Commercial property diligence for a Gulf buyer.

Establish what you are actually buying

The first question is not the price. It is the nature of the interest on offer, because in Thailand there are several and they look similar in a brochure. You may be buying freehold land, which a foreign natural person generally cannot hold. You may be buying a condominium unit freehold within the statutory foreign quota of a building's saleable area. You may be buying a registered leasehold interest for a term. You may be buying shares in a Thai company that owns land, which is a corporate acquisition wearing a property costume. Or you may be buying a bundle: a lease of land with ownership of the building on it, sometimes reinforced by a right of superficies or usufruct.

Each of these is a different transaction with a different diligence scope, a different tax treatment and a different exit. Establish which one is on the table in writing at the outset, and be alert to sellers and agents who move between them in conversation. Our property library treats leasehold against freehold, usufruct and superficies, and villa holding structures in dedicated guides, and a buyer should read the relevant one before the first serious meeting rather than after.

Title, and the hierarchy of deeds

Thai land documents are not all equivalent. The chanote, the full title deed, is the strongest and is the only document under which land is accurately surveyed with marked boundary posts and freely transferable and mortgageable. Below it sit lesser documents evidencing possession or use rights of varying strength, and land held under those lesser documents carries real constraints on transfer, development and lending. A buyer being offered anything other than a chanote should treat that as a central issue of the transaction rather than a technicality, and should have Thai counsel explain precisely what the document does and does not permit.

The search itself is done at the Land Department office for the district where the land sits, and a proper search means examining the original record held by the office rather than a copy supplied by the seller. What you are checking is the deed type, the registered owner's identity matched against identification, the parcel number, the plot size and boundaries, the survey position, and the full history of registered entries on the reverse of the record. Verify that the physical land matches the surveyed parcel, which for larger sites means a surveyor, and check access on the ground as well as on paper.

Encumbrances, which is where the trouble hides

• Mortgages and other registered security, and whether release is arranged and funded at transfer
• Registered leases, including long leases that will bind you as the new owner
• Usufructs, superficies and habitation rights registered in favour of third parties
• Servitudes and rights of way, both those burdening the land and those benefiting it
• Access rights: whether the route to a public road is legally registered or merely tolerated in practice
• Court orders, seizures, execution entries and any pending litigation affecting the parcel
• Expropriation notices, road widening lines and public utility reservations
• Zoning and land use designation, plus any coastal setback, hillside slope or height restriction
• Unpaid land and building tax, common area charges or utility arrears attaching to the property
• Occupancy by anyone other than the seller, including tenants, staff or long term occupiers with claims

Access deserves a separate mention because it defeats more transactions in Thailand than title defects do. A road that has been used for twenty years is not necessarily a registered right of way, and a neighbour who has tolerated access is not bound to continue. For any site reached by anything other than a public road, establish the registered right, in writing, before proceeding. Occupancy deserves the same attention: walk the site, including the parts nobody suggests walking, and ask who the people living or working on it are.

The seller's paperwork

Match the seller on the deed to the person in front of you. Where an individual sells, that means identification, and where the individual is married, spousal consent is generally required for the disposal of marital property, which is a routine step and a routine cause of failed transfers when it is skipped. Where a company sells, obtain the company affidavit, the objects, the list of directors and the signing authority, and a board or shareholder resolution authorising the sale in the form the Land Department will accept. Confirm the signatory's authority against the affidavit rather than against a business card.

Where anyone signs under a power of attorney, examine it with real care: Thai property powers of attorney are a recognised vulnerability, they should be specific rather than general, properly executed, current, and verified with the grantor directly. Our guide to property powers of attorney in Thailand treats this fully and it is worth reading before accepting one. If a share purchase rather than an asset purchase is proposed, the diligence widens to the company itself: its full filing history, its tax position, its liabilities, its employment obligations, its litigation, and the legitimacy of any Thai shareholding within it.

Planning, building and permitted use

A building that exists is not necessarily a building that was permitted, and a building that was permitted is not necessarily permitted for the use you intend. Obtain the construction permit, compare the permitted drawings against what has actually been built, and check for extensions and alterations that were never approved. Establish the zoning designation and what it allows, which in resort and coastal areas commonly includes restrictions on height, density, setback from the shoreline and construction on slopes above a defined gradient. Where the property is to be operated commercially, the operating licences are part of the diligence: a hotel licence under the hotel legislation, food and beverage licences, and any sector specific permit.

Where a purchase is off plan or under construction, the risk profile changes entirely and the developer becomes the principal subject of diligence rather than the land: its corporate history, its completed projects, its financial standing, the permits already obtained, and the contractual protections around staged payments and completion. Our guide to off plan purchase risk sets out what to insist on. The general principle for any buyer is that money should follow milestones and registrations, never precede them.

Payment, deposits and the transfer

Deposits are where foreign buyers lose money most often, usually because a reservation agreement was signed and a payment made before any diligence was done, with forfeiture terms that made withdrawal expensive. Keep any pre diligence payment small, make it conditional in writing on satisfactory title and diligence, and have the agreement reviewed before signature rather than after. For the main consideration, escrow arrangements exist in Thailand and are worth discussing with your advisers; our guide to escrow in property transactions covers the mechanics.

On transfer day the parties attend the Land Department office, the transfer is registered, taxes and fees are settled according to the agreed allocation, and payment is exchanged against registration rather than before it. For a Gulf buyer there is one further discipline that matters years later: bring purchase funds into Thailand from abroad in foreign currency through documented banking channels, state the purpose correctly, and keep the bank's foreign exchange transaction documentation permanently. That paperwork is what makes repatriation of sale proceeds straightforward when the family eventually sells, and its absence is a problem that cannot be fixed retrospectively. Our finance guides treat exchange control and repatriation in detail.

Where our property guides carry the method

This is an orientation for a Gulf buyer, not the full method. The complete diligence checklist, the treatment of chanote and lesser title documents, leasehold against freehold, usufruct and superficies, powers of attorney, escrow, off plan risk, annual property taxes and the rules on selling and repatriating proceeds all have dedicated guides in our property library and they go considerably deeper than this piece. What none of them replaces is a Thai property lawyer you appoint yourself, who acts for you alone, and who is paid by you rather than by the seller, the agent or the introducer.

Title, encumbrance and zoning positions are specific to each parcel and can only be established from the official record. Verify title and all registered entries at the Land Department office for the district where the land sits, verify company sellers and signing authority with the Department of Business Development, and verify building permits, zoning and operating licences with the relevant local authority. Appoint your own independent Thai property lawyer and, for larger sites, your own surveyor and valuer, before paying any deposit.

This briefing is general information, not legal, tax or investment advice. Thai rules change frequently and individual cases differ. Verify current requirements with the relevant authorities, including the Immigration Bureau, the Board of Investment, the Land Department, the Department of Business Development and the Revenue Department, and take advice on your own facts before acting.