How does one search a title at the land office? In other words, how and why do you use the information that the land office has recorded about the titles that it has registered?
There are some important reasons you may need to look at land office records. First, if you're buying or long-leasing property in Thailand, you want to know who owns it. Let's say you look around and decide that you want to buy or long-lease a house in a neighbourhood you know is a desirable one. The agent introduces you to a lady whose husband has recently died. The agent explains that the house belonged to the lady's husband, but that the widow is now the owner.
The more you see the house, the more you like it. It's reasonably priced, and, as you should, you ask neighbours and friends in the area about the place. They think highly of the lady and don't know anything about the house that would make you not want to buy. Examples of things that would make you not want to buy that the neighbours might know are that there's a polluting factory nearby area or that there was recently a fire in the house and much of the damage has been covered up with one coat of paint.
You also have taken the precaution of having a local builder inspect the house for you. For a small fee, he has spent a couple of hours in the house and thinks that it's in pretty good shape.
So you decide to plonk down your savings. What's the next step?
You will be asked for a deposit, let's say 50,000 baht. Do you just fork it over in cash?
No, you shouldn't. Not without something important. Both you and the seller should sign a deposit agreement. In general, the practice in Thailand is that deposits are non-refundable, unless there's a problem with the title.
Why non-refundable? The idea is that the owner is taking it off the market and won't offer it to others while the deal is pending. To induce him or her to do that, you may have to pay something. If you change your mind and don't want to go forward, you have to compensate the landlord for giving you the opportunity to buy while passing on the chance to sell to others. We want to emphasise that this is not a legal requirement, just a matter of local practice. So if you have some real leverage in the deal, you may be able to talk the seller into letting you have your money back if you change your mind.
But the more important issue is that relating to the title. The deposit agreement should say that if the title report isn't favourable, you get your money back. This is different from the situation where you back out because you have changed your mind. If there's something wrong with the title to the place, you shouldn't buy and it's not your fault. So you should have your deposit back.
If you don't say in writing that the seller must return your money if the title report isn't favourable, you probably won't get your money back, even if you find out the title is no good.
So be sure to sign a deposit agreement that contains the wording about a favorable title report. And then get one.
What could be wrong with the title? We'll talk about this next week.
James Finch of Chavalit Finch and Partners (email@example.com)
and Nilobon Tangprasit of Siam City Law Offices Ltd (firstname.lastname@example.org).
Researchers: Arnon Rungthanakarn and Sitra Horsinchai.
For more information visit www.chavalitfinchlaw.com.
Questions? Contact us at the email addresses above.
About the author
Writer: James Finch & Nilobon Tangprasit