Right Of Redemption For Seller Of Foreign Owned Condominium

[jackcorbett]

A friend of mine is in the process of selling his condo. I strongly urged my friend to hire a Thai woman attorney who has done an excellent job for me on two separate occasions at a very reasonable price. He saw the woman, then he wound up seeing two other attorneys after deciding she had made an error in her understanding of the Thai law regarding the right of redemption. I want to ease in my own mind if the lawyer I strongly recommended to him was right or not.

The sales price agreed upon between the buyer and seller is 5 million baht. The buyer claims he doesn't have the money but he will get it down the line. He has just put down 2 million baht on the condominium which is in my friend's own name, not a Thai company. During the next several months he is to come up with another half a million baht. The buyer is to pay the seller 10,000 baht a month which represents the approximate monthly interest on the outstanding balance for three years after which he is to pay the balance owed to the seller. That's at 5 % interest.

I just saw my friend who told me the lawyer he saw first who I urged him to use insisted that he get "right of redemption." I understood this to mean that if for any reason the buyer defaulted on his payments that he could be evicted from the condo, my friend would then gain possession of the condo and the seller would forfeit all monies he had paid the seller.

What happened next is my friend went to a "falang" lawyer who told him the Thai attorney was wrong on the question of "right of redemption" The buyer had hired a legal advisor who I am well familiar with (who does not have a law degree). This advisor wrote the initial sales contract. She agreed with the falang lawyer regarding the "right of redemption so now my friend thinks the lawyer I recommended isn't a good lawyer and that she gave him bad legal advice.

The sale just went through. And I got it from both the seller and buyer that the title will be in both their names. My personal feeling is the lawyer I recommended gave my friend sound legal advice. The legal adviser representing the buyer will naturally serve her client to the best of her ability and this means drawing up a contract that is in the best interests of her client---and not my friend. As to the "falang lawyer"....who knows. He's a Westerner, not Thai and I think not nearly as qualified as the lawyer I urged my friend to hire in the first place.

So after all the above facts are considered, my question is this. Did the lawyer I recommended to my friend give him sound legal advice or not---that is the right of redemption enforceable in Thailand against a buyer of a foreign owner condo who's defaulted in his payments? Secondly, did my friend screw up by making the deal he wound up making?

[Seizetheday]

Amazing that your friend would "give" the buyer 50% of his condo when they have only paid 40% of the purchase price. It sounds like a recipe for disaster

Edited June 19, 2010 by Seizetheday

[tangoll]

I'm not a lawyer, but I have bought and sold several condo properties in Bangkok (as a non-Thai national), and in your friend's case, as the owner and seller, I would never have agreed to transfer the ownership of the condo unit either under the right of redemption or enter into joint ownership with the buyer. For one thing, with transfer taxes/fees going back to normal levels, depending on number of years used in tax/fees calculation, you want to avoid multiple ownership transfers. Even if right of redemption is available, I'm sure trying to get back ownership under redemption rights can't be so easy or straightforward. Under the joint ownership arrangement, the joint owners would be responsible for maintenance fees, insurances, increase in sinking fund, etc of the property, and any contingent liabilities that the owners of a condo unit might incur, such as leakage into the condo unit below, etc.

If I were the seller, and offering to help a buyer with deferred payments, I would offer the buyer a regular sales and purchase contract which offers the buyer the right of occupancy under a set of payment terms (somewhat like a rental with option to purchase), and will transfer the condo unit only after all payments have been received. The buyer would have the protection of the S+P Agreement plus right of occupancy, maybe with a separate rental agreement.

[jackcorbett]

Good points from both of you. I tend to view it like this....1. My friend is not a bank so why should he behave like one? And 2. Good idea. Let the buyer rent the condo with an option to buy. That seems to be the tidiest arrangement. Still wondering how far off base the lawyer i strongly urged my friend to go to was when she told him to insist on right of redemption. I can see your point about the stickiness of real estate transfer fees being paid still one more time. Also.......although it seems many of Thailand's traffic laws are the same as in the U.S. the major difference is that here in Thailand they their enforcement is practically non existent. Example in point....what happens in the U.S. if one runs a red light? if the police see you do it you are going to get a ticket every time. But here in Pattaya the last time anyone got a ticket for running a red light was in 1897 while the last time anyone got a ticket for driving the wrong way down a one way street was 1814. So as a practical matter I'm wondering how difficult it is to get the authorities to actually enforce a right of redemption on a condo sale from one Westerner to another.

The last time I used the lawyer i recommended to my friend was when a female insurance agent sold me a policy on my condo, but failed to deliver the policy to me. Turned out the insurance broker pocketed the money but did not insure me. I had to pay this lawyer 1000 baht. She put the fear of God in the Insurance broker and I had my policy in a matter of days. The insurance broker had been playing a game of standing me up for appointments and on the appointments she kept she's simply not bring me my policy. She stood up my lawyer too who immediately informed the broker that if she did not come up with a policy for me in very short order she's put her in jail. I would absolutely not want to cross this lawyer who has on at least one other occasion than the one I mentioned been rather successful at gaining the instant respect of the opposition.

[jackdawson]

Turned out the insurance broker pocketed the money but did not insure me

what a country !

[eljeque]

I have sold many properties here, and a few of them over time. I would never transfer ownership into the buyers's name until after I had been paid in full.

I would not make a redemption contract either.

I would not register a mortgage at the land office.

I would simply not transfer the property until after payment was completed.

The only possibility is "Kai Fark", as the seller would be the one with the property in his name, and the buyer would need to pay him the three million plus interest / rent / etc., at the end of the contract or the property would remain in the name of the seller and not revet to the buyer. This way, the buyer would lose the two million.

In the case of a mortgage, if the buyer defaulted, the porperty would go through court and to the auction house, and the the seller could use his court judgement to rebuy the property, but he would also have to pay a lot of fees and this would also take a long time, all of which the buyer would be able to stay in the condo.

The court would then return to the buyer the difference between the amount owed to the seller on the mortgage and the amount the property went for at the auction. The auction is so that the seller gets his mortgage money back, not makes a profit.

SO, the seller could always make a higher mortgage amout at the land office, by including interest in the amount up front, and then make the mortgage....