Real estate plays a crucial role in many foreign investment transactions in Thailand, whether for establishing a manufacturing facility or acquiring a luxury condominium. While investors often seek to finalize deals quickly, conducting thorough due diligence is essential to mitigate risks and ensure a smooth transaction. This is particularly important in emerging markets like Thailand, where legal, regulatory, and land title considerations require careful examination.
This guide outlines the key aspects of real estate due diligence that investors should prioritize when purchasing property in Thailand.
1. Title Verification
The first step in due diligence involves a physical inspection of the property by a qualified surveyor and a title search at the government Land Office. Investors should conduct these steps before making any deposits, though in practice, this is often overlooked.
Thailand has various types of land titles, each with different implications:
- Chanote – The most secure title, equivalent to freehold ownership, allowing full transferability.
- Nor Sor 3 Kor – Confirms ownership and can be transferred but lacks precise survey markers.
- Nor Sor 3 – Grants possessory rights but with less legal certainty than Nor Sor 3 Kor.
- Sor Kor 1 – Only acknowledges possession; it cannot be legally transferred.
A thorough title review ensures that the property meets investment requirements and is free from ownership disputes or legal limitations.
2. Land Use & Zoning Regulations
Investors must ensure that the property complies with zoning, environmental, and construction regulations. These factors are particularly critical for:
- Commercial & Industrial Developments – The land must be properly zoned for its intended use.
- Resort & Hospitality Projects – Height restrictions, density limits, and environmental laws may apply.
- Environmental Considerations – Properties near protected areas, shorelines, or national parks may be subject to additional restrictions.
Verbal or informal assurances about development potential should never replace official verification through due diligence.
3. Legal & Financial Checks
A comprehensive legal review should include:
✅ Litigation Searches – Checking for any pending or threatened lawsuits involving the land or its owner. Disputes may include boundary disagreements, environmental claims, or government actions.
✅ Tax Liabilities – Ensuring no outstanding tax claims against the property or its owner, which could transfer to the buyer.
✅ Encumbrances & Liens – Identifying any mortgages, easements, or other restrictions that could impact the investment.
Failure to uncover these issues in advance could lead to financial and legal complications after the purchase.
4. Access & Infrastructure
Ensuring unrestricted access to the property is crucial, particularly in rural areas where land plots may lack direct road connections. Key considerations include:
- Public Road Access – Confirming that the property is directly accessible from a registered public road.
- Servitudes & Easements – If access relies on a legal right of way (servitude), its validity and enforceability should be verified.
Without guaranteed access, legal disputes or logistical challenges could arise, affecting the property’s usability and value.
5. Condominium Due Diligence
For condominium purchases, additional due diligence is required:
- Condominium Title Search – Verifying that the unit’s title originates from a valid land title.
- Condominium Juristic Person (CJP) Review – Checking financial health, meeting minutes, and governance records of the condominium management.
- Regulatory Compliance – Ensuring the development complies with foreign ownership quotas (not exceeding 49% foreign ownership in a registered condominium).
Investors should validate any claims made by developers or management through official documentation rather than relying on verbal assurances.
Conclusion
Real estate transactions inherently carry risks, especially in emerging markets like Thailand, where due diligence is often neglected in favor of speed. However, skipping this critical step can lead to costly delays, legal complications, and financial losses.
By conducting thorough title verification, legal checks, zoning assessments, and financial reviews, investors can significantly reduce risks and ensure a secure and successful transaction. Taking the time for proper due diligence is not just a safeguard—it is a crucial investment in long-term security and profitability.
The team at ThaiEstate will be happy to introduce you to a selection of trusted and reputable law firms to assist with your Due Diligence.
