You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

May 31, 2013

Buying a House in a Land Development Project: Look Before You Leap

Subscribe to Updates
Bangkok Post, Corporate Counsellor Column

Recently, consumer interest in purchasing residential homes in Thailand has skyrocketed. In response to this, developers have launched numerous residential development projects catering to both domestic and foreign purchasers. Consumers now have the opportunity to contemplate purchasing homes of varying quality while also factoring in developer reputation and risk. When thinking about buying a home in a land development project, there are a few major issues buyers should consider both before and after making the purchase.

Is the project protected under Thailand’s Land Development Act?

Under Section 4 of the Land Development Act of 2000, “land development” means the sale of land divided into sub-lots from one main lot of land or from several lots of adjoining land in return for property or benefit as remuneration if at least 10 sub-lots are sold. This includes projects where the land is divided into fewer than 10 sub-lots but subsequent divisions are made within three years, resulting in the combined land being at least 10 lots.

Buyers should note that a developer might seek to avoid compliance with the Act by dividing the land into less than 10 sub-lots, so that the project may not have to provide public facilities or services, such as roads, parks, or children’s playgrounds.

Is the project being completed as described in the contract or as in the developer’s advertising materials?

Advertisements purporting to provide services or public facilities are regarded as contractual obligations between the buyer and the developer (Section 11 of the Consumer Case Procedure Act of 2008). Therefore, the land developer must fulfill promises made in the house sale advertisements, as they are contractual terms.

Furthermore, the land developer must request a bank or financial institution to conclude a guarantee with the Land Development Commission. If the land developer fails to provide for public facilities or services, the bank or financial institution will pay the commission the amount specified in the guarantee, so the commission can spend it on the provision of those public facilities or services (Section 24 of the Land Development Act).

How will the public facilities or services be maintained both during and after purchase?

Sometimes, after developing a project, a land developer fails to maintain public facilities or services in good working condition. Thai law provides that buyers of at least half the sub-lots under a project can pass a resolution to establish a developed-estate juristic entity, which is registered with the land official and controlled by an executive committee and the buyers. The management of public facilities or services can then be transferred to this developed-estate juristic entity (Sections 44 and 45 of the Land Development Act) to ensure they are maintained effectively.

Will there be any issues related to the collection of common fees?

Once the developed-estate juristic entity is established, all buyers of the developed land become members. If there are any sub-lots that have not yet been sold or which are transferred back to the land developer, the land developer becomes a member of the developed-estate juristic entity (Section 47 the Land Development Act).

Buyers of developed land are liable to pay common fees for the management and maintenance of public facilities or services, and land developers are liable to pay common fees for sub-lots that have not been sold (Section 49 of the Land Development Act).

To enforce contractual obligations in case of default, the developed-estate juristic entity can file a civil claim against a buyer or land developer who fails to pay the common fees.

What will happen if there are manufacturing defects?

If defects are found before the transfer of ownership, the buyer should submit a written objection (preferably acknowledged by the developer or its representative’s signature) outlining the list of defects (with photos) and requesting the land developer to repair the defects within the prescribed contractual period. If the land developer fails to repair the defects or does so inadequately, then on or before the transfer date, the buyer should present objections and supporting evidence of those defects to the land officer, informing the officer that the transfer cannot proceed unless and until the defects have been fixed.

If the defects are discovered after ownership transfer, the land developer is likely contractually liable. Exceptions include: (1) if the buyer knew or would have known of the defects at the time of sale; (2) if the defects appear at the time of delivery and the buyer accepts the house without objection; and (3) if the house was sold by public auction. The law allows buyers to take action concerning liability for defects within one year from the date the defects are discovered (Sections 472, 473, and 474 of the Civil and Commercial Code).

What are the key steps before making a purchase?

Before buying a house in a land development project, buyers should study the project and the environment to determine whether the government has any plan to use the land or adjacent land or if the land could be subject to expropriation, such as for future transport projects.

Buyers should review the corporate land developer by considering its previous projects and its corporate and financial status. Buyers can also conduct due diligence on the developer’s authorized directors to determine whether they have the authority to sign the sale and purchase contract. This may include investigating whether the developer or its directors have been involved in previous consumer claims.

Finally, buyers should examine the land and the relevant title deeds and prior title rights to confirm whether the developer owns the land or has the right to use it with no risk of encumbrance.

Download Full Article
Related Professionals

Practices

Dispute Resolution and Litigation

Real Estate

Location

RELATED INSIGHTS​ 

July 14, 2025
Specialists from Tilleke & Gibbins in Vientiane have contributed an updated Laos entry to Multilaw’s Real Estate Guide, a concise online resource designed to give investors insight into some fundamental issues they may face in managing real estate transactions and ownership. The guide now features contributions from Multilaw member firms in 68 jurisdictions worldwide. It outlines key legal requirements in each jurisdiction, focusing especially on the restrictions and taxes applicable in each country, and the legal methods available for registering and identifying real estate and property ownership. Tilleke & Gibbins is a proud member of Multilaw, a leading network of carefully selected, independent law firms in more than 150 commercial centers, able to provide expert legal advice in complex environments around the globe. The Laos entry in the Real Estate Guide is available on the Multilaw website.
Read More
June 25, 2025
In Thailand, in-court business rehabilitation is a legal proceeding that enhances a debtor’s chance to restructure business operations for corporate debtors who are unable to repay their debts. The purpose of this proceeding is to allow the debtor to continue operating the business and generate income to repay creditors. The amounts that creditors receive in the rehabilitation proceeding are greater than the amounts creditors would receive if the debtor went bankrupt. The law is not designed to allow debtors or creditors to use the business rehabilitation process in bad faith for their benefit or to defraud another party. Accordingly, the Business Rehabilitation Law, which is included in the Thai Bankruptcy Act B.E. 2483 (1940), provides criminal liability for actions taken before or during the process. This article addresses the key points regarding criminal liability for safeguarding debtors and creditors in business rehabilitation proceedings from any parties who act in bad faith. Criminal Liability in Business Rehabilitation The following provisions establish the framework for criminal liability in business rehabilitation cases, ensuring that all parties act with integrity throughout the process. The Bankruptcy Act of Thailand B.E. 2483 (1940) provides the relevant provisions regarding the business rehabilitation process. Additionally, if a company debtor or its authorized directors are found to have committed fraud or malfeasance under the Bankruptcy Act, they can also be held criminally liable under the Penal Code or related criminal statutes. The rehabilitation process aims to help a business recover financially under the supervision of the court. When the court approves the rehabilitation plan, the court appoints a business rehabilitation plan administrator to manage and implement the process. However, if it is discovered that the debtor, its executives, or even the plan administrator engaged in illegal activities prior to or during the rehabilitation process—such as tax evasion, embezzlement,
Read More
June 13, 2025
In today’s digital age, cyberattacks have become a real threat to organizations worldwide. These attacks can range from phishing and malware to ransomware and distributed denial of service (DDoS) attacks. As the frequency and sophistication of these attacks increase, so does the importance of cybersecurity compliance. In the corporate world, compliance refers to the process of ensuring that a company and its employees adhere to all relevant laws, regulations, standards, and ethical practices—but it should not stop there. Compliance should also encompass asset recovery and disciplinary measures, which can both help organizations address incidents effectively and promote good governance. Cyberattacks are malicious attempts to access or damage a computer system or network, often carried out for financial gain, for political activism, or simply to cause disruption. For instance, a successful attack might involve an attacker creating an email address that closely resembles a legitimate one, perhaps by changing only one or two characters. That email address is then inserted into an existing conversation thread, making it appear as if the user with this email address was already part of the discussion. This tactic can easily deceive a recipient into believing the email was sent from a trusted source, thereby leading them to click on malicious links, provide sensitive information, or even make payments in accordance with the attacker’s request or instructions. Phishing attacks like these are particularly dangerous and can have a serious impact on the ongoing business of a corporation because they exploit the trust and familiarity established in the original email chain. Effective Mitigation Approaches Mechanisms for addressing the aftermath of a crisis provide important recourse to affected organizations, but effective compliance mechanisms can minimize the risk of such crises ever occurring. Companies should therefore prioritize preventative measures and implementation of effective crisis management schemes. Various legal
Read More
June 11, 2025
Thailand’s tax dispute resolution framework has undergone a significant transformation with the enactment of the Act Establishing the Tax Court and the Procedure for Tax Cases (No. 3) B.E. 2568. Published in the Government Gazette on May 27, 2025, the amended act will come into force on November 24, 2025, which is 180 days after its publication. The amended act marks a pivotal shift in the jurisdiction and procedures of the Tax Court, most notably by empowering it to adjudicate certain criminal tax cases for the first time. Background and Rationale The Tax Court was originally established in 1985 as a specialized forum to handle complex tax disputes, including those related to revenue, customs, and excise taxes. The creation of the Tax Court recognized the need for judicial expertise in tax law, given its technical and specialized nature. The latest amendment is designed to address procedural inefficiencies, modernize court processes, and align Thailand’s tax litigation system with international standards. The reform demonstrates Thailand’s commitment to enhancing the efficiency, transparency, and fairness of its tax dispute resolution mechanisms. Key Amendments and Provisions Six of the key changes in the amendment are highlighted below. Expansion of jurisdiction to criminal tax cases. The most significant change is the extension of the Tax Court’s jurisdiction to include criminal offenses under the Revenue Code, customs law, excise tax law, and other tax-related laws that may be specified by royal decree. New sections in the act explicitly grant the Tax Court authority to hear and decide criminal tax cases, so individuals and entities accused of criminal tax evasion or other tax-related crimes will now have their cases heard by judges with specialized tax expertise. The law also clarifies the Tax Court’s jurisdiction when a single act constitutes multiple offenses (some tax-related, some not) or when
Read More