Independent Third Party Escrow Services in Thailand
Escrow Business Law in Thailand:
The new escrow business law was enacted by Parliament on 21 December 2007 and came into effect on 19th May 2008. The law is intended to protect buyers and sellers of real estate from possible fraud and deceit by utilizing the services of a neutral third party who holds funds, property, or legal documents for disbursement once certain conditions are met as instructed by the buyer and seller and in accordance with a Sale and Purchase Agreement. An independent third party escrow services provider can provide services in the areas of a reciprocal contract, contracts for purchase of homes, condominiums, and land. The third party escrow services provider is responsible for overseeing that payments for purchase of property are made according to the Sale and Purchase Agreement, and as specified by the conditions under the escrow contract. In the event of breach of contract, such as the seller cannot complete the project as stated in the contract, the funds held by the third escrow service provider will not be disbursed to the seller and will be returned to the buyer.
It is not mandatory under Thai law to enlist the services of a third escrow service provider when purchasing real estate. If the buyer and seller wish to avail themselves of an escrow arrangement, a contract with the buyer, seller, and third party escrow service provider as signatory, will be needed in addition to the contract between buyer and seller.
The escrow service provider must be a financial institution, a commercial bank, or a financial company. Non financial institutions will be required to provide security and will need to comply with specific financial status requirements.
- The escrow services provider must have received authorization to provide escrow services from the Ministry of Finance.
- The escrow contract must be signed by the buyer, seller, and the escrow service provider.
- The escrow services provider must be a neutral third party and have no connections to buyer or seller either directly or indirectly.
- The escrow services provider must open a dedicated bank account for the parties to the contract with a financial institution
- The property, funds, or legal documents held in trust by the escrow service provider must be kept separate from the escrow services provider's personal assets.
- For escrow property agreements, the escrow services provider must inform the Land Department that the property comes under the escrow agreement and that transfer of ownership is not permitted until the escrow service provider provides the department with a written notice authorizing transfer of ownership. The department's official must make a written record to that effect.
- In the event of disagreement between buyer and seller, the escrow services provider must not transfer funds or property to either party until the parties come to an agreement or under order of the court.
- Once the funds have been transferred from the escrow services provider's account to that of the rightful owner and the escrow agreement comes to an end, the escrow services provider must close the escrow bank account and inform the parties immediately.
Both buyer and seller deserve the assurance that no funds or property will change hands until all of the instructions in the Sale and Purchase Agreement have been satisfied. Buyers and sellers submit signed documents and buyer’s deposit money to be held by an escrow services provider. After the conditions agreed upon by both buyer and seller (Sale and Purchase Agreement) are satisfied, the escrow then distributes the documents and the funds.
Please Note: The escrow holder is an ‘Independent Neutral Third Party’; works for both the buyer and the seller, and is authorized to follow the specific written instructions provided by both parties.
Buyer, seller and the escrow services provider enter into an escrow agreement:
- Buyer deposits funds and/or documents, as outlined in the escrow agreement, to a dedicated escrow account
- The escrow services provider manages the escrow agreement from inception to completion, ensuring all steps outlined in the escrow agreement, are satisfied by all parties
- The escrow services provider confirms to all parties that the escrow amount and/or documents have been received into the escrow account
- Seller completes each step as set out in the escrow agreement
- Buyer accepts delivery of the property, and proof of acceptance is sent to the escrow services provider
- The escrow services provider releases the funds and/or documents to the seller, and the escrow is close
It is easy to set up an escrow agreement with specific fund release conditions
- The seller has the reassurance that the buyer has remitted the funds and/or documents to the escrow services provider
- The buyer can be sure that the funds and/or documents will only be released once the terms and conditions as set out in the escrow agreement are satisfied. This is especially important when considering purchasing off-plan from a developer with no track record or guarantee the project will be completed
- With the help of a competent escrow services provider, an escrow agreement can be set up within 48 hours of receiving the necessary information
If you are interested in receiving further information on escrow services, please complete the enquiry form below:
The information set out above is for guidance only. No representation is made in respect of this information. Interested parties should consult their ‘Real Estate Lawyer’ prior to participating in an escrow services transaction