To avoid setbacks in the construction of a property, it is preferable to sign a construction contract in due form. The construction contract provides you with essential guarantees. Whether you go through a builder, an architect, a project manager, or you have your house built directly by craftsmen, you must cover yourself with a specific and detailed construction contract. At Themis Partner, our construction contract template in Thai and English language includes all the essential elements and clauses as well as the scope of the service. We also remind you that to build your house and choose between several types of contracts. They are more or less different depending on the missions that will be asked to the builder.
Building a house in Thailand is a serious project. Among the many possibilities of construction, development and financing, everyone can find the solution adapted to his desires and needs. Often, building a house in Thailand is much more profitable than buying a property, provided you find the right construction company.
The restrictions on foreign ownership in Thailand apply only to land, not to the buildings that can be built on that land. Ownership of land and facilities are not intrinsically linked and can be assigned to different persons. Thus, a foreigner wishing to build a house in Thailand may lease the land under a long-term lease, and on the other hand, own the house in his own name.
Why sign a construction contract?
The construction contract is a natural protection against dubious and trusting builders. It is nowadays more and more widespread and highly recommended. It offers a higher degree of legal security than other construction contracts. Indeed, signed with independent companies in Thailand or with a builder providing a turnkey service, the construction contract determines the commitments of each of the participants, plans the progress of the construction site and serves as a reference in case of litigation.
The construction contract is a real protection against some dubious builders. Today, it is more and more widespread and highly recommended. It offers a higher degree of legal security than other construction contracts.
With Themis Partner, our model construction contract offers you enhanced legal protection and mentions the following mandatory information:
General information about the parties and the project to be built: You can put all the necessary and valuable information for your use
Information on your construction project: You must mention all the services of the builder, the deadlines, the different stages
Price conditions and financing: Our contract indicates the price of the house to be built, the terms of payment according to the state of progress of the work, the financing, the nature and the amount of the loans you have obtained
Annexes: Copy of the building permit and other administrative authorizations, description of the technical characteristics of the house and the interior or exterior equipment, construction plan, information on the parties
How to choose the land to build?
The choice of land is an essential step. Before signing, it is strongly advised to make an appointment with your notary or the notary in charge of the sale. He will carry out all the necessary research to allow the future owner to make an informed decision. It is essential to ask yourself the following questions before embarking on the construction of a house:
➤ Is the land suitable for construction?
➤ Does it correspond to the real estate project envisaged, particularly with regard to the urban planning constraints in force in the region?
➤ What is its real value?
➤ Is it affected by any easements?
➤ What is the acquisition cost of the land?
How to own a house without owning the land?
The buildings do not have a title as such. The procedure for obtaining the right to a house built on the land is as follows:
➤ If the purchase is made from a developer, the purchase of the house excluding the land can be done by a long-term lease for the land and a sales contract on the building, registered with the relevant authority, or a long-term lease for the land and a building contract with a building permit, both drawn up in the name of the purchaser
➤ If an individual wishes to build on land, the building permit must be issued in the name of the person leasing the land
➤ Sale and transfer of ownership of an existing building, separate from the land, requiring the seller and the buyer of the house to sign a contract of sale of the building in the premises of the competent authority and in the presence of an agent duly authorized for this type of act, publish for 30 days a public announcement specifying the locality and nature of the house sold to transfer the real estate at the end of the above-mentioned 30 days, in the presence of an employee of the competent administration, who will sign and stamp the deed of sale, which will then be considered the title deed of the real estate subject to the sale
Step by step guide to build a house in Thailand
Building a house is not a trivial project. It is often the project of a lifetime. From the choice of land to the handing over of the keys, through the elaboration of the plans, it is necessary to remain vigilant at each stage of the construction.
Establish your budget before defining your project
Before you embark on your construction project, it is essential to take all the necessary steps to ensure its financing. The construction of your individual house has a significant cost, including fixed costs and additional expenses, which can upset your estimate. Establish a provisional financing plan with your banker to evaluate your borrowing capacity, which depends on your contribution and your income. To obtain the best loan conditions, don’t hesitate to shop around. Find out about any housing subsidies you may be entitled to.
Find the right land to build your house
Once your budget is defined, you will need to find a suitable plot of land to build your project. Knowing that the land can represent up to 50% of the total cost of your construction project, this step is not to be taken lightly. Several criteria must be taken into account, including orientation, exposure, soil quality, neighborhood and water, gas and electricity connections. To do this, ask your neighbors or contact the town hall of the municipality concerned. It is also essential to consult the plans and documents of the land registry to verify the exact location of the land. It is also necessary to analyze the characteristics that can increase the value of a plot of land, in view of a future resale: proximity to shops, schools, parks and public transport.
Choosing the right contractor to build your villa
Once the construction contract is obtained, the long-awaited moment arrives: the beginning of the construction of your house. For this stage, if you have not opted for self-building, you have the option of turning to a builder or an architect. In any case, it is advisable to play the competition by carrying out estimates in various companies, which will enable you to benefit from quality services at the best rates. Moreover, do not hesitate to inquire about the previous constructions of the company and its financial health. For that, do not hesitate to question your entourage. This will allow you to avoid certain disappointments.
Follow-up of the construction site
During the construction of your house, the follow-up of the building site is essential to check that the work is carried out in time and that it is in conformity with your expectations. Site meetings are scheduled at various critical stages of the construction, corresponding to the payment of each invoice.
How to get a construction contract?
The seller of a house must have a construction contract issued by the local government called Or Bor Tor. The construction contract is proof that he is the owner of the house and that he has received permission to build it. The construction contract must be presented to the property administration when the property is transferred. On the other hand, it will be necessary to verify that the house was built in accordance with the construction contract. If a seller cannot produce a construction contract, extreme caution should be exercised as this could mean that the house was built illegally or in violation of local standards.
In Thailand, the Building Control Act provides for heavy fines and jail time for those who violate the law. In case of non-compliance, the authorities can stop the construction or request a rectification to ensure that the construction complies with the building permit. The authorities also have the power to order the demolition of any building built illegally. Where a long-term tenant hires a builder, the building permit may be issued in the name of the builder or the owner of the land. In this case, the name on the building permit must be changed to Or Bor Tor to the name of the tenant of the land. This must be done before the Tabien Baan is issued. The building permit is proof that a person owns a house. Separating the ownership of the house from the land increases the legal security of the tenant and reduces the taxes to be paid.
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