Standard clauses you should bargain with the condominium developers

by Mr. Ponthep Werachon
Thai Solicitor
Mrs.Darunee Werachon
Thai Solicitor & Accountant

WERACHON LAW OFFICE : 315/304, Moo 12 Theppasit Road (Soi 12) Nongprue,Banglamung, Pattaya City Chonburi 20260
Kingdom of Thailand Tel: (038) 304 084, (038) 251 533, Fax: (038) 304 027 Mobile: 081 423 4255, 089 889 6483, Website: www.thaisolicitor.com, e-mail: thai@werachonlawyers.com

A contract is a binding agreement between two or more parties that usually results in some type of performance.
In Thailand, all persons have the freedom to enter into any types of contract they deem fair if the conditions in the contact are not against laws or good morals or public order.
The situation in Thailand that many developers always take advantage from the buyers who have not any knowledge of the law becomes the national agenda for the government to protect these gullible buyers. About 50% of the disputes in Court are from the default of the condominium developers.
The Consumers Protection Act (Volume 2) 1998 specifies that the business of developing and selling condominiums is controlled by the law whereby all developers are legally required to use the standard contract clauses drafted by the Consumers Protection Office.
Due to the limited space of our pages, we cannot quote all clauses in the standard contract.  We can select only some clauses about the default which should be put in your contract.

Clause 7.  Penalty fines and interest for default and termination of the Contract
7.1  In case the “Buyer” is default to make the payment specified in Clause 4, the “Seller” may claim the interest for default at the rate of ……. % per year (not more than 15% per year) from the outstanding amount. However, the total amount must not exceed ten per cent (10 %) of the price of the condominium unit according to this Contract.
7.2  In case the “Buyer” is default to make the payment which is agreed to pay before the transfer of ownership, the “Seller” shall have the right terminate this Contract in accordance with the following circumstances:-
7.2.1  Default to make the aforesaid payment in case one upfront payment is agreed.
7.2.2  Default to make three (3) consecutive installment payments in case from 24 installment payments are agreed.
7.2.3  Default to make the payment for 12.5% of the total price in case less than 24 installment payments is agreed.
Before the termination of this Contract, the “Seller” must inform the “Buyer” in writing to pay the outstanding amount within the period of time not less than 30 days from the date on which the “Buyer” has received the letter and the “Buyer” still ignores to comply with the aforesaid  letter.
7.3  In case the “Seller” cannot transfer the ownership of the condominium unit to the “Buyer” within the period of time specified in Clause 4, the “Buyer” may proceed as follows:-
7.3.1 The “Buyer” shall have the right to terminate this  Contract whereby the “Seller” agrees to returnthe full amount of  money already paid by the “Buyer” with the interest of  ….. % per year (same rate with the rate of the penalty fine imposed by the “Seller” in case the “Buyer” is default according Clause 7.1) and the “Buyer” will not lose the right to take legal action for other damages.
7.3.2  In case the “Buyer” never exercises the right to terminate this Contract according to Clause 7.3.1, the “Buyer” may charge the daily  penalty fines for the rate of ….% (not less than 0.01% of the price of the condominium as agreed in the Contract but the total amount cannot exceed 10%). If the “Buyer” has already exercised the right to charge the penalty fines up to the extent of 10% of the price of the condominium unit and the “Buyer” deems that the “Seller” cannot continually comply with the Contract, the “Buyer” may exercise the right to terminate this Contract.
7.3.3  In case the “Seller” cannot carry on the condominium project due to force majeure,   the “Seller” agrees to return the full amount of money the “Buyer” has already paid with the interest  of ….% per year (by applying to the maximum interest rate of the fixed savings deposit account of  Krung Thai  Bank Public Company Limited from the receiving date of the money from the “Buyer”).  However, the “Buyer” shall not lose the right to claim other damages. If the “Seller” has returned money to the “Buyer”, the amount of money returned accordingly can be deducted from the interest to be paid.

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