Buying a house with installments paid directly to the owner

[stubuzz]

Hi.

My wife has seen a house in the neighborhood that she wants to buy.  She has told me she is going to ask the owner if they will agree to accept payment in installments so we don't have to go through the bank and pay interest. Something like 50% down and the rest over 12 months.

Has anybody heard about or used this kind of arrangement before?

 

 

 

[BritManToo]

Don't do it!

[Pilotman]

We looked into this idea a few years back.  It seems that it is not unusual to find such an arrangement , but it has its dangers, many of them in fact.  Unless you go to the Land Office and register the arrangement with them, and get it recorded on the chanute, the house can be sold from under you and you have no protection.  Even then, it can still happen. You also need a legally air tight document, detailing the deal and who is responsible for what, such as what happens if after a few years the house burns down or a bad fault is found, or the present owner dies. There are many other ifs and buts that you need to cover to protect your payments, too many to go into here.for example, has the house been used as collateral for a basically loan shark loan. You do not want the boys with baseball bats pitched up. demanding you pay the loan off.   We decided that it was all too risky and we bought outright.  

[stubuzz]

1 minute ago, Pilotman said:

Unless you go to the Land Office and register the arrangement with them, and get it recorded on the chanute, the house can be sold from under you and you have no protection.

So the terms can be added to the chanote?

Would the Land Office have any pre-made contracts for this scenario?

[Pilotman]

To add to my last, there is a process that you can enter, which is a 'rent to buy', agreement, which is simpler to draw up and may , only may, work out in the end.  Basically you agree with the owner to rent the property over x years and after that the owner will sell to you at a vastly reduced price.  This is also subject to a legal agreement between you. That is a better approach,  but you have to be prepared to walk away at the end of the rental period and just put it down as a rental that came to a natural  end. 

[rumak]

Just now, stubuzz said:

So the terms can be added to the chanote?

Would the Land Office have any pre-made contracts for this scenario?

read the two posts above your question.     then read again.

 

most things here that have some risk........ are not worth the problems you could encounter.

 

[Pilotman]

3 minutes ago, stubuzz said:

So the terms can be added to the chanote?

Would the Land Office have any pre-made contracts for this scenario?

Yes, they can, I don't know if they have set wording .  I would imagine that a lawyer would help with that. 

[rumak]

the only possible "deal" you might consider is IF  the owner was willing to transfer chanote to you,  THEN  you would move into the house,,,,,,,,,,,,, and make the final payments over a year as you stated.

but i don't think the owner will do that ,  do you ?

Of course,  sometimes not so easy to sell a used house,  so maybe the

owner would be motivated,  with half down and quick payment of the balance 

[stubuzz]

I agree that it is risky. Maybe getting a lawyer to hold the chanote would work.

[Yinn]

Three lawyer deal.

your lawyer, seller lawyer and another lawyer hold the chanote.

MUST be different lawyer. 

MUST write from the land office on Chanote. 

MUST insurance the house. 

 

Similar to jumnong way.

 

No problem.

Better than pay bank. Also if you want to pay one year the bank will “fine penalty” for pay “to quickly”. Bank never give one year house loan. 

 

Good luck.

[impulse]

If the OP is intending to put down 50% and pay off the house over 12 months, how much bank interest is that really, and is it worth the risk?  Maybe a few percent of the total?

 

As appealing as it may sound, "owner financing" reads like the first line in so many Thai real estate scams.

 

[bwpage3]

1 hour ago, Yinn said:

Three lawyer deal.

your lawyer, seller lawyer and another lawyer hold the chanote.

MUST be different lawyer. 

MUST write from the land office on Chanote. 

MUST insurance the house. 

 

Similar to jumnong way.

 

No problem.

Better than pay bank. Also if you want to pay one year the bank will “fine penalty” for pay “to quickly”. Bank never give one year house loan. 

 

Good luck.

It is always a problem because you can never trust the other party.

 

 

 

 

[Yinn]

1 hour ago, impulse said:

If the OP is intending to put down 50% and pay off the house over 12 months, how much bank interest is that really, and is it worth the risk?  Maybe a few percent of the total?

 

As appealing as it may sound, "owner financing" reads like the first line in so many Thai real estate scams.

 

Bank will not give house loan for one year. 

Interest will be minimum three year x 8-12% = 24%-36%. Even if pay in one year or one month. They not care, fine if pay early. Every bank the same. 

If not believe Yinn, ask the bank yourself.

 

Plus “applications” fee. 

[Yinn]

56 minutes ago, bwpage3 said:

It is always a problem because you can never trust the other party.

 

 

 

 

No. 

You undersatnd “jumnong?”

same way.

[seajae]

wife bought a few blocks of land from a doctor with no bank/finance needed, paid a deposit and then monthly payments, we were given receipts each payment and also a copy of the chanotes for each block, last year we asked about paying the balance in cash, he actually gave us a good discount on the agreed price and everything was done/finalized at the land office, helps when you have an honest seller.

[Scouse123]

3 hours ago, stubuzz said:

So the terms can be added to the chanote?

Would the Land Office have any pre-made contracts for this scenario?

It is not the land offices job, its yours to put your house in order, so to speak! 

Of course they won't make such arrangements or contracts of this nature.

A previous poster has already told you to go to a lawyer and get an airtight contract.

What if they have already borrowed on the property? If it is informal it won't be registered. The chanote needs checking and a proper contract and deed of purchase needs doing. Do not fall for the old chestnut,  we are friends and known each other for years, its all <deleted>.

You seem to be asking for trouble and to lose money and get grief by not doing things correctly.

Go to the bank and do it properly. Besides,Interest rates worldwide are ridiculously low.

[AndyAndyAndy]

What could go wrong. LOL

[bwpage3]

9 hours ago, Yinn said:

No. 

You undersatnd “jumnong?”

same way.

Yes, Thai's cannot be trusted in money deals

 

You already mentioned lawyers.

 

If they were trustworthy, no need.

[mr mr]

think about how much money you want to lose. then invest that amount. 

[mariohh1]

i sold 3 houses this way and bought land this way never any problem and of course you do a contract with a lawyer like anywhere else too.

 

[KMartinHandyman]

 Buy it with a 20 or 30 year bank loan with extremely low interest and pay that off in 12 months provided there’s no prepayment penalty which there shouldn’t be. Don’t tell the bank your prepayment plan just get the loan and overpay each month or just pay the amount due each month and save the additional money until you’re ready then walk in and pay it off. The interest paid might be less than a lawyers fees and you’ve got protection of a clean purchase. Tell her don’t be kee neow?

[Farma]

As others have mentioned it can be done. My wife has bought or sold 3 properties using this method with the deal written up by a lawyer and registered at the land office. Its a common method among Thais. They have a name for it as well.

 

I think the last deal she made was a deposit followed by 3 x 6 monthly payments. The chanote is transferred once he final payment is made. If the buyer fails to make all the payments he forfeits his money. Up until final payment his payments are treated as rent.

[Yinn]

3 hours ago, bwpage3 said:

Yes, Thai's cannot be trusted in money deals

 

You already mentioned lawyers.

 

If they were trustworthy, no need.

I think your country if do deal like with people you never meet before it be normal to use lawyer. 

 

Stupid post. 

[Yinn]

8 minutes ago, Farma said:

As others have mentioned it can be done. My wife has bought or sold 3 properties using this method with the deal written up by a lawyer and registered at the land office. Its a common method among Thais. They have a name for it as well.

 

I think the last deal she made was a deposit followed by 3 x 6 monthly payments. The chanote is transferred once he final payment is made. If the buyer fails to make all the payments he forfeits his money. Up until final payment his payments are treated as rent.

Good post.

 

experience and real knowledge.

[Scouse123]

1 hour ago, mariohh1 said:

i sold 3 houses this way and bought land this way never any problem and of course you do a contract with a lawyer like anywhere else too.

 

 

key words. lawyer and contract.

 

12 minutes ago, Farma said:

As others have mentioned it can be done. My wife has bought or sold 3 properties using this method with the deal written up by a lawyer and registered at the land office. Its a common method among Thais. They have a name for it as well.

 

I think the last deal she made was a deposit followed by 3 x 6 monthly payments. The chanote is transferred once he final payment is made. If the buyer fails to make all the payments he forfeits his money. Up until final payment his payments are treated as rent.

 

key words lawyer and written deal as in contract.

 

To the OP, this is what experienced buyers and sellers are telling you. Add me to the list as I have bought and sold in companies and also done usufructs all through lawyers and contracts.

 

Incidentally, when I bought the land for my other half twenty years ago, the family was all about ' No need for lawyers and that kind of expense, we are all family ' 

 

I insisted and pushed ahead.

 

They have land adjacent to us separated by a 7ft wall. The mother transferred their portion of land to the daughter with a verbal agreement it would be shared with the remaining brothers.

 

Guess what? The daughter borrowed off moneylenders, the brothers paid them back, TWICE, and now she doesn't want to transfer the land to the brothers.

 

This is Thai families with each other!

 

My partner to this day still thanks me for digging my heels in.

 

 

 

 

 

 

 

 

 

[CorpusChristie]

3 hours ago, bwpage3 said:

Yes, Thai's cannot be trusted in money deals

 

You already mentioned lawyers.

 

If they were trustworthy, no need.

That is people in general though, not just Thais

[jvs]

You rent the house for one year and go live in it.Make a contract with the landlord that you will buy it and pay cash in one year.

You can pay rent one year up front as down payment.

You have one year to make up your mind.

There will not be too many people who are buying now so the seller should agree.

[Scouse123]

21 hours ago, jvs said:

You rent the house for one year and go live in it.Make a contract with the landlord that you will buy it and pay cash in one year.

You can pay rent one year up front as down payment.

You have one year to make up your mind.

There will not be too many people who are buying now so the seller should agree.

 

Good idea!

 

Even if they don't want to l,ive in it, they could still rent and have use of it whilst they get their money together in full. It makes far more sense than overstretching themselves. If they haven't got the cash in full after one year, all they have lost is a years rent.

[khunPer]

On 6/6/2020 at 1:11 PM, stubuzz said:

Has anybody heard about or used this kind of arrangement before?

Yes, it's done, but it's a simple question of trust.

 

Best is to transfer the land at the land office upon the 50 percent down payment, and at the same time declare a loan servitude for seller, just like a mortgage.

[chilly07]

Do it through a bank. Have done this twice without any early payback penalty at SCB. Much safer as bank ensures legality at land office. Only additional cost is their insurance.