Should i sell my property on consignment

[silver78]

Hi there,

 

My thai wife and me are trying to sell our house 8 millions. Yesterday a thai man came to our property, he was interested by it and purposed a sell on consignment (ขายฝาก). What i understood, it's the guy give us 8 millions, then we go together to the land office, we give him our chanote and we sign a document which stipulate that we borrow 9 millions from him but he said without interest. After a few months without give back any money or interest we sign another document and he get the property. What do you think about it ? Is it safe ? Should i be assist by a lawyer ?

 

Thanks you so much for your precious advice !

Edited November 8, 2016 by silver78

[Peterw42]

I'm not following, the guy gets the chanote (he owns the property) and you still owe him 9 million dollars. he gives you 9 million then you give it back, then he owns the property ??

I have read it 5 times and still cant understand. Selling on consignment is essentially what you do if you get an agent to sell for you.  

[silver78]

1 hour ago, Peterw42 said:

I'm not following, the guy gets the chanote (he owns the property) and you still owe him 9 million dollars. he gives you 9 million then you give it back, then he owns the property ??

I have read it 5 times and still cant understand. Selling on consignment is essentially what you do if you get an agent to sell for you.  

 

 

Hi Peter,

 

Sorry for my poor explanation. First it's 8 millions bahts not dollars :) the title deed is transferred to him after 6 months, 1 years or more because we didn't repay the loan we contracted with him. I think we call it  "mortgage loan"

Edited November 8, 2016 by silver78

[Peterw42]

5 minutes ago, silver78 said:

 

 

Hi Peter,

 

Sorry for my poor explanation. First it's 8 millions bahts not dollars :) the title deed is transferred to him after 6 months, 1 years or more because we didn't repay the loan we contracted with him.

 

I dont think you need a lawyer, I think you need a team of lawyers, lol

 

Others can maybe advise

[silver78]

5 minutes ago, Peterw42 said:

 

I dont think you need a lawyer, I think you need a team of lawyers, lol

 

Others can maybe advise

 

ahahahah yes i know it's complicated. Thanks anyway Peter :)

[KittenKong]

It's a scam. If anyone approaches you here with any sort of arrangement that doesnt involve them giving you the full amount on the day of the sale with no strings attached then it's bound to be a scam.

[blackcab]

ขายฝาก = Kai Faak or Sale with the Right of Redemption (SRR). It is normally used by the owner to raise funds. The difference between a mortgage and SRR is that a mortgagee gives a loan to the mortgagor that is secured against the property, but the real estate remains the property of the mortgagor.

 

With SRR the owner wants to raise funds. To do this they sell the real estate, and receive a specified amount of money. They are also given a specified amount of time (usually 1 year). If the person who borrowed the money repays it plus interest, they can redeem the property and regain ownership. If they do not redeem the property by the deadline, it remains the property of the lender.

[Farma]

I think I know what he means.

It's common method among Thais buying and selling property especially with people having troubles obtaining a bank loan. Land offices are familiar with the arrangement.

 

Buyer and seller go to the land office and register for want of a better word a type of hire purchase.

 

Buyer agrees to pay regular installments usually a few months apart up until the agreed purchase price is reached.

 

Buyer and seller return to the land office on completion of final payment to transfer the chanote into buyers name.

 

If buyer fails to make payments as per agreement the seller keeps the property and monies paid.

 

Usually the buyer agrees to a slightly higher purchase price than what they would expect from haggling the price down.

 

Edit. blackcabs description sounds more like what the OP described. The method I mentioned is also commonly used.

Edited November 8, 2016 by Farma

[silver78]

12 hours ago, blackcab said:

ขายฝาก = Kai Faak or Sale with the Right of Redemption (SRR). It is normally used by the owner to raise funds. The difference between a mortgage and SRR is that a mortgagee gives a loan to the mortgagor that is secured against the property, but the real estate remains the property of the mortgagor.

 

With SRR the owner wants to raise funds. To do this they sell the real estate, and receive a specified amount of money. They are also given a specified amount of time (usually 1 year). If the person who borrowed the money repays it plus interest, they can redeem the property and regain ownership. If they do not redeem the property by the deadline, it remains the property of the lender.

 

Thanks Blackcab, i think it's what you speak about. Do you think it's risky for us (owner) ?

[silver78]

12 hours ago, Farma said:

I think I know what he means.

It's common method among Thais buying and selling property especially with people having troubles obtaining a bank loan. Land offices are familiar with the arrangement.

 

Buyer and seller go to the land office and register for want of a better word a type of hire purchase.

 

Buyer agrees to pay regular installments usually a few months apart up until the agreed purchase price is reached.

 

Buyer and seller return to the land office on completion of final payment to transfer the chanote into buyers name.

 

If buyer fails to make payments as per agreement the seller keeps the property and monies paid.

 

Usually the buyer agrees to a slightly higher purchase price than what they would expect from haggling the price down.

 

Edit. blackcabs description sounds more like what the OP described. The method I mentioned is also commonly used.

Thanks Farma, what we know is that man is very reach and he has a big company so i don't undestand why he is interested to do that rather that buy the property directly. I know he will pay lower tax but of course this isn't the main reason

[silver78]

the answer of a lawyer  about the "Sale with right of redemption"

 

This is special kind of loan. Like you sell the land to someone for getting some benefit, but you have right to buy it back in the future. For example, you sell the land to me at 5 Million bath and I make an agreement with you that you can buy the land back within 1 year by returning 5 Million baht to me with interest. If you don’t buy it back within 1 year, the land will belong to me and you do not have right to buy back anymore. Under this loan, the ownership will transfer to me and you don’t have right to get in the land anymore, until you buy it back.

 

this kind of mortgage, it must to register at the land office only. Without the registration, the legal action will not be valid by Thai law.

 

Regarding to your explanation, if your situation is not under this kind of mortgage above, it will not be safe 100%.

[trogers]

It is not like hire purchase, nor a sale with right of redemption.

 

The above two cases involved a loan. In hire purchase, the buyer is the debtor. And the seller is the debtor in the second hoping to discharge the debt and reclaiming the property.

 

This case, you are getting cash of Bt8m and giving him an IOU for Bt9m. What if he should turn around later and ask for full repayment of the IOU?

 

If you can't or refuse, he can claim he sold the property (to a relation) for only Bt4m, and you still owe him Bt5m on that IOU you had signed...

 

Why put yourself into a fix?

Edited November 9, 2016 by trogers

[blackcab]

2 hours ago, trogers said:

This case, you are getting cash of Bt8m and giving him an IOU for Bt9m. What if he should turn around later and ask for full repayment of the IOU?

 

If you can't or refuse, he can claim he sold the property (to a relation) for only Bt4m, and you still owe him Bt5m on that IOU you had signed...

 

Why put yourself into a fix?

 

The key point is that there is no IOU with SRR. It's a sale. The property is sold for whatever the buyer pays for it. The seller owes the buyer nothing.

 

The only obligations are that the buyer cannot sell the property during the redemption period, and that the buyer must allow the seller to redeem the property during the specified time. (And depending on the contract, how the property can be used during the redemption period).

[blackcab]

4 hours ago, silver78 said:

Thanks Farma, what we know is that man is very reach and he has a big company so i don't undestand why he is interested to do that rather that buy the property directly. I know he will pay lower tax but of course this isn't the main reason

 

I think it is the main reason.

[blackcab]

4 hours ago, silver78 said:

 

Thanks Blackcab, i think it's what you speak about. Do you think it's risky for us (owner) ?

 

If:

 

1. You want 8 million for it, and

2. He pays you 8 million for it in a Kai Faak (SRR)

 

I don't see the problem.  It would cost you 9 million to redeem the property, but if you don't want to redeem it then take the 8 million.

 

He wants a 9 million baht redemption value so you can't redeem the property back for less than he paid you for it.

 

From the buyers point of view he can't lose. From your point if view you get you 8 million.

[thailandroadblock]

People here do not understand that it's usually the seller who proposes this, notthe buyer as in this case.

 

abuyer who has the money to pay has no reason to ask this, so it can only be a scam !

 

 

 

[trogers]

5 hours ago, silver78 said:

Thanks Farma, what we know is that man is very reach and he has a big company so i don't undestand why he is interested to do that rather that buy the property directly. I know he will pay lower tax but of course this isn't the main reason

 

It is the seller who pays capital gain tax, not the buyer. I don't see how such an arrangement would lower the portion payable by the buyer.

 

Side note: If the buyer has the cash, and do not want to show it, he would make such a proposal. A time period to cool hot money...

 

If so, you may be the one ended up holding the hot money.

 

Easy to proof. Make him pay you with a cashier's cheque, and not cash.

 

Edited November 9, 2016 by trogers

[ballbreaker]

The deal is a loan with the house as collateral.  On paper he gives you 9 million baht and holds your house as collateral.  In reality you get 8 and he pockets 1 million.  When the time comes you sign over the house to him because of non payment.  Now he has a house he received as payment on a 9 million baht loan that went bad.

 

Remember this guy is a business man and I don't know how bad loans play out when it comes to business losses and taxes and other activities that take place in this country.  We do know he has a million baht in his packet and a house.  Most likely he can benefit in other ways we don't know.

 

Careful with any contract you consider signing and cannot fully read and understand.

 

 

 

[blackcab]

1 hour ago, ballbreaker said:

The deal is a loan with the house as collateral.

 

No, it's not. The deal is a sale, with the right of redemption. There is a very big difference.

 

With a loan, the person borrowing the money keeps ownership and possession of the property.

 

With SRR the person lending the money takes ownership of the property. Possession during the redemption period can be negotiated.

[trogers]

6 minutes ago, blackcab said:

 

No, it's not. The deal is a sale, with the right of redemption. There is a very big difference.

 

With a loan, the person borrowing the money keeps ownership and possession of the property.

 

With SRR the person lending the money takes ownership of the property. Possession during the redemption period can be negotiated.

 

That's the point. The seller asked for an outright sales. Why is the buyer offering the right of redemption when such is not requested.

[KittenKong]

44 minutes ago, trogers said:

The seller asked for an outright sales. Why is the buyer offering the right of redemption when such is not requested.

 

Because it's a scam?

[trogers]

14 minutes ago, KittenKong said:

 

Because it's a scam?

 

If it's a scam, the seller is not the victim.

 

A scam would be to use the IOU to book the property value at Bt9m, maybe by a company a year later, and the actual buyer pocketing the difference.

 

If so, the seller may be found as a party to the scam.

 

To avoid such a possibility, do an outright sales with a proper sales and purchase agreement.

Edited November 9, 2016 by trogers

[blackcab]

I've been thinking about this. It's not the SRR process I have a problem with, but the OP needs to fully understand the tax/fee structure of an unredeemed sale.

 

The first point is that the land office fees would be calculated on the 9 million. This is going to be an extra cost than if the sale was stated at 8 million. It needs to be clarified exactly who is liable for what.

 

If the property is not redeemed the seller will be liable for additional income tax for the time of the redemption period. The seller needs to fully understand how much this tax works out at.

 

It might be that after looking at the numbers through seller prefers a straight sale.

[blackcab]

2 hours ago, trogers said:

 

That's the point. The seller asked for an outright sales. Why is the buyer offering the right of redemption when such is not requested.

 

I have no idea, but it would be nice to know the answer.

[SOUTHERNSTAR]

OP take the agreement to a good lawyer to make certain of the fine print if its an SRR its ok. But what you need to make certain of is that he has no claim on the B 8 million/against you or your wife if you don't repay him in 1 year.

[williamgeorgeallen]

On 11/8/2016 at 8:11 PM, KittenKong said:

It's a scam. If anyone approaches you here with any sort of arrangement that doesnt involve them giving you the full amount on the day of the sale with no strings attached then it's bound to be a scam.

i would agree. i started getting involved in property in thailand. its all messy as very few people can get a bank mortgage to buy. i have had people offer me all sorts of deals when i was selling. i think anything but full payment on settlement day is not worth the risk. i have sold up almost everything now and wont buy here again. good luck selling. so far i have sold 2 houses on the baht sold website and one condo. it is better than dealing with agents and costs almost nothing.

[lungnorm]

I don't follow. He gives you 8 million so what is all the other crap about. 8 million is your price he gives you 8 million you register the sale and its all over. No need for any of the other crap. It sounds like a scam when you add the rest of it into the deal. 

[KBsinter]

Wow,I have an idea now, my brother is selling his house (same price)and now I have some Info he had my head reeling

with all that has gone before "posts" hurray thanks to all the posters I am 1/2 way to some understanding,what he 

was talking about,same,same as silver 78...............

[1FinickyOne]

Hi Silver - - what is there to prevent him from coming to claim the money for the loan... you give him the chanote and you get nothing in return - I do not understand this... it sounds to me like you lose the house and might have to return his money as it is a loan??

 

Silver, what I have found is that business is not usually too complicated. If I am having trouble understanding all the terms 100% then it is not a deal I want to be involved in... 

 

As noted above, essentially giving the house to an agent is consigning... if you sign something that is a loan, you will be responsible to repay that loan... 

 

good luck - 

[khundon]

The real question for the seller is, are you going to fall for it.

Seems the seller is getting the S&&t end of the stick when tax liability ETC are taken into consideration.

 

Remember, TIT.

 

Edited November 10, 2016 by khundon