THAILAND Law and Practice Contributed by: Olaf Duensing, Jerrold Kippen and Weeraya Kippen, Duensing Kippen, Ltd.
2.5 Typical Representations and Warranties The seller typically provides contractual representa - tions and warranties of ownership and proof that no third-party rights, such as any mortgage or lease, encumber the property. Such warranties generally do not expire nor do they vary based on whether or not the real estate is commercial in nature. In the case of any defect in a property sold, of which the buyer was not, nor would have been expected to be, aware, this impairs either its value or fitness for ordinary purposes or for the purposes of the contract, and the seller is liable by statute regardless of whether or not the seller knew of the defect. It should be noted that no action for liability for defect can be entered later than one year after the discovery of the defect. Though not typical, caps for liability can be used and parties can agree that the seller shall not incur any liability for defects or eviction. Howev - er, it is not possible to exonerate a debtor from their own gross negligence. Such an arrangement would be void. And any such caps are subject to the Unfair Contract Terms Act (if applicable) and must therefore stand the test of being “fair and reasonable” in the specific case. The seller is also liable by statute for the consequenc - es of any disturbance caused to the buyer’s posses - sion of, or eviction from, the property by any person having a right over the property at the time of sale, of which the buyer was unaware, or by the fault of the seller. The law allows parties to contract out of these statu - tory warranties, thus the sale and purchase typically releases the seller from liability or disturbance. How - ever, such a non-liability clause does not exempt the seller from repayment of the purchase price, unless the clause specifies otherwise. Thus, this release is also typically included. At the same time, a non-lia - bility clause may not exempt a seller from the conse - quences of their own acts or facts which they knew and concealed. Lastly, if an immovable property is declared to be subject to a servitude (elsewhere often known as an “easement”) by law, the seller is not liable unless
they have expressly guaranteed that the property was free of servitudes, or from that servitude. Thus, sell - ers often refuse to so warrant or explicitly represent otherwise. Other than money damages, there is typically no secu - rity for such representations and warranties. In Thailand, Representation and Warranty Insurance (RWI) is rarely used in commercial real estate transac - tions. 2.6 Important Areas of Law for Investors The CCC, which governs contracts such as sale and purchase and lease agreements, as well as real estate rights such as ownership, leaseholds and servitudes/ easements, is a crucial area of law for all real estate investors. This is also true of Thailand’s three main land use laws (see 1.1 Main Sources of Law ) which should be carefully evaluated by all buyers prior to investing. Depending on the type of property, the Land Act and the Condominium Act are also crucial areas of law as they determine the validity of title to land and condominiums. Where the investor is a foreigner, laws that provide possible exemptions to Thailand’s restrictions on for - eign ownership of real estate, such as the Investment Promotion Act and the Industrial Estate Authority Act, may also be relevant. 2.7 Soil Pollution or Environmental Contamination Under the Enhancement and Conservation of National Environmental Quality Act, the owner or possessor of any property that is a source of contamination that causes physical harm to any person or damage to someone else’s property is liable and must compen - sate the harmed party or parties. Furthermore, the owner or possessor must also compensate the gov - ernment for all its costs in connection with cleaning up the contamination. The liability standard under the Act is strict – the owner or possessor need not have intended or been negligent with regard to the con - tamination from their property – and the very limited exemptions from this liability do not include the prop - erty having originally been contaminated by a prior owner or possessor. Thus, where there is any possibil -
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