Introduction:
As of January 2025, Thailand has implemented enhanced consumer protection measures for condominium reservation agreements. Designed to safeguard buyers during the pre-sale phase, the new regulations impose stricter obligations on developers to ensure transparency, clarity, and fairness in these transactions. The changes cover areas such as contract terms, disclosure requirements, deposit management, and buyer rights.
In this article, we will explore the specifics of these new Condominium Reservation Regulations and their impact on the Thai condominium market.
Key Points
- Developers must include clear, comprehensive terms in standard reservation contracts in Thailand to ensure buyers are fully informed.
- Buyers are entitled to complete and accurate details about the project, its specifications, and associated risks.
- Strict regulations govern the handling of reservation fees, providing buyers with added financial safeguards.
- Revised cancellation rights offer consumers greater control and balance the dynamics between developers and purchasers.
Purpose of the New Notification
The Notification of the Contract Committee regarding the Designation of the Sale of Reserved Condominium Units as a Contract-Controlled Business aims to remove unfair practices that have often disadvantaged buyers during the reservation process.
By classifying these transactions as contract-controlled business, the government is introducing a structured and approachable framework that ensures both buyers and developers are held to clear, standardized terms. This is expected to help improve condo buyer protection in Thailand
Scope of the Condominium Reservation Regulations
The notification applies to all scenarios where consumers enter into reservation agreements with developers for condominium units. This includes transactions conducted via traditional methods and online platforms. The measures apply across multiple channels, including:
- Reservations at property exhibitions or promotional events
- Direct reservations at developer sales offices
- Transactions through real estate agents or brokers
- Online reservations on developer websites or third-party platforms
Key Components of the Standard Reservation Contract in Thailand
Under the new regulations, developers must use a Standard Reservation Contract, drafted in Thai and containing mandatory terms that prioritize transparency and consumer protection. The required components include:
Project and Unit Details
- Project name and location
- Reservation number for reference
- Detailed unit specifications, including size, layout, materials, and equipment
- Any additional benefits or premium items provided by the developer
Timelines and Milestones
- Date for signing the final sales contract
- Deadlines for obtaining required permits and approvals
- Completion schedules for construction milestones
Financial Information
- Total purchase price of the condominium unit
- Reservation fee amount
- Details of applicable discounts or promotions
- Accepted payment methods (e.g., bank transfer, credit card, cash)
Consumer Rights and Developer Obligations
- Circumstances under which buyers can terminate the contract
- Developer responsibilities concerning construction quality and timelines
- Dispute resolution procedures and remedies for contract breaches
Refund Policies
The contract must clearly outline conditions for refunds, including:
- Situations where refunds are applicable
- Processing timelines for refunds
- Deductions or penalties, if any
Prohibited Terms in Reservation Contracts
To further improve condo buyer protection in Thailand, certain terms are now explicitly banned in reservation agreements. These include:
Limiting Developer Liability
- Exemptions from liability for construction delays or contract breaches
- Shifting the burden of proof onto consumers during disputes
Unilateral Contract Changes
- Developer rights to modify terms, materials, or pricing without buyer consent
- Alterations to project details after the reservation is finalized
Unfair Termination Clauses
- Termination without proper notice
- Automatic forfeiture of payments for minor breaches by the buyer
Misuse of Reservation Fees
- Using reservation fees for purposes other than securing the unit
- Treating reservation payments as down payments without clear agreement
Data Protection Violations
- Unauthorized collection or use of personal information
- Sharing consumer data with third parties without explicit consent
- Retaining personal data beyond its necessary period
Exploitation of Common Property
- Charging residents for access to standard amenities
- Exclusive developer use of shared facilities
- Unilateral modifications to common areas without resident approval
Enhanced Consumer Protections from the Condominium Reservation Regulations
The regulations significantly enhance buyer rights by introducing the following safeguards:
Right to Terminate
Buyers may terminate contracts under specific conditions, such as:
- Developer failure to secure permits or approvals
- Unauthorized changes to project specifications or materials
- Breaches of material contract terms by the developer
Refund Rights
- Full refunds for developer non-compliance with agreed terms
- Pro-rated refunds based on project stage for terminations initiated by buyers
- Expedited refund processes with clear timelines
Transparency and Access to Information
Buyers are entitled to:
- A copy of the reservation contract in Thai
- Detailed project specifications, including floor plans and materials
- Updates regarding changes or construction delays
Protection Against Unfair Practices
The regulations prohibit:
- Arbitrary price increases or altered payment schedules
- Hidden fees or undisclosed charges
- Pressure tactics or misleading sales practices
Developer Obligations
The new framework establishes clear responsibilities for developers, including:
Refund Processing: Refunds must be processed within the specified timeframes (15 days for wire transfers, 45 days for credit card payments).
Contract Preparation: Two identical copies of the reservation contract must be provided, one of which remains with the buyer.
Project Transparency: Developers must disclose accurate project details and promptly communicate changes.
Construction Standards: All necessary permits must be obtained, and quality specifications adhered to.
Financial Management: Reservation fees must be used exclusively to secure the unit, with clear receipts issued for payments.
Timeline for Implementation of the Regulation
- Publication Date: October 3, 2024
- Effective Date: January 31, 2025
To facilitate compliance, authorities may phase in the regulations, prioritizing new projects while allowing grace periods for existing developments.
Penalties for Non-Compliance
Developers failing to comply with the new regulations face significant penalties, including:
Risks to Reputation: Public disclosure of non-compliant developers in official registers.
Financial Fines: Up to THB 200,000 per violation, with recurring fines for continued non-compliance.
Criminal Liability: Potential imprisonment of up to one year for severe breaches.
Administrative Actions: License suspension or project halts for major violations.
Impact on Thailand’s Real Estate Market
These regulations are expected to strengthen consumer confidence in Thailand’s real estate sector, especially in the Thai condominium market by improving transparency and buyer protections.
Foreign investors, in particular, may view the market as more credible and secure, encouraging greater participation in foreign condo ownership in Thailand. However, stricter compliance requirements could impact project timelines, prompting developers to adopt more realistic schedules and phased rollouts.
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Foreign Condo Ownership in Thailand
Foreigners can own up to 49% of the total floor area in a condominium development under Thailand’s real estate law. However, this cap may increase to 75% in the near future, subject to pending amendments.
To verify condo foreign ownership quotas, buyers should consult the relevant jurisdiction office before making a purchase.
How many condos can a foreigner buy in Thailand?
There are no restrictions on the number of units a foreigner can acquire, provided the ownership cap has not been exceeded.
Condo Due Diligence in Thailand
While these new regulations provide stronger safeguards, buyers are still encouraged to conduct thorough due diligence when purchasing property. Condo due diligence in Thailand involves verifying project approvals, developer credibility, and potential risks, ensuring a well-informed investment decision.
A detailed condo due diligence investigation can uncover important issues that may impact the investment’s value and overall profitability. Some common issues identified during the due diligence process include:
- Undisclosed Mortgages: The buyer may later learn that the property is subject to a mortgage not revealed during the transaction. This oversight could leave the new owner liable for settling the previous owner’s debts.
- Ongoing Legal Disputes: The company owning the land or property may be entangled in long standing legal conflicts. Purchasing such a property could expose the buyer to unexpected legal battles and associated costs.
- Outstanding Tax Liabilities: Buyers may discover that the previous owner failed to pay property taxes. In such cases, responsibility for back taxes, along with penalties, often shifts to the new owner.
- Non-Compliant Construction: If the building was constructed without the necessary permits or fails to meet regulatory standards, the buyer may face significant fines or be required to fund costly renovations to bring the property up to code.
- Boundary and Ownership Disputes: Unresolved disputes regarding property boundaries or condo ownership rights can complicate the transaction and result in legal complications for the buyer.
