Selling Property Already "Owned"

[Gatorade]

On Koh Samui a large property company acquired money from 'Khai Phac' re-mortgagers for land they had already sold, without the original buyers being aware or granting approval.

The terms were that the money was 'borrowed' and had to be paid back from the property company to the 'Khai Pac' mortgager within a certain time period.

However that time period passed by and the re-mortgagers took possession of the land title deeds as the money was not repaid.

The property company is being sued amongst other things for fraud, many other legal actions are underway.

It must have been apparent to the re-mortgagers (I know this is not the correct term but seems to be the nearest description)

that they were lending money on land and properties on a major property development and only a cursory inspection would have shown them that there were contracts in place already committing to sell.

So the question for you wise sages is this: Surely the 'Khai Phac' re-mortgagers should have carried out a 'due diligence' check

before handing over money to the developer? Are they legally allowed to retain the property simply because they hold title deeds

on land already contracted to be sold previously, and in most cases where a hefty deposit had already been paid?

Grateful your thoughts but the advice I have received so far is that although the Developers were at fault the Re-mortgagers are in no way to blame.

My simplistic view is that the original owners should have been advised by the re-mortgagers as it came as a shocking surprise

for owners of 40 odd properties, communal land and roads on the complex, that they had already been re-sold!! Surely the

re-mortgager must take responsibility as well for not (probably deliberately) carrying out a comprehensive due diligence check.

Thanks for your views.

[InterestedObserver]

He who holds the title deed (Chanote) controls the game. There was an obvious breach of contract between the property company (developer) and the original buyers. But apparently the original buyers had not been registered as the property owner and taken possession of the Chanotes.

[katabeachbum]

He who holds the title deed (Chanote) controls the game. There was an obvious breach of contract between the property company (developer) and the original buyers. But apparently the original buyers had not been registered as the property owner and taken possession of the Chanotes.

Lesson learned is, pay less than 10% before transfer of land deed, and the rest at land office when clear title is transfered

Some developers make buyers believe Tabien Baan is ownership. It is not. Chanote is.

[PattayaParent]

Sounds legit so long as the new owners (your re-motgagers) don't intend to cancel the contracts with the purchasers without compensation.

The purchasers just pay the balance of the amounts owing on their contract to the new owner.

[InterestedObserver]

Sounds legit so long as the new owners (your re-motgagers) don't intend to cancel the contracts with the purchasers without compensation.

The purchasers just pay the balance of the amounts owing on their contract to the new owner.

The original contracts and deposits paid are with the property company (developer) who is presumably still in business, nothing was mentioned about a bankruptcy or company closure. The land is now owned by the 'Khai Phac' re-mortgager, who is free to go about his business with an unencumbered Chanote. Depends if the original contracts were ever registered with the land office who was apparently unaware (legally) that the land had been presold and deposits paid. This is going to get messy and will only bode well for the lawyers involved.

Edited August 13, 2010 by InterestedObserver

[H2oDunc]

I'm a bit lost here.

The title says " selling property already owned " How can the developer sell something he has already sold as per title ? Or am I missing something here ? It wouldn't be the first time As I see it if somebody has bought a property they should have the chanote etc for this purchase. If they have bought a property without anything then what do they expect ?

As said maybe I am missing something

[trogers]

Hope those pretty brochures are worth the price.

This is the reason I only buy 2nd hand properties.

[InterestedObserver]

Simply put, "selling property already owned" only paid a deposit. A deposit is not a legally registered property sale as required by Thai law. No title deed (Chanote) ever changed hands at the land office.

[Gatorade]

Simply put, "selling property already owned" only paid a deposit. A deposit is not a legally registered property sale as required by Thai law. No title deed (Chanote) ever changed hands at the land office.

Thanks everyone for your replies. I should have been clearer. In most cases over half the deposit had been paid and in some cases

all the money paid upfront to the developer. I see you all shrieking in horror! But at the time, over 4 years ago everything was

going well and the developers had met all their previous commitments. Contracts were issued as were Memorandums of agreement

which were legally binding but as you all rightly point out the Chanote title is the clincher.

The Company is now in receivership and there are criminal and civil cases which have been successfully brought against them

but getting the money out of them is of course a different story.

My point is that the Khai Phac re-mortgagers should bear some of the responsibility as they must have known from even the most

simplistic research that these properties were already "sold". The other point I'm unclear on is that building work was already in progress on many of these properties. Do the Khai Phac mortgagers inherit all the building work/footings etc in addition to the Chanote land?

If only we had the benefit of hindsight!!

[InterestedObserver]

I'd say Khai Phac mortgagers inherited all building work and footings etc.along with the land. Assuming nothing was ever registered at the land office there are no individual registered owners of the houses. Whose name appears on the building permits? Any recourse is with the property company (developer) now in receivership.

[PattayaParent]

Simply put, "selling property already owned" only paid a deposit. A deposit is not a legally registered property sale as required by Thai law. No title deed (Chanote) ever changed hands at the land office.

Thanks everyone for your replies. I should have been clearer. In most cases over half the deposit had been paid and in some cases

all the money paid upfront to the developer. I see you all shrieking in horror! But at the time, over 4 years ago everything was

going well and the developers had met all their previous commitments. Contracts were issued as were Memorandums of agreement

which were legally binding but as you all rightly point out the Chanote title is the clincher.

The Company is now in receivership and there are criminal and civil cases which have been successfully brought against them

but getting the money out of them is of course a different story.

My point is that the Khai Phac re-mortgagers should bear some of the responsibility as they must have known from even the most

simplistic research that these properties were already "sold". The other point I'm unclear on is that building work was already in progress on many of these properties. Do the Khai Phac mortgagers inherit all the building work/footings etc in addition to the Chanote land?

If only we had the benefit of hindsight!!

Again it all depends on whether the new owner intends to honour the contracts already made with the depositors / purchasers.

All they have done is bought a distressed development as an investment, presumably at a discount. Do they intend to comlplete the development?

[eljeque]

The Khai Phac re-mortgagers, Khai Phac = Sell with the right to buy back.

The developers sold the land to the buyers, but the buyers must sell it back to the developers when the developers have the money to pay them back, plus interest (usually paid monthly), and this must happen within one year, unless they make an agreement to renew it.

If the developers do not have the money, then the land continues to belong to the new owners forever. They have lost it.

Anyone who contracted with the developers to build a house on the land should have first investigated to see of the developers really did own the land, not owned it on a mortgage with the bank-like most of them do, but truley owned it. In this case, the developer did not own the land, and I am sure that they did not make sales fast enough to make payments, or did not really plan on making payments in any way at all, to the owners in order to be able to buy the land back at the end of the payment period.

The Khai Phac re-mortgagers, bear no responsibility in this. They own the land and they own any structires built on the land as long as those structures have "anuwat buksan" building permits, for the structures. No one can have any claim to the structures as no one has any agreement to build or own any structures with them on their land.

It would be a good idea for the buyers to form a group and then go to the Khai Phac re-mortgagers, and work out something with them, as they are the ones in power, legally and morally. The took land back as a gaurantee on a loan, and the borrowers defaulted. They keep the land, but they are not the ones who signed the contracts to build houses. If the houses cost 10,000,000, and the builders received 10,000,000, but did only 1,000,000 in work on the houses, then will the buyers want the land owners to continue and spend another 9,000,000 on each house to finish it? It is not their responsibility.

The buyers have been cheated, and should be as nice as possible in dealing with the land owners, as they are holding the cards, and are also not in the business of building houses, but are instead in the buiness of lending money. They want their money back on the project, plus big interest, and if the house buyers bite the bullet and pay the land owners for the land and their interest, the house buyers will receive their land and their semi-built structures which they can then finish at their own expence.

This may not be any fun, but the other option is to fight with them in court and end up with nothing but costs.

Try to get your money, as much as possible, out of the original developer, as he is the thief.

[Gatorade]

Thank you for your very comprehensive answer. Most of the prospective home owners on the site will not pay twice for the same property.

But as you point out the legal battle should be taken up against the original sellers. This is going on at the moment. However they have gone into receivership and it will take some time to find out where the Directors have secreted the Billions of Baht which was paid to them.

I just have the feeling that the odds are stacked up in favour of these Khai Phac mortgagers and I could not see a similar situation

being allowed to exist in Europe. They really must have known the situation as it is a large project. None of the prospective owners were aware of the re-mortgaging until long after the expiry date. It was then that the Khai Phac vultures 'suddenly' found out who the prospective owners were to ask them if they would like to pay again for their land but at least twice the original selling price.

Still, the law seems to be on their side and perhaps I was just grasping at straws that some measure of responsibility should be with the KP people.

Many thanks Gator

[eljeque]

Although I know the (Sell with rights to buy back) system well, I do not know the laws against concerning selling houses on land which one does not own, but I am sure there are many.

Maybe this below has already been done.

I guess that your group is suing the developer, and I suggest that you also go directly to the police department, and file police reports as individuals against the developer for fraud.

This report will first be written by a low level policeman , and then he will send you into a captain who will write a more lengthy report.

From here, the report will then be sent up the ladder to be reviewed by higher level policemen, and and if accepted, sent to the public prosecutor (ai-yah-gahn) who will proceed with a criminal case against the developer's owners.

I state the above under the assumption that the developer has no ability to ask that the polcie report is not slowed nor stopped anywhere along route in the police station to the public prosecutor.

By your going by the police route instead of, or besides the civil court route, the developer then risks jail instead of just being told to pay back the money he pocketed, which he has more than likely already hidden into other land in the country.

You can also see if the new owners of the land and the developers have any board members who are the same people, or the same family. This could show their implicit knowledge... BUT, Thailand is not like the Western Courts where lots of evidence and witnesses are called for indepth questioning and the like. Some evidence can be obvious to you as fact, but not allowed into the courtroom, to your utter surprise.

If you are able to find the other buyers, those who are Thai and have some wealth themselves or some connections in the police or elsewhere, and or find if a bank had arranged a mortgage, or planned on arranging a mortgage for anyone there, they may be of some assistance.

Did the new land owners release any of the properties to any of the new buyers at any point in time? Were any of the houses ever finished? I cannot think of a way right now, it is late, but you may be able to find a way to show the new owners released some of the properties (if they ever did), only after the developers where paid in full, and then the new land owners were paid in full.

If this makes any sense, it will surprise me, but then see if you can show that the new land owners knowingly cooperated with the developers in their shame... This is a long shot, and maybe you can make it sound better than I did.

And, I do not know if their cooperating would be illegal.

Best of luck to you and the other buyers.

[eljeque]

One more idea, but again, you need to run this by your attorneys, as I am no pro at this.

Although I may be grasping at straws here.....

The developers must register to build a housing deveolopment at City Hall.

And City Hall maintains the office for building permits (or at least the one in Pattaya does). Phuket should be similar.

Building permit = Ahn ooh wat - book sahn

I am sure, like you are, that the new land owners must have been cognizant of the development. They may not legally be responsible for looking at the land they are lending on (check the date of the loan or loans), although that would be difficult to argue in court, and they may not be legally liable for looking at the office in City Hall for builiding permits for a company which is building houses on land which they own, but it would make sense for the new owners to find out.

It might be possible for you to show in court that the the new owners should be responsible for some form knowledge of the entire situation and that some knowledge leads to some responsibility, AND it will be lot of work for a savy lawyer to accomplish.

[InterestedObserver]

Facts as posted: The original property developer is now bankrupt and in receivership. Many court cases are pending against the original property developer. No individual landowners were ever registered at the land office and/or registered on the title deed (Chanote) thus encumbering the title deed(s) and blocking any mortgage. Khai Phac mortgage lender now owns the land, and things fixed to the land, by way of a defaulted mortgage. The original deposit money has been spent or disappeared. Khai Phac is apparently willing to continue the development if people pay again at inflated prices, which many can't/won't do..

Edited August 18, 2010 by InterestedObserver

[Gatorade]

Facts as posted: The original property developer is now bankrupt and in receivership. Many court cases are pending against the original property developer. No individual landowners were ever registered at the land office and/or registered on the title deed (Chanote) thus encumbering the title deed(s) and blocking any mortgage. Khai Phac mortgage lender now owns the land, and things fixed to the land, by way of a defaulted mortgage. The original deposit money has been spent or disappeared. Khai Phac is apparently willing to continue the development if people pay again at inflated prices, which many can't/won't do..

That seems to sum things up, but the fact remains that all this re-mortgaging took place without the original buyers knowledge. This situation would not have arisen had they been aware. This subterfuge was to a degree aided and abetted by the KP lenders by asking no questions. Even the most elementary due diligence check would have revealed that sales contracts (for what they are worth) were in place.

It seems to me that there is not enough legal protection in Thailand to prevent such sharp practice. At the end of the day the property sellers received money for the same plots twice over!