Summary
In Thailand, a Sale and Purchase Agreement (SPA) is a two-stage process comprising a preliminary buy and sale agreement and a formal property transfer registered at the Land Office. The essential provisions in the SPA include the exact purchase price, detailed payment terms (deposit and installments), conditions precedent (e.g., property inspections, title transfer), and consequences of non-compliance (such as deposit retention or litigation). Importantly, the SPA also specifies which party is responsible for additional fees and taxes, including transfer fees and duty stamps. This structured approach provides legal security and clarity, ensuring both buyer and seller are committed to the transaction.
In Thailand, property transactions require a carefully structured Sale and Purchase Agreement (SPA) that complies with the Civil and Commercial Code. The SPA is not a single document but a two-stage process. First, buyers and sellers sign a preliminary “buy and sale agreement” outlining the key terms of the transaction. Then, they proceed to the second stage—the formal registration of the transfer at the Land Office—which legally completes the change of ownership.
Key Elements of the SPA
At the heart of the SPA is a set of essential provisions that detail the financial and procedural commitments of both parties. These include:
• The Purchase Price:
This is the exact amount agreed upon by both parties. It forms the core of the transaction and sets the financial basis for the sale.
• Payment Terms:
The SPA must clearly state how the purchase price will be paid. This includes any deposit that is required to secure the deal, as well as subsequent installment payments or a lump-sum payment. The payment schedule is vital to ensure that both parties understand their monetary obligations.
• Conditions Precedent:
These are specific conditions that must be met before the final payment is made or the sale is completed. Common conditions include satisfactory property inspections, the transfer of title, or other legal requirements. These conditions help protect both parties by ensuring that the transaction only moves forward once key requirements are fulfilled.
• Consequences of Non-Compliance:
The SPA must outline clear consequences if either party fails to meet their obligations. For example, if the buyer fails to pay or the seller does not transfer the property as agreed, the contract may stipulate that the deposit will be retained or that legal action may be taken to enforce the agreement.
• Additional Fees and Taxes:
An essential part of the SPA is to specify who will bear the cost of additional fees and taxes associated with the property transfer. These typically include:
• Transfer Fees: The cost required to update the property title at the Land Office.
• Duty Stamps: Fees for stamping legal documents to officially validate the transaction.
• Taxes: Any applicable taxes related to the sale, which could include specific property taxes or other levies mandated by law.
By detailing these fees and tax responsibilities, the SPA prevents future disputes over unexpected costs. For example, the agreement might state that the buyer will cover the transfer fee while the seller pays the duty stamps and taxes. This clear allocation ensures that both parties are aware of and agree to their respective financial obligations before the transaction moves forward.
Why the Two-Stage Process Matters
The preliminary buy and sale agreement serves as a binding promise between the buyer and the seller. It ensures that both parties are committed to the deal by laying out the critical terms—such as the purchase price, payment schedule, conditions precedent, and allocation of fees and taxes—right from the start. If either party fails to comply with these terms, the contract provides for remedies like retaining the deposit or pursuing legal action.
The second stage—registering the property transfer at the Land Office—adds the necessary legal finality to the transaction. Without this registration, the transfer is not recognized by law, and the buyer cannot secure legal title to the property. Therefore, both documents are crucial: the preliminary agreement outlines the details, and the registration confirms them officially.
Final Thoughts
Understanding the essential provisions of an SPA is crucial for a smooth property transaction in Thailand. The agreement must not only set the purchase price and payment terms but also specify the conditions under which the sale will be completed, the consequences of any non-compliance, and who will pay for additional fees and taxes. This detailed, two-stage process protects both the buyer and seller by providing clarity and legal security. Consulting with a legal expert in Thai property law is always recommended to ensure that your SPA is thoroughly drafted and all terms are clearly understood, helping you avoid disputes and unexpected costs.
Aphiwat Bualoi Law Office 
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