Thailand Specifies Form of Reservation Contract for Sale of Condo Units

New Regulation on Condominium Reservation Contracts in Thailand

On October 3, 2024, the Contract Committee of Thailand’s Office of the Consumer Protection Board  published a new regulation that prescribes the form of reservation contracts for selling condominium units. Known as the Notification Prescribing the Business of Selling Condominium Units Through Reservations as a Contract-Controlled Business B.E. 2567 (2024), this notification is set to come into effect on January 31, 2025. The primary aim of this initiative is to protect consumers from potential exploitation by condominium project developers and operators. 

The notification clarifies that the sale of condominium units through reservations involves consumers entering into a reservation contract with business operators. This agreement entails the payment of a reservation fee—different from a security deposit or down payment—which commits the consumer to sign a subsequent sales contract for the unit. Notably, this provision extends to reservations made via electronic channels, reflecting the growing trend of online transactions in the real estate sector. It needs to be noted, that these provisions apply between developer/operator and customer/consumer, and not necessarily when a consumer sells the condominium unit to another consumer. 

Key Provisions of the Standard Reservation Contract 

Under the new regulation, the reservation contract must be drafted in Thai and adhere to specific material terms and conditions outlined in the Standard Reservation Contract. This means if the developer presents an agreement in English language, he needs to prepare one in Thai language as well.

Importantly, the contract cannot include certain prohibitive terms, such as: 

• Exemption or limitation of the business operator’s liability for contract breaches. 

• Unilateral rights for the operator to change contract conditions or impose additional burdens on consumers. 

• Termination rights without written notice or the consumer’s material breach. 

• Confiscation of payments unless the consumer is at fault. 

• Misuse of reservation fees or personal data of consumers. 

The Standard Reservation Contract must include comprehensive details, such as: 

• Project name, location, and reservation number. 

• Specifications of the condominium unit, including materials and equipment. 

• Dates for contract signing and construction permit notifications. 

• Pricing details, including the amount of the reservation fee and any applicable discounts. 

Consumer Rights and Operator Obligations 

The new regulation provides consumers with enhanced rights. They can terminate the reservation contract if the business operator fails to meet specific conditions, including: 

• Obtaining necessary approvals for environmental assessments. 

• Signing a sales contract within the designated timeline. 

• Securing construction permits. 

• Making unauthorized modifications to project details. 

Conversely, business operators may only terminate the contract if the consumer fails to enter into the sales contract within the agreed timeframe, and they are entitled to confiscate the reservation fee in such instances. 

Additionally, both parties have the option to terminate the contract if a consumer’s loan application from a financial institution is not approved within the specified timeframe. 

Compliance and Penalties 

Business operators must prepare two identical copies of the reservation contract, providing one to the consumer upon signing. Non-compliance with the requirements set forth in the Standard Reservation Contract may result in severe penalties, including imprisonment for up to one year or fines up to THB 200,000. 

Conclusion 

The new notification aims to enhance consumer protection in Thailand’s real estate market. By specifying the terms of reservation contracts for condominium sales, the regulation seeks to ensure transparency and fairness, ultimately fostering a more secure environment for consumers navigating the complexities of property purchases. As the implementation date approaches, stakeholders in the condominium market will need to adapt to these new requirements to comply with the law and uphold consumer rights.