Developer Due Diligence in Thailand: 7 Steps Before You Pay a Reservation Deposit

A registered capital of 1 million THB. A 47-unit project with a projected sales volume near 600 million THB. That mismatch shows up in a Department of Business Development (DBD) company extract within fifteen minutes, and it settles the question of trust faster than any glowing review in a buyers' chat group.

The short answer to 'what should I check': who actually owns the company, who owns the land under the project, whether a construction permit and an approved EIA exist, and where the completion funding is coming from. Everything else is secondary.

The contract itself is reviewed separately, afterward. The point is simple: never sign a reservation agreement with a non-refundable deposit before you have seen the land title.

Quick Answer

• Legal and financial due diligence on a developer takes 5-10 working days and costs, based on Bangkok and Phuket legal market rates, roughly 30,000-60,000 THB per project, plus a separate fee for contract review.

• The land title (Chanote, Nor Sor 4 Jor) must be checked at the local Land Office covering that plot. What matters is not just the registered owner, but the back page of the title, which records mortgages, easements, and seizures.

• An EIA (Environmental Impact Assessment) is mandatory for residential buildings of 80 units or more, or 4,000 sqm or more of usable area, as well as for coastal projects. Sales launched without an approved EIA mean the project is not yet legally cleared for construction.

• The foreign quota is 49% of total sellable area in a building registered under the Condominium Act. The right question isn't 'is freehold available', it's how many square meters of quota remain unsold as of your reservation date.

• Purchase funds must arrive from abroad in foreign currency. For transfers of USD 50,000 or more, the bank issues a Foreign Exchange Transaction Form; below that threshold, a bank confirmation letter is enough. Without this paperwork, the Land Office will not register freehold title to a foreigner.

• Contract terms weaker than the standard Or Chor 22 form, issued by the Ministry of Interior, do not legally bind the buyer: Section 6/2 of the Condominium Act and the Unfair Contract Terms Act B.E. 2540 work in your favor. But litigation is slower and costlier than renegotiating a clause before signing.

Scenarios and Options

Off-plan purchase from a local developer. The biggest discount versus completed-unit pricing, typically 20-30% at launch, comes with the highest risk. Full due diligence is essential here: shareholder structure, bank financing, pre-sales ratio. If the company was set up solely for one project and has zero completed track record behind it, the discount is compensating for a missing history, not for manageable risk.

Purchase from a SET-listed public developer. Reporting is quarterly, audits are external, and financial health is visible without a lawyer. The trade-off is a price 15-25% higher and almost no flexibility on payment schedules. Important caveat: a stock listing does not guarantee timelines. Handover delays of 6-12 months have hit large listed companies too, particularly in 2020-2022 projects, when supply chains and labor crews stalled.

Ready-to-move unit bought from unsold developer inventory. The building exists, the title has been issued, and the quota can be verified in fact rather than in projection. Checks narrow down to building status, outstanding common-fee debts, and whether the unit sits inside the foreign quota. It costs more, but you are paying to eliminate construction risk entirely.

Villa on land under a long-term lease. A different animal altogether: here you check not only the developer but also the landowner, the lease term and renewal conditions, and whether the lease is registered at the Land Office. Thirty years is what actually gets registered; the promised 'plus 30 plus 30' is a contractual promise, not a registered property right.

My recommendation: if this is your first purchase in Thailand and you don't live here full-time, buy completed or near-completed stock from a company with a delivered track record. The price gap versus off-plan buys you sleep. Ignore this advice only if you already have a local lawyer you've worked with for years, and your budget can absorb losing the initial payment without changing your lifestyle.

According to the 2026 Phuket developer due diligence guide from aiproperty-phuket.com, four objective signals filter out most bad actors fast: track record (how many projects delivered and since when), EIA approval on large projects, the payment protection model (escrow is voluntary in Thailand, and payments often go straight into the developer's operating account), and whether the SPA includes a clear long-stop date for handover.

Comparison Table

Main Risks and Mistakes

Non-refundable reservation deposit paid before due diligence. The standard reservation sum is 100,000-200,000 THB, almost always labeled non-refundable. Fix: write a refund clause into the reservation covering cases where due diligence turns up an encumbrance, a missing permit, or an exhausted quota.

Land mortgaged to a bank. This is normal on its own; that's how project financing typically works. What isn't normal is the absence of a bank letter confirming units will be released from the mortgage in stages at handover. Demand this document before the first installment.

Asymmetric penalties. Buyer payment delay: 15% annual interest and contract termination within 30 days. Developer handover delay: 'the parties will discuss an extension.' A contract like this gets rewritten or it doesn't get signed.

Vague finishing specifications. 'Materials of similar or better quality' is how Italian showroom tile quietly becomes local Thai tile. Fix: attach a signed specification schedule with brands and model numbers.

Upfront payment untied to construction milestones. A healthy payment schedule ties tranches to actual progress: piling, structure, roof, facade, handover. A large first installment at zero completion is an interest-free, unsecured loan to the developer.

Money routed the wrong way. Payment from a Thai company account or from domestic Thai funds can block freehold registration in a foreign name entirely. Wire foreign currency from abroad in your own name and keep every bank confirmation.

A final note on what doesn't work. Checking reputation through reviews, the showroom, and the sales presentation replaces none of the above. A polished mockup is built by a marketing agency; the building is built by a contractor who may not even have a signed contract yet. Asking 'how many years has the company existed' is equally unhelpful, since a fresh legal entity is typically set up for each project, and the parent group's age says nothing about the risk on this specific site.

FAQ

Can I check a developer myself, without a lawyer?

Partially. Anyone can order the DBD extract and financial statements online, though they're in Thai. Land title and encumbrance checks at the Land Office usually require a power of attorney or a representative present. Fully independent due diligence is realistic only if you read Thai.

How much does developer due diligence cost in Thailand?

Market estimates put it at 30,000-60,000 THB for company and project checks, plus 15,000-25,000 THB for contract review. On an 8-10 million THB property, that's under 1% of the budget.

What if the developer refuses to amend the contract?

Document exactly which clauses fall short of the standard Or Chor 22 form. Larger companies usually agree to revisions on handover deadlines and finishing specs. A flat refusal to discuss anything is itself a preview of how communication will go if a delay hits.

How do I confirm the foreign quota is still available?

Request a current breakdown of Thai versus foreign quota area from the condominium's juristic office. A verbal assurance from a sales manager is not something you can act on later.

What is an EIA and why does its absence matter so much?

Environmental Impact Assessment. Without ONEP approval, the municipality will not issue a construction permit for projects of 80 units or 4,000 sqm or more. A project without an EIA can sit stalled for years.

Is there any protection for buyer funds during construction in Thailand?

There is no mandatory mechanism. Protection is built through a milestone-based payment schedule, a bank guarantee from the developer if one is offered, and a lender's letter confirming units will be released from mortgage.

What should I check when buying on the resale market?

A different checklist applies: unit title, no outstanding common-fee or utility debts, confirmation of foreign quota status, and no mortgage on the unit. Developer finances are irrelevant here; the building's reserve fund condition matters instead.

What taxes and fees apply at transfer?

The transfer registration fee is 2% of the appraised value, the Specific Business Tax is 3.3% if held under 5 years, and stamp duty is 0.5% otherwise. Who pays which share is a matter of contract negotiation, not law.

A practical step for this week: before paying anything, request three documents from the developer, namely a copy of the land title including the back page, the construction permit, and written confirmation of remaining foreign quota. How they respond to that request tells you more than an hour-long sales presentation ever will.

Source: aiproperty-phuket.com

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