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    Member สมาชิก london_jim's Avatar
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    Default House purchase in stage payments while renting to begin with

    Thai GF is selling a House in Jomtiem. Buyer would be a Farang couple. The Farang wants to pay a deposit, move in and rent the house, and pay for the purchase of the building in agreed stage payments till the full purchase price is paid and ownership transferred.

    What is this style of contract called here? Any tips on what the contract should include? I'm looking for a draft template to cover this. There's every intention here on drafting a fair agreement to to all parties benefit.

    Most Farang I know would steer away from this kind of contract, even though they may not be in possession of all the facts.

    Grateful for your thoughts etc.
    Jim

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    Its more popular then you might think. I wouldn't use any 'draft contract' - use a reputable Thai lawyer if you want the agreement to hold water.

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    Member สมาชิก london_jim's Avatar
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    I'm not going to use a draft, I just need a heads up on what it might / should contain. Of course I 'm going to get her to use a competent solicitor.
    Jim

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    Use a law firm would be my advise ,pay the extra for a good one would also be recommended not on the cheap .Should also be like a English
    mortgage ownership dose not pass over till all monies are paid .
    Legal advice is a must ,

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    Quote Originally Posted by london_jim View Post
    Thai GF is selling a House in Jomtiem. Buyer would be a Farang couple. The Farang wants to pay a deposit, move in and rent the house, and pay for the purchase of the building in agreed stage payments till the full purchase price is paid and ownership transferred.
    What is this style of contract called here? Any tips on what the contract should include? I'm looking for a draft template to cover this. There's every intention here on drafting a fair agreement to to all parties benefit.
    Most Farang I know would steer away from this kind of contract, even though they may not be in possession of all the facts.
    Grateful for your thoughts etc.
    Hi Jim
    You are quite specific when you say you are selling "the building ", can I ask what is happening with the land that the building is on, because you cannot sell that to a Farang couple, unless one of them has Thai citizenship. you can lease the land to them for up to thirty years and sell the house as a separate entity which would be recorded on the Land Title.
    There's no specific name that I am aware of for the contract other than a loan agreement. The important point is that no form of ownership passes to the borrower until the final payment is made and if any payment is x days late that the agreement is terminated, without any return of monies and the house vacated.
    BR

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    Jim, What James is saying, is 95% correct. If I was you, tell this Foreigner to get a lawyer. It sounds like that this person is not thinking straight and he is rushing to move in.

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    Quote Originally Posted by te2008 View Post
    Jim, What James is saying, is 95% correct. If I was you, tell this Foreigner to get a lawyer. It sounds like that this person is not thinking straight and he is rushing to move in.

    Sent from my G3121 using Tapatalk
    I'd be really interested in what the 5% is that I've got wrong since I head a Thai property company and advise on this kind of thing professionally. Perhaps you could enlighten me.

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    Quote Originally Posted by James HKT View Post
    The important point is that no form of ownership passes to the borrower until the final payment is made and if any payment is x days late that the agreement is terminated, without any return of monies and the house vacated.
    Genuine question James - are you 100% on that? Surely it depends on what is agreed in the contract? Are you saying there is only one specific type of contract and it can't be varied - even by the seller?

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    Quote Originally Posted by Flip View Post
    Genuine question James - are you 100% on that? Surely it depends on what is agreed in the contract? Are you saying there is only one specific type of contract and it can't be varied - even by the seller?
    As with most if not all contracts they are normally a negotiation between parties and a written confirmation of what has been agreed. With this in mind my "important point" is that which should be included to protect the "Seller". There is no standard form contract for this kind of deal but any seller that didn't include such a clause is asking for trouble.

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    Quote Originally Posted by James HKT View Post
    As with most if not all contracts they are normally a negotiation between parties and a written confirmation of what has been agreed. With this in mind my "important point" is that which should be included to protect the "Seller". There is no standard form contract for this kind of deal but any seller that didn't include such a clause is asking for trouble.
    Possibly but any buyer that didn't protect themselves from unforeseen circumstances would also be asking for trouble. I guess its just a question of striking a balance.

    I thought there would be room for negotiation - the way I read your previous post, it appeared that there was some form of fixed contract. Thanks.

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    No there's no fixed contract, but the arrangement I describe is quite common here. In my opinion if a loan agreement is made and the borrower defaults this is not the fault of the lender whether the reason for default is unforseen or otherwise, and thus their property should be returned.

    The principle applies equally to most forms of secured finance and is no different from let's say car finance.

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    Quote Originally Posted by James HKT View Post
    The principle applies equally to most forms of secured finance and is no different from let's say car finance.
    No, but a buyer does not necessarily lose all they've paid if they default.

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    Quote Originally Posted by Flip View Post
    No, but a buyer does not necessarily lose all they've paid if they default.
    Why should the seller have to hold the money he / she has received in good faith until the full loan has been repaid as part of a mutually accepted agreement on the off chance that the borrower defaults due to circumstances nothing to do with the seller. The seller should be free to spend the money they are paid as they see fit without the worry that they might have to pay any part of it back as long as the seller honors their part of the finance agreement.

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    I have no idea on Thai law but in the UK, normally a lender would not be allowed to profit from a failed loan. A guy I know lost his job, couldn't pay his mortgage and eventually his house was repossessed. It was sold at auction and as often happens - it went sky high, far more than it was worth in my opinion. The lender was repaid and the proceeds were handed to the borrower. Not the norm I know - usually lenders add on fees etc. so that in the end the borrower still owes.

    I'm not actually disagreeing with you James, I'm just saying that I would not enter into an agreement that was totally in favour of the seller, where I stood to lose a significant amount unless I was absolutely certain that I could repay the total amount on time. Things can and do go wrong. If I was giving a borrower advice it would be to make sure any agreement they enter into is something they can live with taking account of a worst case scenario.

    I guess that it really depends on the amount likely to be lost and the time given to sort matters out should they go wrong. I'm refering though, to the type of agreement that I believe the OP has in mind where a large deposit is paid with a short-ish period to repay the balance. In such a deal the buyer could stand to lose a fortune.

    I don't know about Phuket but in my area of Thailand, with a few exceptions, the market is still just in favour of buyers so whether or not a seller could get away with a particularly punitive agreement at the moment is doubtful. Set to change in the very near future though when the new elevated tollway is finished - prices are just starting to rise and are predicted to rise much higher very quickly. My neighbours are rubbing their hands in anticipation - I'm not, I bought the place for its views and rural location - development gets closer by the week, I might not have either before too long.

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    Quote Originally Posted by Flip View Post
    I have no idea on Thai law but in the UK, normally a lender would not be allowed to profit from a failed loan. A guy I know lost his job, couldn't pay his mortgage and eventually his house was repossessed. It was sold at auction and as often happens - it went sky high, far more than it was worth in my opinion. The lender was repaid and the proceeds were handed to the borrower. Not the norm I know - usually lenders add on fees etc. so that in the end the borrower still owes.

    I'm not actually disagreeing with you James, I'm just saying that I would not enter into an agreement that was totally in favour of the seller, where I stood to lose a significant amount unless I was absolutely certain that I could repay the total amount on time. Things can and do go wrong. If I was giving a borrower advice it would be to make sure any agreement they enter into is something they can live with taking account of a worst case scenario.

    I guess that it really depends on the amount likely to be lost and the time given to sort matters out should they go wrong. I'm refering though, to the type of agreement that I believe the OP has in mind where a large deposit is paid with a short-ish period to repay the balance. In such a deal the buyer could stand to lose a fortune.

    I don't know about Phuket but in my area of Thailand, with a few exceptions, the market is still just in favour of buyers so whether or not a seller could get away with a particularly punitive agreement at the moment is doubtful. Set to change in the very near future though when the new elevated tollway is finished - prices are just starting to rise and are predicted to rise much higher very quickly. My neighbours are rubbing their hands in anticipation - I'm not, I bought the place for its views and rural location - development gets closer by the week, I might not have either before too long.
    Hi Flip
    Don't worry I'm not a TUK keyboard warrior and know we are just exploring the ramifications. We've spoken separately and privately about other matters and I would definitely buy you a beer if you ever find yourself in my part of the world.

    I might have mentioned that prior to my second life here I was a UK estate agent, and actually still have branches there so am aware of UK Law, which is very different to that which the Thais like to call Law. In my corporate days I also used to work for a number of building society owned agents, so have some experience in these matters. In the UK if a property is repossessed and sold then it is illegal for the lender to make a profit from liquidating it and must repay anything outside their costs and loan obligation back to the defaulting borrower. The difference here is the UK repossession model is based on the lender selling the house and then repaying any excess from the sale. However in this case the OP may not want or even be able to sell the house to another buyer, so if the situation presents itself and it is agreed that some money should be paid back to the defaulting borrower in the event of default then it will have to come from the OPs pocket, so the OP would be well advised to keep all the the loan repayments in a separate deposit account and not to be spent until the house is fully paid for.
    I don't disagree with your sentiments, but as in the UK no one should enter into any kind of agreement without being confident that they can fulfil it.
    In any case a farang couple cannot buy land and the company route is now very difficult and ill advised to do. I think it unlikely that they will want to lease the land and buy the house so I'm pretty sure this is an unworkable arrangement.

    J

    PS I'm still interested to hear from Te2008 where my 5% error lies..... Perhaps just an expression but I am 100% correct.

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    Quote Originally Posted by James HKT View Post
    Hi Jim
    You are quite specific when you say you are selling "the building ", can I ask what is happening with the land that the building is on, because you cannot sell that to a Farang couple, unless one of them has Thai citizenship. you can lease the land to them for up to thirty years.
    I've been told that it's 25 years, but after having a chat with a decent Thai lawyer, he said it's actually 30 years with an option to renew for another 30 years.
    It looks like the other bent lawyer been trying to have me over the table.
    James, about 8-9 years ago did I meet you at a property exhibition in BKK"?


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    Quote Originally Posted by te2008 View Post
    I've been told that it's 25 years, but after having a chat with a decent Thai lawyer, he said it's actually 30 years with an option to renew for another 30 years.
    It looks like the other bent lawyer been trying to have me over the table.
    Well you are still not receiving decent legal advice. The Thai courts have ruled that 30 years is the max on either leases or Usufruct agreements. 30 + 30 deals no longer stand up.

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    Quote Originally Posted by Flip View Post
    Well you are still not receiving decent legal advice. The Thai courts have ruled that 30 years is the max on either leases or Usufruct agreements. 30 + 30 deals no longer stand up.
    Are you a property Thai lawyer?
    If not. Where did you get your info from.

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    No need for sarcasm, I keep up with the news. A Thai court ruled on this not so long ago. Here's one item but you have the same access to Google that I do - there are many reports.

    https://www.thephuketnews.com/phuket...2kV6KzGGP7P.97

    Note in the text that if the original lease contained extension clauses, the head lease itself could be deemed void.

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    Flip, do you know if that decision has been confirmed by the Thai Supreme Court?
    Tobias - โทเบียส

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