Buying property in Thailand can be a great investment, but it comes with legal and financial risks. Conducting property due diligence is essential to ensure that the property is legally sound, free from disputes, and a safe investment. Whether you are a Thai citizen or a foreign investor, understanding the due diligence process can prevent fraud, ownership disputes, and financial losses.
This guide explains the importance of property due diligence, key legal checks, and best practices for buying property in Thailand.
1. What is Property Due Diligence?
Property due diligence is a legal and financial investigation conducted before purchasing property to verify ownership, check for legal issues, and ensure compliance with Thai property laws.
💡 Example: A foreign investor buys a condominium in Bangkok without checking the title deed. Later, they discover the seller did not have legal ownership, leading to a legal dispute.
Why is Property Due Diligence Important?
✅ Prevents fraud – Ensures the seller legally owns the property.
✅ Confirms legal ownership – Verifies that the title deed is valid.
✅ Checks land use regulations – Ensures the property follows zoning laws.
✅ Avoids financial risks – Identifies outstanding debts or legal claims.
✅ Ensures compliance with Thai property laws – Foreigners face property ownership restrictions.
2. Key Steps in Property Due Diligence
Step 1: Verifying the Title Deed
Thailand has different types of title deeds, and not all allow full ownership rights.
✔ Chanote (Nor Sor 4 Jor) – The highest land title; provides full ownership rights.
✔ Nor Sor 3 Gor – A confirmed land title; can be upgraded to Chanote.
✔ Nor Sor 3 – Land surveyed but not fully registered; ownership may be unclear.
✔ Sor Kor 1, Por Tor Bor 5 – Lower-level documents that do not grant ownership rights.
✅ What to Check?
- Ensure the title deed is a Chanote or Nor Sor 3 Gor (secure for ownership).
- Verify the seller’s name matches the name on the deed.
- Check for encumbrances (mortgages, liens, or legal disputes).
💡 Example: A buyer purchases land with a Nor Sor 3 title, thinking it provides full ownership. Later, they learn it cannot be transferred without further land surveys.
Step 2: Checking Land Ownership and Seller Verification
✅ How to Verify Ownership?
- Request a copy of the title deed from the seller.
- Verify details at the Land Department to confirm ownership.
- Check if the land is leased, mortgaged, or under dispute.
💡 Example: A foreign buyer purchases land from a Thai seller, but later finds out the land is co-owned by the seller’s relatives, who refuse to sell.
Step 3: Legal Restrictions for Foreign Buyers
Foreigners cannot own land in Thailand, except through:
✔ Buying a condominium (up to 49% of total units can be foreign-owned).
✔ Leasing land for 30 years (renewable).
✔ Setting up a Thai Limited Company (with majority Thai ownership).
✔ Investing 40 million THB in Thailand for BOI approval to own 1 rai of land.
💡 Example: A foreign buyer attempts to purchase a house in their own name but is later informed that foreigners cannot directly own land in Thailand.
Step 4: Investigating Zoning and Land Use Regulations
Different areas in Thailand have zoning laws that restrict residential, commercial, or industrial development.
✅ Check with the Local Land Office for:
✔ Building restrictions (height limits, commercial use, environmental zones).
✔ Flood-prone areas or landfills that may affect the property value.
✔ Condominium laws (e.g., must be 51% Thai-owned for foreigners to buy units).
💡 Example: A foreigner buys land in Phuket to build a hotel but later discovers that zoning laws prohibit commercial use in that area.
Step 5: Reviewing Property Encumbrances and Liabilities
Encumbrances include:
❌ Mortgages – Property is used as loan security.
❌ Litigation Claims – Ongoing legal disputes.
❌ Right-of-Way Issues – No proper access to the property.
❌ Unpaid Taxes – Outstanding land tax obligations.
✅ How to Check?
- Request an Encumbrance Certificate (Bai Jam Rong) from the Land Department.
- Verify that the property is free from outstanding loans or legal claims.
💡 Example: A buyer purchases land in Pattaya but later discovers that the land was used as collateral for a bank loan, causing legal complications.
Step 6: Construction and Building Permits
If buying a house, villa, or commercial property, ensure that all building permits and environmental approvals are valid.
✅ What to Check?
✔ The house has a building permit (issued by the local municipality).
✔ The construction complies with Thai building codes.
✔ The property is not violating environmental laws.
💡 Example: A foreigner buys a villa in Koh Samui, later finding out it was built illegally on forest land. The government orders demolition.
Step 7: Reviewing Sales Contracts and Agreements
Before signing a Sale and Purchase Agreement (SPA), verify that:
✔ The contract includes the correct price, payment terms, and timeline.
✔ It specifies whether taxes and transfer fees are paid by the buyer or seller.
✔ There are no hidden clauses that favor the seller.
✅ Important Clauses to Check:
- Deposit and Payment Terms – How much must be paid upfront?
- Penalty Clauses – What happens if the buyer or seller backs out?
- Transfer Fees and Taxes – Who is responsible for paying these?
💡 Example: A foreign buyer pays a deposit on a condo off-plan but later finds out the developer does not have full construction permits, causing delays.
3. Hiring a Lawyer for Property Due Diligence
To ensure a safe and legal property purchase, it is highly recommended to hire a Thai property lawyer.
✅ A lawyer will:
✔ Verify ownership documents and legal restrictions.
✔ Conduct a title deed search at the Land Department.
✔ Review sales contracts and lease agreements.
✔ Ensure compliance with Thai property laws.
✔ Protect buyers from fraudulent deals.
💡 Example: A lawyer investigates a land deal in Chiang Mai and discovers the seller does not have the legal right to sell the land, saving the buyer from a scam.
4. Common Property Scams and How to Avoid Them
❌ Fake Title Deeds – Scammers create false documents to sell land they don’t own.
❌ Illegal Land Sales – Some sellers attempt to sell state-owned or disputed land.
❌ Foreign Ownership Loopholes – Some agents promise foreign land ownership through illegal methods.
❌ Unapproved Condominium Projects – Developers sell condo units without legal permits.
✅ How to Avoid Scams?
✔ Always verify title deeds at the Land Department.
✔ Work with a reputable real estate lawyer.
✔ Avoid deals that seem too good to be true.
💡 Example: A foreign investor buys land through a “legal loophole” but later finds out the Thai government voids the transaction, leading to total financial loss.
Conclusion
Conducting property due diligence in Thailand is essential to avoid legal issues, financial losses, and scams. By verifying title deeds, ownership rights, zoning laws, and encumbrances, buyers can ensure a secure and legal property purchase.
✔ Key Takeaways:
- Always check the title deed type and verify ownership.
- Foreigners cannot own land directly but can invest through legal alternatives.
- Hire a Thai property lawyer to review contracts and protect your rights.
- Be cautious of real estate scams and illegal transactions.
