Buying off-plan in Thailand: risks and protections

What you are actually buying

When you sign an off-plan contract, you acquire a contractual right against a company, not an interest in property. Nothing is registered in your name until the building is complete, the unit is titled and transfer takes place at the Land Office, typically two to four years after your first payment. In the interim, every baht you have paid ranks as an unsecured claim against the developer. If the project stalls or the company fails, you queue with the other creditors, usually behind the construction lender whose security sits over the very land you thought you were buying into. That is the core risk, and everything else in this briefing is about reducing it.

Developer credit risk comes first

The single most important diligence question is not about the project; it is about the company. Thailand's listed developers, the names behind Bangkok's major condominium pipelines, have long completion records, audited accounts and reputational capital they will spend to finish a difficult project. At the other end of the market, particularly in resort areas, projects are launched by thinly capitalised special-purpose companies with no history, funded substantially by buyer deposits, where the marketing budget visibly exceeds the balance sheet.

• Pull the developer's filings from the Department of Business Development: registered and paid-up capital, audited financials, directors and shareholders.
• Walk previous projects. Were they delivered, how late, and how do they look five years on? Talk to owners, not the sales office.
• Confirm construction financing is committed from a bank, not hoped for from presales. A project funded purely by deposits is a chain letter with architecture.
• Confirm the project company actually owns the land, unencumbered or with the lender's disclosed security, on Chanote title.

Permits and the EIA: the quiet killer

Thai developers may legally market and presell before their Environmental Impact Assessment is approved and before a construction permit is issued, and many do. Buyers therefore fund projects that do not yet have the right to exist. EIA rejection or prolonged revision is one of the most common causes of resort-market project death, particularly for coastal and hillside sites in Phuket and Samui where height, slope and setback rules bite hardest. Before signing, require documentary proof of the EIA approval and the construction permit, or price the absence of them as the speculative risk it is. Verify with the regulator, not the sales gallery.

Payment staging and the escrow problem

Thailand has an escrow law, but escrow is voluntary and developers rarely offer it; your instalments go into the developer's operating account and are spent on construction, or on anything else. The practical protection is structure: minimise what is at risk before the building exists. A well-negotiated schedule keeps the reservation and contract payments modest, ties every subsequent instalment to certified construction milestones rather than calendar dates, and holds a substantial final balance, ideally 20 to 30 percent or more, payable only at transfer of title. Resist front-loaded schedules and discounts offered for paying ahead of milestones; the discount is the price of your unsecured credit, set by the borrower.

Contract clauses that actually matter

Thai off-plan contracts for condominiums are governed by consumer-protection standards that imply certain minimum terms, but developer paper still varies enormously, and villa contracts sit largely outside the standard-form regime. These are the provisions we negotiate hardest.

• A fixed completion date with a hard long-stop, after which you may rescind with full refund and interest, not merely wait.
• Late-completion compensation accruing automatically, at a stated rate per month, without requiring you to prove loss.
• A defined and narrow force majeure clause; weather, labour shortages and material prices are business risks, not acts of God.
• Area adjustment tolerance: a stated maximum variance, with price adjustment both ways and a walk-away right beyond roughly 5 percent.
• Specification schedules detailed enough to enforce: brands, models and materials, not photographs and the phrase 'or equivalent'.
• Assignment rights, so you can sell your contract before completion if circumstances change.
• Clarity on the fee split at transfer and on common-fee and sinking-fund obligations from day one.

Foreign buyers of off-plan condos have one further structural task: the currency trail. Registration of foreign freehold at transfer will require evidence that the purchase funds entered Thailand as foreign currency, so every instalment should be remitted from abroad, in your name, referencing the unit, generating the FET documentation as you go. A buyer who pays instalments from money already sitting in Thailand can reach completion day with a unit they are not able to register in the foreign quota, an entirely avoidable failure that our repatriation briefing explains from the other end of the transaction.

If the project fails anyway

Diligence reduces the odds; it does not eliminate them. When a project stalls, the practical remedies are weaker than buyers hope. Consumer protection machinery and the courts do function, and buyers of standard-form condominium contracts have statutory rescission rights when completion dates are badly missed, but a judgment against a company whose money is gone recovers little, and construction lenders with registered security over the land stand first in any insolvency. Realistic outcomes in a genuine failure are a negotiated exit at a discount, a transfer to a rescuing developer who completes the project on revised terms, or a long queue in liquidation. This is why the payment schedule is the real insurance: the buyer who has paid 25 percent of a stalled project has a problem, while the buyer who has paid 80 percent has a catastrophe. There is also a modest secondary market in off-plan contracts, and an assignment clause negotiated at signing is what lets you use it, exiting a wobbling project to a more optimistic buyer before matters resolve either way.

Delays, defects and delivery

Even successful Thai projects routinely complete 6 to 18 months late, and contracts are drafted to make this painless for the developer. Budget for it: do not sell your existing home against a promised completion date, and do not schedule furniture around a sales brochure. At handover, inspect professionally before accepting transfer, document defects in writing, and understand that your leverage peaks at the moment before the final payment. Once title has transferred and the balance is paid, defect rectification depends on the developer's goodwill and the slow machinery of warranty claims.

The strongest protection in off-plan buying is the willingness to walk away at the diligence stage. Most disasters were visible in the developer's accounts before the first deposit was paid.

Where we come in

AGP treats off-plan purchases as credit decisions. We underwrite the developer through counsel and our own market network, verify permits at source, negotiate the payment schedule and contract from precedent rather than the developer's template, and stage-manage handover and transfer. Clients still take construction risk, that is the nature of off-plan, but they take it knowingly, priced, and with paper that gives them an exit.

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.