Real Estate & Property Due Diligence

Real Estate Due Diligence/Title Verification And Investigation

A complicated system of rules, laws, and regulations dictate real estate ownership, transactions, and land use in the Kingdom of Thailand. There are no codified or unified regulations or laws governing such matters, and there is as of yet no centralized registry for real estate property that would instantaneously provide the necessary data on both unregistered and registered property, registered owners, and transactions. Furthermore, issues involving overlapping of titles, double titling, double sales of land, proliferation of false titles, encroachment, sale of unregistered real estate condominium and subdivision projects by unethical developers, and conflicts involved in land use with regulations, like current zoning, among others, continue to plague the real estate sector and its stakeholders.

Therefore, the world of Thailand real estate is a daunting territory. A due diligence investigation of a target land for investment, acquisition, or lease is undoubtedly necessary to avoid the significant risks mentioned and ensure that the individual making all the decisions can rest assured of their persistence.  Juslaws & Consult is equipped with with real estate appraisers, real estate attorneys, real estate business advisors, accountants, and other real estate professionals who will provide the required key information and integrated real estate solutions to confront the primary risks associated with a client's commitment to acquire or invest in particular real estate.

Checklist For Real Estate Due Diligence

Some of the general problems that transferees or real property buyers face include land-use restrictions, eviction problems, and construction permit restrictions.

If a person plans to purchase immovable property in Thailand, they should execute proper due diligence before they finalize the purchase to ensure the legitimacy of the legal owner and that the property owner can rightfully sell the property. They should also inspect any potential attachments or legal encumbrances.

It is wise to seek the guidance of a property practitioner who has a strong legal background and can legally conduct real estate due diligence by considering the relevant land documents, like the land title deed, for example. Further, the property practitioner must conduct a thorough title search at the Land Office at the location of the land and evaluate all building construction permits.

Moreover, you must ensure you receive a comprehensive due diligence report, which includes the following material details:

Title Status and Land Documents 
Thai law dictates that land documents start with the notice of possession to the land title deed, which stands at the highest level of the hierarchy and represents complete ownership rights.

Therefore, it is essential that you know the hierarchy level of the title and the context and history of the land documents, as well as whether or not they have been issued properly, evidence of a lower hierarchical level, or upgraded from other land documents.

Land Details 
This section of the report would specify the land details, a display of the surrounding land, and a miniature map.

Ownership Chronology
This section of the property due diligence report should confirm the history of the land's ownership. It is essential that you check at which point the original ownership document was deemed a lower-level document instead of a title deed. Moreover, you must check that the title deed was issued legally.

Attachments and Legal Encumbrances
Thai law requires the easements, mortgages, servitudes, and any other legal encumbrances over immovable property to be registered at the Land Office where the land is situated for it to be valid.

Leases And Other Rights Registered Over Property
According to Thai law, the lease of immovable property lasting over three years has to be registered with the Land Office of the area. If the lease agreement is valid for fewer than three years, it is not required to be registered but must still be written. This section will clarify if the land is leased to another individual for over three years or if there are any other tenancy rights, such as a right of benefit, usufruct, or habitation rights, that apply. This clarification will use the extent of the buyer's right to use the property. Ownership transfers do not terminate a contract to lease immovable property. The person receiving the transfer is granted the rights and is responsible for the duties the transferor has toward the leaseholder.

Building Control Regulations, Zoning, and Environmental Regulations
The City Planning Act regulates land use relating to industrial, residential, environmental, agricultural, and cultural protection purposes in Thailand. Furthermore, any buildings constructed must correlate with the relevant rules, notifications, and regulations as issues under the laws governing building control along with other relevant laws. This section is intended to clarify the current zoning, environmental regulations, and building control that relate to building construction and cover land use so the land buyer will have insight into whether the land can be built on. Essentially, this section of the report will verify if the building construction on the property was properly granted a valid construction permit as well as any other required permits for the buyer's consideration.

You are required to execute an adequate litigation search to evaluate where any litigation cases against the landowner are involved, as they may have an impact on the landowner's property.

Official Assessed Price
It is essential that any land buyer should know the official assessed price. This is particularly crucial when the Land Office registers the property transfer because the government authority confirms the official assessed price. This official assessed price determined by the government officials is included in the calculation of the transfer fee the Land Office demands for the property transfer registration. The official assessed price is commonly lower than the actual sale price and the market price.

A property should generally grant an owner access to a pubic road, whether it is by means of directly adjacent access or through another property. If a landowner can only access a public road through another property, the servitude has to be registered over the person's land granting the right to be able to enter the target land.

On-Site Survey
In addition to the above-mentioned requirements and information included in a due diligence report, it is advised that you execute an on-site survey alongside a property practitioner. The purpose of an on-site survey is to ensure the property is the same land you plan to buy, to observe the land location, and verify that the observed land is the same plot as displayed in the land documents.

Scope of Work

Juslaws & Consult real estate due diligence or title verification and investigation services include:

⦁ Investigation of the authenticity, validity and current status of the title, tax declaration or other muniments of title covering the target property, including the right of the registered owner to transfer or convey the property
⦁ Overlap or double titling verification with the relevant government agencies
⦁ Investigation of recorded, apparent and subsisting liens and encumbrances on the target property
⦁ Investigation of any pending claims, complaints, cases, or proceedings involving the target property with the local administrative bodies, trial courts, appellate courts, and agencies responsible for land titling functions
⦁ Investigation of the exact location, the registered owner and the actual possessor/s of the target property, including the claims of ownership, possession and other real rights over the same
⦁ Investigation of the nature, legal classification and actual land use of the target property, including the current zoning classification and authorized land use/s of the same and any proposed zoning re-classification of the same
⦁ Investigation of the legal and land use restrictions on the client’s intended use of the target property, including easements and setbacks
⦁ Investigation of the coverage of the subject property under any of the agrarian reform or other social programs of the government
⦁ Investigation of tax liabilities and/or charges on the target property
⦁ Geohazard verification with the relevant government agency
⦁ Investigation on whether the property is an ordinary or capital asset of the registered owner
⦁ Investigation on the registered owner such as the current address thereof and the heirs thereof (if deceased) or the current registration status thereof and current officers/directors/shareholders thereof (if juridical entity)
⦁ Investigation of other risks involved in the acquisition of the target property such as issues on threatened or proposed expropriation or public auction of the same
⦁ Investigation on the property owner or project developer’s compliance with building, zoning and other land use and development regulations and restrictions
⦁ Verification of the permits, licenses and approvals issued in connection with the construction, development and/or management of the target property