by an owner of the Condo Unit for up keeping e.g. common facilities fees, water charges, electricity charges. Who should they be paid to and how much are they? Find these out from the owner of the Condo Unit.

(3) If (1) and (2) above are satisfactory to you, request from the owner of the Condo Unit a copy of the Condo Unit Title Deed. Take this to the local district or Amphur Land Office and counter check with the original Title Deed kept there on: (a) Who is the owner of the Condo Unit ? This owner should be the person whom you are dealing with and signing the contract to sell you the Condo Unit. If the owner is a company limited, who can sign on behalf of this company ? Does the company limited have enough capital to complete building the condominium ? The answers to these questions can be obtained from the incorporation records of the company limited at the Ministry of Commerce; (b) Is the condominium building registered at the Land Office ?; and (c) Does the original Title Deed reveal any registered encumbrances, lease, mortgage or charges ?

(4) Have a lawyer peruse the conditions of the Reservation Contract or To Sell and To Buy Condo Unit Contract prior to signing it. Legally speaking, this Contract does not create any property rights for you yet because the Condo Unit ownership title will transfer to you at a later date. This Contract is binding only on the promises of both the seller and you that ownership title transfer and sale of Condo Unit will take place at the agreed upon later date. However, the risk exposure to you here is that, at the signing of this Contract, you are usually requested to place a deposit with the seller. If the seller does not sell and transfer ownership title of the Condo Unit to you at the agreed date, you will have to claim the seller in court for breach of Contract to get the deposit back. As a result, I do not recommend the signing of this type of Contract. You should make a 1 time payment of the whole purchase price at the sale and upon ownership title transfer of the Condo Unit to you. Alternatively, you could arrange for a neutral escrow agent to hold your money and hold the original Title Deed (Note: Under the new Escrow Business Law, effective on May 19, 2008, an authorized financial institution or commercial bank can provide escrow agent services).

(5) Clarify with the owner who is responsible for the ownership title transfer fee, income tax and specific business tax or stamp duties payable at the Land Office on the day of ownership title transfer. Unless agreed otherwise between the owner and you, you are only legally responsible for 50% of the ownership title transfer fee. Please note that the amounts payable here can be calculated for you by an official at the Land Office.

(6) Make sure that the owner have obtained from the Condominium Juristic Office the following: (a) A letter verifying that foreigners have ownership in condominium units not exceeding 49% of the total space of all units in the condominium building; and (b) A letter verifying that the owner has no outstanding debts owing to the Office.

(7) You have obtained the required bank document to verify that the purchase price for buying the Condo Unit was remitted into Thailand.

** Written by David Tan. David is a Lecturer of Business Law at Asian University and author of the book “A Primer of Thai Business Law (Second Edition)”, available online at www.chulabook.com . In Bangkok, the book is available at all Kinokuniya and Asiabooks bookstores. Any questions or comments should be sent to Business Legal Advisory Services at: blas.inter@yahoo.com

 

Carlos Montes asked:




With Calgary metro condo sales accounting for almost 91% of total residential home sales, you’d think there would be no need for incentives. However, the 940 new condo listings from August 2009 were 21 per cent lower than the prior year when listings totaled 1,186.

Everyone has felt the pinch, including well known Calgary condominium developers, Anthem Properties. They were commended for their agressive undertaking to develop waterfront property along the Bow River. Not only the largest condo project in history, this prime downtown real estate suffered from contamination and required over $10 million dollars dedicated for clean up, before they could even break ground.

This multi-year project includes three highrise towers and five podiums of 1,000 units in total plus retail space. Waterfront is located in an incredible downtown Calgary location convenient to shops, restaurants, jobs and local parks. The quality condos are equipped with high quality Sub Zero appliances, Caesarstone counter tops and hardwood floors.

In the summer of 2009, over 100 condo units at Two Waterfront were drastically reduced in price. One bedrooms dropped from $300,000 to $249,000 and large two bedroom condos came down $187,000 in price. After selling 60 condos in 60 days, you would think that the developers would be content with that response. They still felt that although there was strong interest in the property, consumers were still reluctant to commit to purchasing.

Recently, Anthem Properties announced a new worry-free program to encourage fence sitters to take the plunge. If a prospective buyer hasn’t sold their existing home by the time they take possession and move into their Waterfront condo, then Anthem Properties will purchase their home at a pre-arranged price.

Calgary builders aren’t the only one’s tantalizing buyers with incentives. In Toronto, the condo capital of North America, only 917 units were sold in the first three months of 2009 – the lowest since the same time in 1996, and down from the average 4,000 units sold in subsequent quarters. Added to the lack of consumer interest, is the impending harmonized sales tax in 2010 that will add another 8% to the price of a new home.

To stimulate sales and combat what could possibly cause a dangerous glut in new home sales, developers are offer discounts of up to 20%, as reported in Urbanation Inc. Over 60% of major builders are also offering perks that include free parking and reduction in mortgage rates. Experts feel that these incentives are not enough and lower price per square foot may be what it takes to boost sales to the levels they require.

With regard to the harmonized tax, new homes priced under $400,000 will be exempt from the tax, but that only effects 70% of the market. Compounded with the harmonized tax, Toronto has created their own version of a land transfer tax, in addition to the existing provincial required tax (we’re at 3 taxes in Toronto now), you could easily see another $8,000 tacked on to the price of that $400,000 home.

Thomas Lloyd asked:




The Playa del Carmen real estate is one of the highest of demand here in the country of Mexico.  Many economical factors and general trends over the past two years throughout the North American and European economies are working to place the Mexico real estate market as one of the most attractive for investors throughout the world.  Near forty percent 40% of the Riviera Maya Properties are being purchased by Mexican Foreigners with the Americans and Canadians leading the countries with the highest amount of such international real estate investors.

A very popular investment option has been the Mexico condo options.  In this real estate opportunity, buyers are able to reserve a condo unit before the construction has been realized.  On some occasions, the developer may offer Mexican investment construction options “off the plan” before a parcel of land has even been purchased.  The risks are compensated with large discounted prices on the condo units which many international buyers have found extremely attractive given international averages on Ocean Front Condo prices.  The procedure normally requires a reservation quantity to be paid ranging from $5,000 up to $10,000 usd.   This money is refundable upon request and may reserve a unit for an average of 20 days, enough time for the investor and his legal counsel to study and analyze the promissory contract on the Playa del Carmen Real Estate.  If the buyer, upon review of the contract, decides to proceed on the investment opportunity, he will then be required to sign a promissory contract and forward another payment quantity.   This hard contract deposit may range from 20% up to 90% depending on the developer or the negotiation of the particular operation.   Other payments and payment plans may include monthly transfers or transfers based on construction milestones.   Once the property is completed, the developer can proceed on obtaining a Mexico Condominium Regimen, which will then allow for delivery of the physical property as well as transferring the legal rights to the Mexico property.

International buyers are playing a significant role in the demands for Playa del Carmen real estate.  With the tourism and occupancy rates higher than years before, and projections stronger than any historical figures on record, the appreciation on Riviera Maya Real Estate continues to grow despite slowdowns in the United States market.  As more tourists come to the area, more fall in love with the local Caribbean Beaches, Mexican history, and the warm Spanish hospitality.