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Posted: 10 Oct 2009 | 10:02 am
The Phuket Gazette.
As property issues on the island seem to be taking a decidedly litigious course of late, the late Warren Zevon's words - "send lawyers, guns and money" - never rang more true. As a limited number of projects slow down or are put on hold on the back of an economic downturn which is proving harder to shake than a cold which won't go away, some buyers are wondering what to do when things go wrong.
For the most part, property in Phuket is sold to foreign buyers who comprise the majority of the resort property market. These purchases are conducted on either a leasehold basis or on a freehold basis if the property is in a condominium and is part of the 49 percent threshold for overseas buyers. Legal contractual disputes in condominium projects have grown more sophisticated over the past few years. Last year, a significant amendment was made to the Condominium Juristic Act, bringing purchasers rights increasingly parallel to those found in many Western countries.
Leasehold ownership is inherently more complicated as there is no 'leasehold title' per se. It is governed under the Civil and Commercial Code and referred to as 'the hire of immovable property'. For the most part, legal action is broken down into Product Liability Law and Consumer Proceedings Law. In Thailand, the Office of the Consumer Protection Board has been established to handle initial complaints and hopefully find a resolution.
Desmond Hughes, a well-respected property legal advisor, clarified, "For condominium issues, legal cases are typically filed here in Phuket, but consumer complaints are filed in Bangkok and staff are sent to the island to investigate. Furthermore, leasehold cases are filed mostly in Phuket as well."
It should be noted that the process of filing complaints with the Consumer Protection Board can be a complicated task for many absentee owners, but it remains a much cheaper option than full-blown litigation. Looking at an overview of real estate complaints from legal firm Baker & McKenzie, 838 were CPA land and construction cases, 328 were condominium-related and just 38 were land only issues.
In Bangkok, a new trend has emerged in which foundations or associations are hired to handle disputes. Examples of these are the Foundation for Consumers and Kon Condo Network. Unfortunately for people in Phuket, these foundations mainly focus on disputes in the capital and more often than not specialize in condominiums. On the back of the current housing boom in Phuket, one would expect similar organizations to be established here, given the importance of this sector of the economy to the island.
Failing to go down the consumer complaint route, some purchasers opt to go directly to civil court and file a case under the Consumer Case Procedure Act. Should this be the case, litigation remains the final process that should be considered.
Leasehold litigation can be complex in Thailand. In many cases, contracts are broken into sale and purchase agreements for villas or apartments and share subscriptions to name but two. However, more often than not, the jurisdiction of many of these components are specified outside of Thailand.
Having been involved in the property industry on the island for the past eight years, I can thankfully say I can count the number of real estate failures I know personally on less than 10 fingers. Given the lack of bank financing and the strong sales momentum over the past five years of double digit capital appreciation, supply and demand was in good form and most projects have delivered, albeit - in true Thai sabai sabai-style - not on time.
While writing for the Gazette and my property blog, I have started to see a marked increase in complaints of late from buyers regarding issues such as non-completion of units, lack of titles or defunct projects. When someone writes to me, I always advise people to pick up the phone and call the developer, or go see them in person and try to work out a solution. If that fails, there are a number of good lawyers on the island and getting good legal advice is readily available.
Sadly, in many cases, making an informed decision is often an afterthought, and many who rush into purchases don't complete due diligence or ensure adequate contractual coverage. Although Warren Zevon is no longer with us, and guns are widely frowned upon, sending in a lawyer and money looks to be something on the rise in today's market.
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