Buying House And Paying Monthly Directly To Former Owner?

[atelko]

Hey guys,

A guy told me that it is also pretty common to buy a house here in Thailand and arrange a payment plan directly with the current owner.

This way is used by some foreigners if they can´t get any home loan from banks and don´t get the thai wife into it.

He also said that it is a pretty safe thing, because everything is written and signed in the contract.

I know that this way of owning property is also used in many other countries - "rent to own".

I would like to know if that is also a good way here in Thailand or I or other people should be aware of that possibility.

I think it is a great way. Sure, probably not all owners are willing to choose that way and you don´t have the variety of houses to choose from, but if somebody doesn´t really care and just want a house that belongs to him after a while and not just paying the monthly rent for nothing, it is a great way.

Hope you got some informations for me about that...

[trogers]

What kind of enforceable contract is there between house owner and farang? Remember, an illegal contract is not enforceable!

And over a long period of time, what contingency and rights does the farang have if the house owner were to sell it to another person, or upon his demise, the property passes on to his kins, and they do not honour the contract?

[Farma]

I’ve seen this method of purchase done by Thais and I know a few who have bought shophouses this way. It’s usually done for shops or houses built on leasehold land where the banks won’t lend money.

They make a contract drawn up by a lawyer and registered. A deposit is made usually followed by 3 or more payments 6 months apart.

[trogers]

I've seen this method of purchase done by Thais and I know a few who have bought shophouses this way. It's usually done for shops or houses built on leasehold land where the banks won't lend money.

They make a contract drawn up by a lawyer and registered. A deposit is made usually followed by 3 or more payments 6 months apart.

"Purchase done by Thais", not by a farang. It is illegal for a foreigner to own freehold landed property. This point makes such a contract illegal, and unenforceable in the courts.

[malcolminthemiddle]

I'm aware of a procedure we shall call “Option to Buy”. The buyer buys an option to purchase the property within a set time period at a fixed price. During the option period the buyer has use of the property at an agreed rent. The rent paid by the buyer during the option period is offset against the fixed purchase price should the buyer take up the option to buy. Depending on the agreement, during the option period the seller can or cannot sell the property to a third party. Should the seller sell to a third party as allowed under the agreement or the buyer not take up the option to buy, the money paid in rent is forfeited. Again depending on the agreement the option agreement maybe sold or passed on to a third party. I'm unsure whether an "Option to Buy" can be registered in Thailand?

[trogers]

I'm aware of a procedure we shall call "Option to Buy". The buyer buys an option to purchase the property within a set time period at a fixed price. During the option period the buyer has use of the property at an agreed rent. The rent paid by the buyer during the option period is offset against the fixed purchase price should the buyer take up the option to buy. Depending on the agreement, during the option period the seller can or cannot sell the property to a third party. Should the seller sell to a third party as allowed under the agreement or the buyer not take up the option to buy, the money paid in rent is forfeited. Again depending on the agreement the option agreement maybe sold or passed on to a third party. I'm unsure whether an "Option to Buy" can be registered in Thailand?

Can an 'option to buy' be effective when ownership title of the object of the sales cannot be transferred, as it is against Land Law?

[katabeachbum]

Hey guys,

A guy told me that it is also pretty common to buy a house here in Thailand and arrange a payment plan directly with the current owner.

This way is used by some foreigners if they can´t get any home loan from banks and don´t get the thai wife into it.

He also said that it is a pretty safe thing, because everything is written and signed in the contract.

I know that this way of owning property is also used in many other countries - "rent to own".

I would like to know if that is also a good way here in Thailand or I or other people should be aware of that possibility.

I think it is a great way. Sure, probably not all owners are willing to choose that way and you don´t have the variety of houses to choose from, but if somebody doesn´t really care and just want a house that belongs to him after a while and not just paying the monthly rent for nothing, it is a great way.

Hope you got some informations for me about that...

I have sold like this and it works out well. The agreement is legally binding if not exeeding 3 years. If its more than 3 years its considered a lease and must be registered in land deed and taxes payed.

If the downpayment is more than 20-30% I would prefere to complete a transfer (co ltd?) and register the remaining payments as a loan in land deed. Or register a lease with monthly payments.

[katabeachbum]

I'm aware of a procedure we shall call "Option to Buy". The buyer buys an option to purchase the property within a set time period at a fixed price. During the option period the buyer has use of the property at an agreed rent. The rent paid by the buyer during the option period is offset against the fixed purchase price should the buyer take up the option to buy. Depending on the agreement, during the option period the seller can or cannot sell the property to a third party. Should the seller sell to a third party as allowed under the agreement or the buyer not take up the option to buy, the money paid in rent is forfeited. Again depending on the agreement the option agreement maybe sold or passed on to a third party. I'm unsure whether an "Option to Buy" can be registered in Thailand?

Can an 'option to buy' be effective when ownership title of the object of the sales cannot be transferred, as it is against Land Law?

Yes, but the agreement must mention the rights/duty to transfer to any thai national or co ltd.

[malcolminthemiddle]

I'm aware of a procedure we shall call "Option to Buy". The buyer buys an option to purchase the property within a set time period at a fixed price. During the option period the buyer has use of the property at an agreed rent. The rent paid by the buyer during the option period is offset against the fixed purchase price should the buyer take up the option to buy. Depending on the agreement, during the option period the seller can or cannot sell the property to a third party. Should the seller sell to a third party as allowed under the agreement or the buyer not take up the option to buy, the money paid in rent is forfeited. Again depending on the agreement the option agreement maybe sold or passed on to a third party. I'm unsure whether an "Option to Buy" can be registered in Thailand?

Can an 'option to buy' be effective when ownership title of the object of the sales cannot be transferred, as it is against Land Law?

Yes, but the agreement must mention the rights/duty to transfer to any thai national or co ltd.............

........... should the property include land.

Edited August 14, 2009 by malcolminthemiddle

[trogers]

I'm aware of a procedure we shall call "Option to Buy". The buyer buys an option to purchase the property within a set time period at a fixed price. During the option period the buyer has use of the property at an agreed rent. The rent paid by the buyer during the option period is offset against the fixed purchase price should the buyer take up the option to buy. Depending on the agreement, during the option period the seller can or cannot sell the property to a third party. Should the seller sell to a third party as allowed under the agreement or the buyer not take up the option to buy, the money paid in rent is forfeited. Again depending on the agreement the option agreement maybe sold or passed on to a third party. I'm unsure whether an "Option to Buy" can be registered in Thailand?

Can an 'option to buy' be effective when ownership title of the object of the sales cannot be transferred, as it is against Land Law?

Yes, but the agreement must mention the rights/duty to transfer to any thai national or co ltd.

OP did say, "...and don´t get the thai wife into it". Using Co., Ltd has numerous problems such as nominees, etc.

[sirineou]

There are 2 ways a real –estate transaction such as this can be accomplished.

1) Rent With an option to buy

2) Owner finance, where the owner holds the Note

First let me say that you can’t personally own the land in Thailand, you can own a condominium, or lease the land, but that is a different subject addressed under “ property ownership”

And second say that I have limited experience with real-estate in Thailand, but extensive experience with both of the above real estate purchasing options in the States.

The Rent with an option to buy is an agreement where you rent a property , and a pre-agreed percentage of the rent go toward the eventual purchase of the property. There are many Problems with this type of agreement, and a very large percentage of those who enter in such agreement , do not exercise their option to buy in the end. (I would say over 80%.)

One of the problems is:

If the agreement is for a fixed price Both the seller and the renter don’t know what the value of the property will be at the end of the option, and one or the other could loose. This problem is remedied by writing an appraisal contingency in the contract. ( ie. Purchase contingent to the property appraising at or above the sale price at time of closing) . in the USA an appraisal is easily accomplished, all you need are comparable current sales, but in Thailand where there is no standardized Multiple listing service where all the listings and sales are recorded , and accurate appraisal is difficult to accomplice.

In fact this is a thread that I plan to start, “ how does one accomplice an accurate and objective appraisal for a residential property in Thailand” ?

The second way to Purchase( and the best in my opinion) is where the Seller holds the Note. I have seen this done by many developers in Thailand . The Piman Group I believe is one that will do this for you, or it can be negotiated with a private seller who is willing to wait for his money.

You purchase the property in the normal way, but the seller holds a lien on the property,the lien is placed in the title where if the Buyer fails to perform according to the terms of the contract, the property revert to the seller . This purchase agreement can be a standard 15 or 30 year mortgage, at an appropriate interest rate, or a 5 year ( or other agreed term) balloon mortgage where you make payments for the 5 years and at the end of the 5 years use the equity you have in the property to secure a loan from a bank and pay the balance, and the bank becomes the lien holder, or if you have the funds, pay the balance and hold the property free and clear.

I Know this is a very superficial analysis on the subject, but I hope it gives you a little insight . The key to all of these transactions is a properly written contract, with all the appropriate contingencies to protect both the seller and the Buyer.

[JUDAS]

I bought my house ( or my wife's house ) by paying around a 30% deposit to have it built then made monthly payments directly to the builder/ land owner for 5 years. House is now fully paid for with it registered in the wife's name. The price I paid in total equaled the same if I'd rented a similar property in the same development for 5 years. I know of about 35-0 properties bought in the same way.

[trogers]

I bought my house ( or my wife's house ) by paying around a 30% deposit to have it built then made monthly payments directly to the builder/ land owner for 5 years. House is now fully paid for with it registered in the wife's name. The price I paid in total equaled the same if I'd rented a similar property in the same development for 5 years. I know of about 35-0 properties bought in the same way.

You must be mistaken! You did not buy. Your wife bought...

[lioness]

Are you purchasing a home, or house and land, there is a difference?