New Buyer Friendly Laws on Condominiums
This past year major revisions to the Laws on Condominiums in Thailand have been enacted that are sure to pique the interest of all who may contemplate purchasing a Condominium Unit in the Land of Smiles. The highly anticipated and newly released Condominium Act, B.E. 2522, effective since last July, 2008, has proven to be a bonanza for Condominium purchasers providing consumer protections unseen prior to the passage of the new Act.
Although most developers in Phuket are fair and honest, gone are the days whereby a Condominium developer could entice a person to purchase a Condominium unit through the unsavory use of misleading sales brochures and pictures. Under the new laws, all advertising materials, brochures and pictures, used by a developer as part of its sales practice shall be considered as part of the signed sales contract, and the representations made in the brochures, pictures, etc. must not misrepresent the Condominium premises and unit being sold. If the developer fails to deliver as advertised, he may be liable for damages in a court of law.
Condominium sales contracts are now standardized in a buyer friendly fashion. Until now, some developers incorporated onerous conditions and terms into their sales contracts. In the past, buyers unaware of unscrupulous developers entered into agreements to purchase Condominium units that compromised their interests. However, under the new laws, all sales and purchase contracts are standardized and contain many buyer friendly provisions as a measure of consumer protection. Any provisions in a Condominium unit sales agreement that is not in compliance with the new standardized agreement and that is to the disadvantage of the buyer shall be null and void.
Among the chief consumer protections that appear in the new standardized contract are provisions relating to seller termination of contract due to breach by the buyer. In the past, it has been the practice of some developers to include unconscionable termination and forfeiture provisions in the event a condo buyer failed to remit payment pursuant to his purchase contract. Typically, these provisions called for termination of the contract by the developer, and forfeiture by the buyer of all payments made to the developer to date in the event the buyer missed any payment for any reason. Such draconian forfeiture provisions, which are nothing more than confiscation clauses pure and simple, are no longer allowed under the new law. Under the standardized contracts, in the event of buyer default, a buyer’s liability is capped not to exceed 10 percent of the contract purchase price. Additionally, the law imposes civil and possible criminal penalties against developers who run afoul of the mandates of the new laws.
Other notable changes to the law are provisions that allow a Condo unit contract purchaser the right to assign his contract to a third party without penalty, and provisions that require the developer and the buyer to equally share the expense of registration of the Condominium unit, and much more. The new laws on Condominiums offer much consumer protection to those inclined to sign on the line that is dotted.
This article is written by Philip M. Jacobson J.D., Consultant of the Phuket based law firm International Law Office Patong Beach Co., Ltd.
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