Buying into Pre-Construction Agreements? If you are going to buy offplan in Thailand and wish to sign a pre-construction agreement then you will understand that the risk is very high. There have been many projects over the years which had either not been completed or worst where nothing was ever built. Pre-construction purchasing is very high risk however you can minimize the risk by having a due diligence done on the property which includes the attorney looking at the reputation and capital of the property developer.
Pre-Construction Agreements & Buying Offplan
Over the years there have been a number of high profile property developments in Bangkok as well as Pattaya which simply never got off the ground and many people have lost their life savings in some of these projects. Pre-Construction Agreements does come with risk. The due diligence will not secure your investment but look at how much risk you really are taking.
Looking past the marketing hype which goes with many of these developments you are best served by having background checks done to see how risky this investment really is. Property speculation adds to these issues as many will put down a deposit and as the project develops they tend to want to sell the property on completion when the risk is now lower. This type of property speculation adds to the problems with property developments. In Bangkok this type of speculation has vastly decreased as the developers and government are no insisting on higher deposits to dampen this type of speculation. Pre-Construction Agreements are common in Thailand.
What you would be looking for in pre-construction projects or buying offplan is the time limits. There has to be a time limit for each stage of the development as well as financial penalties should these deadlines not be met. Most of the failed projects in Thailand has been that there had been delays as the developer did not have enough cash flow and being unable to pre-sell units they run out of cash and delays start. There has to be an agreement with regards to timelines. You would also need to ensure that what you wanted in the design is found in the end product. When money is short developers at times have built all the units in an identical manner to save costs by buying the materials bulk.
The quality of these fittings might also be lowered and all of this needs to be very specific in your pre-construction agreement. What specific type of kitchen sink you want and what type of floor tiles. Many developments would want a 5% down payment or a 10% down payment and before you get to that stage you are best advised to have a background check don on the project as well as the developer. If something does go wrong then getting your deposit back is going to be very difficult if not impossible. Project completion when buying into Pre-Construction Agreements is normally between 6 months and 2 years in Thailand. If the developer has not been able to meet the deadlines then you should consider all your options and speak to a property lawyer in Thailand for advice.
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