While you are looking for the perfect luxury villa or condominium to purchase, you will have the choice between buying a previously owned property, or a brand new from a developer, or sometimes even off-plan. Each of these will have its own advantages depending on what you are looking for, and often the resale properties will be some of the most appealing as they are usually ready to move in, and you can inspect them to know exactly the finished product that you are buying. But even with these advantages, it's important to be aware of the legal aspects of the property that have been chosen by its previous owner, as well as the agreed conventions that you will be adhering to by taking over his property. Here we explain the important elements to verify when purchasing a resale property, so that you can better enjoy the advantages of this kind of transaction.
The ownership type of the property
The most important aspect to look at on a resale property is its ownership type. Indeed, this is a choice that has already been made by the first purchaser, and usually will be taken over as is by the subsequent purchasers, although you can change it if required, but usually at an extra cost. In all cases, it's important to know which type of ownership you are purchasing, to avoid any misunderstandings in the future.
- Foreign Freehold
This type of ownership is the most sought-after and the most simple to understand for foreign buyers. It's also therefore the most expensive, both in taxes and in prices. It's only available for condominiums in the proportion of 49% of the total units area. For this kind of property the sale and purchase must be registered as such at the Land Department, where the taxes will usually be around 6.3%.
The Leasehold ownership is technically a registered lease of 30 years, with two contractual renewals agreed in advance with the Seller on the first purchase. This means that in a resale, you are purchasing the Seller's rights over the property, which are both the already registered lease period, and the contractual rights with the developer. For the registered rights, it's possible to register a "Transfer of Leasehold Rights" into your name, which will give you all the rights of the previous owner in your own name, registered at the back of the title deed. There is a 1.1% registration fee for this operation. For the contractual rights, it's very important to check the original Lease Agreement and make sure you can agree to all its contents, as you will be receiving both the seller's rights and obligations accordingly. Usually you'll be able to make an agreement directly with the previous owner, while in some setups the signature of the developer will also be required. It's highly recommended to hire a good property lawyer for the acquisition of a Leasehold property. It will also be usually possible to change the ownership type to a Company Freehold if required during the purchase process, but at an extra cost.
- Company Freehold
The Company Freehold type of ownership means that the property is owned through a Thai holding company. Such company will have to be formed with 51% Thai shareholders, but you can still be the majority shareholder, and its director. This means that by becoming the director of the company, in practice you control the ownership of the land. It's nevertheless the most expensive way to acquire property, as it requires filing the annual Tax Audit, and also the setup of a Thai company at the start. The advantage of this kind of ownership is that you aren't tied to anyone if the documentation is well prepared, and there is no time limit on your rights over the property. A very attractive advantage of this kind of ownership is that such a resale property can be purchased by simply acquiring all the shares in the company and changing directors, which costs almost nothing.
The original sale and purchase agreement
Besides the rights and obligations inherent to the legal ownership of the resale property, you will usually also be taking over a set of contractual rights and obligations between the previous owner and the developer or the management company hired afterwards. This will be especially the case in managed estates, and in the leasehold ownership scenario. In both cases, it's very important to check the original conditions agreed to by the previous owner, to make sure that you agree to them as well and avoid any surprises once the deal closed. Usually they will be fairly standard and reasonable, but it's always better to check.
The existing contracts
Resale properties, whether condominiums or luxury villas, will usually have established contracts for common area maintenance and sometimes even with private service providers. It's good to ask about these, to make sure you will be paying your fees in the right amounts and to the right entities, as well as to make the decision of subscribing to new services and maybe cancel some old ones. The good side of a resale property is that the utilities, gardening and other aspects of the property maintenance are already arranged, and it's only a matter of fine-tuning according to your preference, you don't have to start from scratch.
Differences from buying from the developer or off-plan
Buying a resale property is obviously very different from buying directly from a developer or even off-plan. The risk is usually much lesser on a resale property as you can see what you get with your own eyes, at the condition that you hire a proper attorney to check the legal soundness of the property. While you have less freedom in design than with an off-plan property, you can nevertheless save a lot of time by taking advantage of the time spent by the previous owner to care the property, and just build-on it to make it even better and more to your taste. By hiring a good renovation company and investing the proper funds, you could actually transform the property into a much more valuable asset, that could be sold again at a much higher price.