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October 15, 2024

Thailand Specifies Form of Reservation Contract for Sale of Condo Units

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The Contract Committee of Thailand’s Office of the Consumer Protection Board (OCPB) has issued the Notification Prescribing the Business of Selling Condominium Units Through Reservations as a Contract-Controlled Business B.E. 2567 (2024). The notification was published in the Government Gazette on October 3, 2024, and is expected to come into effect 120 days after the publication date (i.e., January 31, 2025). This notification aims to prevent condominium project business operators/developers from exploiting consumers.

Under the notification, the business of selling condominium units through reservations refers to a business in which a consumer enters into a reservation contract with a business operator to reserve a condominium unit in a condominium building, by paying a reservation fee (or other benefit similar to a reservation fee) that is not a security deposit or down payment, and committing the consumer to enter into a subsequent sales contract to buy the unit. This also extends to the sale of condominium units reserved through electronic channels.

The reservation contract must be written in Thai and must include material terms and conditions as specified in the prescribed reservation contract form attached to the Notification (“Standard Reservation Contract”).

In addition, the reservation contract must not contain any of the following terms and conditions:

  • Exemption or limitation of the business operator’s liability arising from its breach of contract.
  • The business operator’s right to change the contract or various conditions imposing an additional burden on the consumer, exceeding what was agreed upon at the time the contract was made.
  • The business operator’s right to terminate the contract with the consumer without written notice, or without the material breach of contract by the consumer.
  • The business operator’s right to confiscate all or part of the payment unless the consumer is in breach of the contract.
  • The business operator’s right to treat reservation fees as a deposit or down payment.
  • The business operator’s right to charge fees for the assignment of reservation from the consumer.
  • The business operator’s right to utilize common property in the project.
  • The business operator’s right to collect, compile, use, or disclose personal data of consumers in violation of the laws governing personal data protection.

The following material terms and conditions are included in the Standard Reservation Contract:

  1. Condominium reservation details, including project name, location, reservation number, type and specifications of materials and equipment within the condominium unit, list of equipment to be provided as premium or benefits by the business operator (if any), specified date of contract signing, specified date of submission of application for construction permit/notification letter of condominium unit or date of receipt of permit, specified date of issuance of construction permit/notification letter of condominium unit, price of condominium unit and amount of reservation fee and discount (if any), and payment methods for such fees or benefits (e.g., cash, wire transfer, cashier’s check, credit card, etc.).
  2. Consumer’s right to terminate the contract if the business operator (i) fails to obtain approval for the environmental impact assessment report (if applicable); (ii) fails to enter into the sales contract with the consumer within the timeline specified in the reservation contract; (iii) fails to apply for or obtain the condominium construction permit, or the receipt of notification of the construction; (iv) modifies project details or construction materials without the consumer’s consent; (v) fails to comply with the terms and conditions required under the notification and the reservation contract; or (vi) fails to use the material and equipment under the notification and the reservation contract.
  3. The business operator has the right to terminate the contract only if the consumer fails to enter into a subsequent sales contract to buy the unit within the time frame specified in the reservation contract, and the business operator is entitled to confiscate the reservation fee.
  4. If it is known to the business operator that the consumer is seeking a loan from a financial institution and the loan is not approved within the agreed-upon time frame, either party can terminate the contract.
  5. Upon the termination of contract according to items (b) or (d) above, the business operator must return all reservation fees received from the consumer within 15 days (if returned by cash or wire transfer) or 45 days (if returned by credit card).
  6. The business operator can only terminate the contract (as specified in items (c) and (d) above) if a written notice has been sent to the consumer to rectify such breach of agreement within a period of not less than 7 days from the receipt of the notice, and the consumer fails to rectify such breach.

In addition to the terms required under the Standard Reservation Contract, if the reservation was made through electronic channels or a digital platform acting as an agent/intermediary, such reservation contract must also comply with the requirements under the laws governing electronic transactions.

Lastly, the reservation contract must be prepared in two identical copies by the business operator, who must provide one copy of the reservation contract to the consumer upon signing.

A failure to comply with the requirements of the Standard Reservation Contract under this notification will subject the business operator to imprisonment of not more than one year or a fine not exceeding THB 200,000, or both.

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