Escrow and payment safety in Thai property

Why the escrow market is thin

Thailand passed an Escrow Act in 2008, under which only licensed financial institutions may provide escrow services for property transactions. In principle this created a regulated market; in practice, few banks actively offer the service, the product is unfamiliar to most sellers and developers, and nothing compels its use. Developers in particular have little incentive to place buyer instalments beyond their own reach, and the market has never forced the issue.

The result is that genuine third-party escrow is available for some transactions, at a fee and with lead time, but it is the exception. Most deals settle through mechanisms that predate the Act and persist because they work well enough when handled competently.

What is used instead

• Lawyer client accounts: funds held by a law firm on documented undertakings, released against defined conditions. The protection is only as good as the firm, so this is a decision about the lawyer, not just the mechanism.
• Simultaneous exchange at the Land Office: the dominant pattern for resales. Payment passes by cashier's cheque at the same counter where the transfer is registered, so neither side is exposed for more than minutes.
• Staged payments against milestones: the off-plan norm, where the schedule itself is the risk-management tool.
• Bank escrow where both sides agree: worth requesting on larger private transactions, and occasionally accepted.

Of these, the lawyer client account deserves the most scrutiny because it is the most used. The funds sit in the firm's account under professional obligations, not in a statutory trust, so the buyer's protection rests on the firm's integrity, its insurance and the precision of the written undertaking governing release. A reputable firm will set out release conditions in writing without being asked; a firm that treats the undertaking as a formality is disqualifying itself.

Structuring staged payments

For resale purchases the sound structure is a modest reservation fee, a contract deposit commonly around 10%, held where possible by a law firm rather than paid direct, and the balance by cashier's cheque at the Land Office on transfer day. The deposit should move only after title diligence is complete, not before.

Off-plan purchases carry the real exposure, because money is paid over years against a building that does not yet exist. Instalments should track construction milestones rather than calendar dates where negotiable, the contract should state completion dates with remedies and refund triggers, and the buyer should understand that there is no general compensation fund standing behind Thai developers. The developer's covenant, track record and financing are the true security; the payment schedule merely limits how much is at risk at any moment.

Weight the schedule toward the end. A developer who resists back-loading payments or naming a refund trigger for late completion is telling you something about either their funding or their intentions.

Protecting the deposit

Deposit protection is mostly sequencing. Diligence first, money second: title search, encumbrance check, seller identity and authority, and for condos the foreign quota position, all before the deposit moves. Refund triggers belong in writing in the reservation and contract documents, including failure of title, failure of quota and failure to complete. Where a deposit is forfeitable, the conditions should be narrow and explicit. Foreign buyers should also remit funds correctly from the outset, since the inbound foreign-currency trail required for condo registration is easier to build in real time than to reconstruct afterwards; our separate briefing on the foreign exchange paperwork covers the mechanics.

Timing of the remittance itself deserves a word. International transfers into Thailand can take days to clear and confirm, and Land Office appointments, cashier's cheques and letter validity windows all run on fixed dates. Funds should land with comfortable margin before completion, in the right currency and with the right narrative on the transfer, so that no one is improvising at the counter on the day.

Judgement over mechanism

No payment mechanism substitutes for knowing who is on the other side of the table. The cases that end badly almost always involve money moved before diligence, into the wrong hands, on the strength of urgency. Asia Global Partners structures payment flows for clients through vetted counsel and, where warranted, negotiated bank escrow, so that at no point in a transaction is more of a principal's capital exposed than the deal stage justifies.

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.