Condominium Project Due Diligence

Condominium Project Due Diligence

Condominium buyers are often warned that they must conduct a thorough due diligence before investing in any property, and that they should not rely solely on the verification process done by banks while they are processing a home loan request. This is sound advice, especially in the current times when many buyers have found themselves in troubled waters after making property purchase decisions without doing their homework.What does due diligence mean with regards to property purchase? Basically, it is a thorough investigative process whose objective is to determine whether or not a certain real estate option is safe to invest in. The process requires different elements to be focused on, depending on whether one is purchasing a ready-to-occupy property or one which is under construction. A due diligence for redeveloped properties also has specific areas to be focused on.

Due Diligence For Ready-To-Occupy Properties

Get all details pertaining to the developer’s credibility. Of particular importance is the developer’s delivery track record of past projects. There are many aspects that directly affect the level of risk, but are never revealed to buyers. The required information needs to be assimilated at a local level, preferably by someone who has been residing in the locality for a while.Ask the developer for the approved drawings of the project, a copy of the IOD (intimation of disapproval) and completion certificate and a clear land title. Ensure that the property is free of litigation and any kind of associated debt. Also, establish the existence of a proper society. If one is buying a second-hand property, proper transfer and re-registration should be done before hand over. The documents required for registration of a residential flat, apart from the sale deed, will include a letter from the society that reflects the number of floors in the building, the year in which the building was constructed, the apartment’s built-up area and the number of lifts in the building.The buyer should have a proper check list in place; this must include the approved usage of the property, notices of any pending or threatened litigation or governmental action relating to the real estate or seller, any applicable condominium documents, service contracts, all construction-related documents including warranties, as-built plans and specifications etc.

Due Diligence For Under-Construction Properties

If the project is under construction, get an accurate idea of the project’s progress. This is especially true if the property is being bought directly from the developer. When no property advisor is involved in the transaction, the risk of falling prey to a deceptive projection of the project’s development progress multiplies manifold.

The buyer needs to establish whether the builder has free and clear ownership of the land on which the project is being built. An agreement between builder and the original owner of the land is not sufficient. The project also needs to have an IOD. This is a set of instructions that a developer needs to comply with so that he can legally construct the project. The IOD is valid for one year and needs to be reissued if the project has not been completed in a year’s time. The project also needs to have a commencement certificate in place.

While considering a pre-launch option, it is even more necessary to establish the trustworthiness of the builder, especially in terms of his track record for transparent dealings and compliance with legal formalities.

Due Diligence For Redeveloped Properties

For a redeveloped property, the paperwork is the same as for a new one as the project is complete, no matter what its history is. In the case of redeveloped properties, there are two possible scenarios:In the first scenario, discussions regarding redevelopment are ongoing between the society and developer, but no agreement has yet been signed. In such a case, buying into the project is as good as buying into a normal resale property.

In the second scenario, an agreement is already in place between the society and the developer. If one of the society members wishes to sell his property and has found a buyer, there are three parties involved in the transaction – the seller, the buyer and the developer. The developer in question needs to be kept in the loop so that the rights of the existing society member who is selling his property are properly transferred to the buyer, with the knowledge of the society.

In case the agreement is signed between society and developer, there are two situations possible. In the first, the building has yet to be demolished, in which case the process is simple – the buyer moves into the property, to vacate along with other society members at the time of actual redevelopment.

However, if the building has already been demolished, the old flat no longer exists and the new one is yet to be constructed. In this case, the permission of both the society and developer are required since, though money has changed hands, the transaction is incomplete until the property has been reconstructed and registered in the new owner’s name. The agreement needs to mention this appropriately.

In the case of a redeveloped property, apart from the usual due diligence, the development agreement between society and developer must be checked on. The new buyer must ensure that the seller is surrendering all rights and claims after the property is reconstructed.

Breach Of Contract 

When a party to an agreement fails to perform any term of a written or oral contract without a legitimate legal reason the other party may claim for breach of contract. This could involve not completing a job, not paying on time or in full, failing to deliver all required goods, substituting inferior or substantially different goods, or any other act demonstrating that the party will not perform as specified. One of the most common types of civil law suits in Thailand is for court-order specific performance and/or damages.

Defamation Claims

In Thailand a civil and/or criminal case can be brought against a party for defamation. As defined in Section 423 of the Thai Civil and Commercial Code, civil defamation involves a statement made that is contrary to the truth, and which is asserted or circulated as being factual, resulting in injury to the reputation, credit, earnings or prosperity of the individual who is the subject of the statement.

Employment Disputes

Thai labor law provides the grounds for an employee's dismissal or termination and the provision of severance compensation. Any violation of the law is a cause for an employee to file a labor case against the employer. The most common case involves illegal dismissal or unlawful termination. The employee must first take the complaint to the Labor Relations Committee to see if a compromise can be reached between the employer and employee. If this is impossible and the committee finds probable cause against the employer, it will recommend that a labor lawsuit be filed.

Personal Injury Cases In Thailand

In Thailand, when a person negligently or willfully causes injury to another person's body, life, liberty, property, or right, the person causing the injury is bound to compensate the injured person for the damage caused. If the wrongful act was committed by or against a foreigner who is under Thai jurisdiction, a foreign element is then considered to be involved in the case and the Conflict of Laws Act comes into play.

Real Estate Disputes – these are quite common particularly when foreigners buy property in Thailand. Disputes may arise due to language barriers, unlawful purchasing procedures or the dishonesty of sellers, for example. According to the Consumer Protection Board, complaints about real estate development companies are on the rise, involving misleading advertising, low quality workmanship and material, and delays in construction.


Our Thai civil litigation lawyers will represent you at every step in the process of a civil action case. This includes the proper designation of the case, the jurisdiction of the court, the determination of the proper parties and many others which will make the assistance of a court lawyer indispensable. Our international lawyers work hand in hand with their Thai counterparts to deliver the optimal civil litigation service for you and the most efficient results for your civil action case.

Please consult our lawyers and contact Juslaws & Consult for further information and assistance.