Thai Real Estate Jargon Buster
Real Estate Jargon
- Asking price
- Building inspection
- Buy to let
- Buyer's market
- Certificate of title
- Chanote ti din title
- Company title
- Completion Date
- Conditions of Sale
- Condominium Act
- Condominium titles
- Contract of sale
- Exchange Control Form (Thor Tor 3)
- Exchange of contracts
- Fractional Ownership
- Gross Rental Yield
- Joint tenants
- Juristic Person
- Local authority search
- Maintenance fee
- Managing Agent
- Market value
- Net Rental Yield
- Off plan
- Open listing
- Owners corporation
- Private treaty
- Reserve price
- Stamp duty
- Tenancy Agreement
- Thai Nominees
Asking price: The listed price of the property, which is subject to negotiation.
Building inspection: A thorough inspection by a licensed builder or surveyor that evaluates the structural condition of a property, undertaken at the buyer's expense.
Buy to let: To purchase a property in order to rent it out.
Buyer's market: A surplus of property on the market, exceeding demand, giving advantages to prospective buyers.
Certificate of title: A description of a property which includes the name of the registered owner and any encumbrances such as mortgages and easements. This will be included in the contract of sale prepared by the vendor's lawyer.
Chanote ti din title: Regarded as the best landed property title in that the land is accurately surveyed, granting incontestable possession of the said land. Only the most developed areas of Thai provinces have such titles, however, the majority of the country lacks this instrument of ownership.
Commission: A percentage of the sales price (generally 3%) of a property paid to a real estate agent for negotiating the sale.
Company title: The means of acquiring ownership of property via company shares. Under company title, land and buildings are owned by a private company. The company's shareholding structure is organised so that ownership of a certain number of shares entitles the shareholder to exclusive possession of a part of the building.
Completion Date: A date specified in the contract when all monies are to be paid over and the keys are released and the sale or purchase is finalised.
Conditions of Sale: Legal conditions specified in the contract, couched in legal terminology, which are normally only referred to if problems occur.
Condominium titles: A title to a part of a building or buildings with multiple owners, and a fractional interest in the land (covered by a Chanote), and other common facilities like a swimming pool and parking area, as well as the common areas of the building, such as the lifts, stairwell or lobby. Specified in the title is the floor area of the unit, the ground area of the common land and the percentage interest which the unit has in the common property. This percentage also represents the value of the voting interest in the condominium company or owners' association, as well as representing how much of the maintenance charges the owner is liable for.
Contract of sale: A written agreement specifying the terms and conditions of the sale/purchase of a property.
Deeds: Legal title documents proving ownership.
Deposit: A percentage of the purchase price given at the time of exchange, usually about 1% of the purchase price in Thailand.
Easement: The right to use land that belongs to another, such as the granting of rights of way.
Exchange Control Form (Thor Tor 3): The certificate in the buyer’s name, specifying that foreign currency has been transferred into a Thai bank account and converted into Thai Baht in order to purchase Thai property.
Exchange of contracts: The point at which signed contracts are physically exchanged, legally committing the buyer and the seller to the purchase and sale of a property at an agreed price.
Fittings: Objects which can be safely removed from a property without causing damage.
Fixtures: Items like built-in cupboards, stoves, dishwashers, etc, which are fixed to the property and cannot be removed without causing damage.
Fractional Ownership: Partial or shared ownership of a property, allowing owners to share occupancy over the year; particularly popular among buyers of holiday homes. It allows for cheap holidays as costs don’t rise unlike hotel prices, maintenance costs are shared and if the respective schedules of the owners are managed well, the property will be occupied throughout the year, without the need to rent, find tenants and pay costly management fees. The difference between fractional ownership and timeshare is that with the former buyers actually own part shares and can benefit if the property appreciates in value, which can be sold, left in a will, or put it in a trust, or even rented out. With timeshare, however, buyers do not actually own the property, but only buy residence rights for a short period of time and also have to pay hefty maintenance payments .
Freehold: the permanent and absolute tenure of land or property with the freedom to dispose of it at will. However, the freeholder is expected to maintain and make improvements to the buildings and the land on which they are built.
Gross Rental Yield: The gross (total) rent received, before deduction or allowances for wear and tear and other expenditures within the accounting period (normally one year), divided by the capital cost of the property, based either on its current value or original purchase price, expressed as a percentage.
Joint tenants: A form of co-ownership that gives each tenant equal shares in the property.
Inventory: The document specifying the property's contents in a rental agreement, signed and agreed on by both landlord and tenant at the commencement of the tenancy and is normally referred to in the Tenancy Agreement
Juristic Person: a legal entity recognized by law whereby several people are allowed to act as though they were a single composite individual. They do not possess the same rights and duties as bona fide individuals, but are allowed to own property. Their main use is as a safeguard of assets and to deflect liability from the real owner and thus protect property ownership.
Leasehold: holding a property according to the terms of a lease for a specific amount of time upon payment of a fixed amount of money. Both the lessor and the lessee share joint responsibility for any damages incurred on the property, unless the law designates a specific party liable; however, due to the length of the lease agreement the tenant may incur risks and costs not originally specified in the lease agreement. Leasehold in Thailand extends up to 30 years and can be renewed twice for the same periods. As freehold ownership for foreigners is not permitted under Thai law, this is the most popular way for foreigners to possess land.
Lessee: the tenant who leases from the owner. Their responsibilities include not using the property leased for a purpose other than those specified in the lease agreement; maintaining the property to an acceptable standard; responsibility for damage to the property by him or herself or their co-residents, although the lessee is not responsible for damage resulting from proper use; and no alterations may be made to the property without the lessor’s consent.
Lessor: the owner of a property who rents it out to a tenant or lessee. Inadequate regulation favours the landlord who may abuse the tenant by making excessive demands and the tenant may be forced to comply due to necessity; negotiation is advisable. Leases are limited to 30 years. Deposits play an essential part in every rental agreement as the amount serves as a security for the landlord, but many are reluctant to return these in full, often citing damages, imaginary or real. Terms governing the termination of any agreement should be specified in every rental contract.
Lien: The right to keep possession of a property belonging to another till the debt owed by the said person is discharged.
Listing: A written contract between an owner and a real estate agent, giving the agent authority to perform services for the sale of the owner's property.
Local authority search: The procedure whereby a buyer's lawyer makes an enquiry to the local council regarding any outstanding enforcement or future development issues which might affect the property or immediate area. Very difficult in Thailand, due to the lack of transparency and consequent obfuscation and impediments put before the inquirer!
Maintenance fee: A charge paid regularly, usually monthly, to cover property maintenance costs, especially by the co-owners of a condominium and calculated in proportion to the size of the unit. Normally, the secretary of the condominium juristic person collects and holds these funds and uses them to pay taxes, common service expenses and maintaining unsold units. The co-owners of the condominium can vote at General Meetings on how some of these funds are used and even block the collection of extra maintenance fees in the guise of emergency funds if they suspect financial wrongdoing or that these extra maintenance fees are unjustified.
Managing Agent: The company or person employed by a building's owner, who is responsible for the management and daily running of the property.
Market value: The common price at which properties of a similar type are sold for.
Net Rental Yield: The net rent received after various deductions and allowances for wear and tear, professional fees, insurance, service charges and ground rent (where the property is leasehold)and other expenditures have been accounted for within the accounting period (normally one year) divided by the capital cost of the property, based either on the property’s current value or original purchase price, expressed as a percentage.
Nor Sor Sam or Nor Sor Sam Kor title: the most popular title deed in Thailand. These land title deeds specify ownership rights allowing the land to be sold or leased. However, because the land survey is not as accurate as that of the Chanott titles it is advisable to ask the owner to clearly define the physical boundaries of the land owned and confirm his delineations with neighbouring landowners
Off plan: Buying a property before construction, having only seen the plans. Rewards are high as the listed price of units usually rises before project completion, but is also high risk as the project may stall or fail completely.
Open listing: A type of listing agreement in which more than one real estate agent may be employed to sell the property.
Owners corporation: The administrative body composed of the co-owners of a group of units or apartments of condominium building.
Private treaty: A sale of a property at an advertised price subject to negotiation.
Reserve price: The minimum price which a seller will accept at auction.
Settlement: The finalisation of the sale of a property by the legal representatives of the vendor and the purchaser, when the new owner takes possession of the property.
Sinking Fund: A means of accumulating a pool of funds to reduce debts and cover expenses, especially in emergencies. In Thailand, Sinking Funds are used as a risk management tool, individual contributions to be collected from co-owners by the juristic person in charge of the condominium and used daily maintenance and upkeep.
Sor Bor Kor title: Similar to a Chanott in that the land is accurately surveyed and marked out, allowing it to be mortgaged and developed. However, these titles cannot be leased, sold or transferred.
Sor Kor Neung, Tor Bor Tor Hoc, and Tor Bor Tor Ha titles: Effectively squatter’s rights registered at the district Land Office, which don’t permit land transfer, sale or the construction of buildings on the land. The Sor Kor Neung cannot be transmitted except to an heir, but grants the holder the right to convert it into another document, either a Chanote or a Nor Sor 3 Khor.
Stamp duty: A state tax on transfer of property, calculated on the total value of the property.
Studio: A unit consisting of one main room or open-plan living area incorporating cooking and sleeping facilities and a separate bathroom or shower room.
Tenancy Agreement: A contract between the landlord and the tenant, specifying each party's rights, responsibilities and obligations concerning the letting and occupation of the property.
Usufruct: The right to enjoy the use of another’s property for a specific time period, even extending up to a lifetime, as long as the said property is maintained in reasonable order and not abused. In addition, the Usufructuary must not make any major alterations to the property, pay for the destruction or depreciation of the property unless the exercise of ordinary prudence can be proven and insure the property. A Usufruct is similar to a lease agreement except that it entails more rights and privileges not present in leasehold, such as the right to rent out and collect the rental proceeds on a property, but a usufruct cannot be transferred, and the land reverts to its owner on termination of the agreement.
Thai Nominees: Thai nationals who have no real interest in land, but register the same under their names on behalf of foreigners to circumvent the legal prohibition of the foreign ownership of land; a practice which can lead to the confiscation of the land, fines and imprisonment because it represents the feigning of ownership by a Thai national in favour of a foreigner. Foreigners, however, may make donations or loans in favour of Thai nationals enabling them to purchase and register land in their names Recently, Thai spouses have been included under the tem ‘nominee’ and are allowed to purchase land as long as the foreign husband and Thai spouse sign a joint declaration stating that the money used for the purchase of the property was entirely owned by the Thai spouse.
Valuation: A written analysis of the estimated value of property prepared by a qualified valuer.
Vendor: The seller.
Zoning: Local authority guidelines for the allowed use of land.