A Purchase and Sale Agreement (PSA), also known as a Sales and Purchase Agreement (SPA) or a Sale Agreement, is a legally binding contract that outlines the terms and conditions of a property sale between a buyer and a seller. This agreement serves as a critical document in real estate transactions. The following are the key elements that need to be included:
Identification of Parties
Names and contact information (addresses) of the buyer(s) and seller(s) with their ID card or passport numbers. If the buyer is a foreigner and the seller a Thai then a check should have been done (with the Juristic Person) that the foreign quota (of 49% of the total condominium space) will not be exceeded. If the purchase is of a Leasehold Condominium then there is no foreign quota as foreigners can own up to 100% of a Leasehold building. The Juristic Person at the condominium will produce a document to show the percentages owned by Thais and Foreigner’s in the building which needs to be shown at the Land Department on transfer of the condominium unit.
- Buyer’s and Seller(s) Information: Addresses and ID Card / Passport details.
- Foreign Buyer and Thai Seller: Check that 49% foreign quota not exceeded.
- Leasehold Condominium Purchase: No foreign quota applies, as foreigners can own up to 100% of a Leasehold building.
Property Description.
Detailed information about the property being sold, including its address, legal description, and any specific features or fixtures included in the sale. What is included in the sale? Is it just the sale of the property or are the fixtures, fittings and furniture included? A list of the specific items included in the sale should be produced and attached as an addendum to the agreement if necessary!
A copy of the Title Deed to the property should also be attached confirming the ownership of the property and the size and a rough layout of the property.
- Property Information: Legal description and Address of the property.
- What’s Included in the Sale: Specify whether it’s the property only or if fixtures, fittings, and furniture are included.
- List Items Included in the Sale (if applicable)
- Title Deed Information: A copy of the Title Deed should be attached to the agreement.
Purchase Price
The agreed-upon purchase price for the property. This section may also include details about the deposit or goodwill money that the buyer will provide as a sign of commitment. How will the buyer pay…….Cash or Bank loan? If the buyer needs a bank loan then the bank will send someone to inspect and value the property! If the Buyer is a Foreigner the funds for the purchase should come from outside Thailand or proof should be shown that the funds were earned in Thailand legitimately. If the foreign buyer wants to sell the property in the future and remit the funds back to his home country he will need to prove where the money came from originally. When the funds are transferred to a bank in Thailand the reason must be shown as ‘For the Purchase of a Condominium unit’ and then the receiving bank will give the Buyer a Tor Tor 3 Form. This needs to be done even if the buyer already owns a property in Thailand for which he had previously imported the purchase money.
- Purchase Price Agreement: Agreed-upon purchase price for the property.
- Deposit or Goodwill Money: Details about any deposit by the buyer as a sign of commitment.
- Payment Method: Specify how the buyer will pay. Cash or Bank Loan.
- Bank Loan Details: If the buyer opts for a bank loan then the property will need inspecting.
- Funds Source for Foreign Buyers: Funds should come from outside Thailand.
Payment Terms
The terms and conditions regarding the payment of the purchase price, including any financing arrangements, down payment, and the schedule for making payments and the transfer date and when the final payment needs to be made at the Land Department. The seller should provide a receipt for any payments made including details such as payment amount, date, and purpose..
- Specify the terms and conditions for the payment of the purchase price.
- If financing is involved, outline the details of the arrangement.
- Clearly state the amount of the down payment required and dates of installments.
- Specify the agreed-upon transfer and final payment date for the property.
- Require the seller to provide a receipt for any payments made by the buyer.
Conditions of Sale
Any conditions that must be met before the sale can be finalized. This may include satisfactory results from property inspections, the buyer securing financing, or the resolution of specific contingencies. The buyer will often ask to do some due diligence on the property. He/she may ask for a copy of the accounts for the condominium from the Juristic Person. This will show whether there is enough money in the company to maintain the building. It could be that the account is in deficit because co-owner’s have not been paying their management fee or it could be because there has been some recent expenditure that will take the account into deficit and there will be an imminent increase in the management fee to cover it! This may not necessarily be a bad thing as it shows that the building is being maintained! The Juristic Person at a condominium building will also be required to issue a ‘Debt Free’ letter to confirm that the seller has no outstanding debts against the property!
- Outline any conditions that must be met before finalizing the sale.
- Specify that the sale is contingent on receiving satisfactory results from property inspections.
- Clarify that finalization is subject to the buyer securing financing (if needed).
- The buyer has the right to conduct due diligence on the property.
- The buyer may request a copy of the condominium accounts from the Juristic Person.
- State that the Juristic Person must issue a ‘Debt Free’ letter confirming that the seller has no outstanding debts against the property.
Closing Date
The date on which the final transfer of the property will take place (closing) at the relevant Land Department in which the property is located. This is when the buyer takes possession of the property, and the seller receives the agreed-upon payment. The Seller shall deliver all keys and any documents related to the Property to the Buyer at the expense of the Seller. The said documents shall include but not limited to the original of the Title Deed and a written confirmation from the Condominium Juristic Person (if transferring a condominium) proving that all common area fees and expenses have been fully paid up-to date.
- Final Transfer Date (Closing): Specify the exact date on which the final transfer of the property will take place at the Land Department.
- Payment to Seller: The seller receives the agreed-upon payment from the buyer.
- Delivery of Keys and Documents: The seller shall deliver all keys and relevant documents.
- Documents to be Delivered by Seller: The seller must deliver, including but not limited to: Original Title Deed, written confirmation from the Condominium Juristic Person (if applicable) proving payment of common area fees and expenses up-to-date, cheque for the amount of transfer fees and taxes, written authorization from seller’s spouse to sell the property!
- Documents to be delivered by Buyer: Including but not limited to a Cheque for the outstanding amount for the purchase of the property, written authorization from the buyer’s spouse to buy the property, copy of Buyer’s Blue Book if the buyer wants to register their address at the property.
Closing Costs
A breakdown of who will be responsible for various closing costs, such as the Transfer Fee, Withholding Tax, Specific Business Tax, Stamp Duty, property taxes, legal fees and agent’s fees. It is usual for the seller to be responsible for cost of the transfer of services such as electricity, water and telephone to the buyer shortly after transfer of the property.
Title and Ownership
A representation that the seller is the legal owner of the property and has the right to sell it. The agreement may also include provisions related to the transfer of a clear and marketable title to the buyer.
Default and Remedies
Include details on what happens if either party fails to fulfill their obligations under the agreement, including potential remedies and consequences. Once an agreement is made and signed between the Buyer and Seller, the property will be taken off the market from the date of the Agreement and only sold to the Buyer.
However, within the Closing Date, if the Buyer fails to deliver the Purchase Price for any other reason than (i) the failure or non-performance of the Seller, (ii) the termination of the Agreement pursuant to any provision, or (iii) the default of the Seller or Force Majeure or any event beyond the control of the Buyer, the Seller shall be relieved from his/her obligation to sell the Property to the Buyer and the Seller will retain any deposit money paid by the Buyer. Additionally, the Seller has the right to immediately sell the Property to another party.
- Clearly outline the obligations of both the buyer and seller under the agreement.
- Once the agreement is made and signed, the property will be taken off the market from the agreement date and reserved for the buyer.
- If the buyer fails to deliver the Purchase Price within the agreed timeframe for reasons other than specific conditions the seller is relieved from the obligation to sell the property.
- In case of the buyer’s failure, the seller retains any deposit money paid by the buyer and has the right to sell the property to another party.
- Clarify the conditions under which Force Majeure events may impact the obligations of the parties.
Governing Law and Jurisdiction.
The Agreement shall be governed and construed in accordance with the Laws of the Kingdom of Thailand and both parties agree that the courts of the Kingdom of Thailand shall have jurisdiction over any disputes arising from the Agreement.
Signatures
Signatures of both the buyer and the seller, indicating their agreement to the terms outlined in the document with both signatures witnessed by an independent third party.
It’s crucial for both parties to thoroughly review and understand the Purchase and Sale Agreement before signing it. In many cases, individuals involved in real estate transactions seek legal advice to ensure that the terms protect their interests and comply with local laws.
