THAILAND Law and Practice Contributed by: Olaf Duensing, Jerrold Kippen and Weeraya Kippen, Duensing Kippen, Ltd.
Additionally, commercial real estate investors typically conduct economic and physical due diligence into the property. The former will usu - ally include an assessment of the revenue gen - erated by the property, eg, from rental tenants, while the latter will typically include one or more physical surveys (eg, topographical, hydrologi - cal) of the property. Other than potential delays due to periodic national and regional lockdowns, the COVID-19 pandemic has not affected the typical due dili - gence process. 2.5 Typical Representations and Warranties The seller typically provides contractual rep - resentations 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 par - ties can agree that the seller shall not incur any liability for defects or eviction. However, 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 conse - quences of any disturbance caused to the buy - er’s possession 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 una - ware, or by the fault of the seller. The law allows parties to contract out of these statutory warranties, thus the sale and purchase typically releases the seller from liability or dis - turbance. However, 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-liability clause may not exempt a seller from the consequences of their own acts or facts which they knew and concealed. Finally, 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 ser - vitude. Thus, sellers often refuse to so warrant or explicitly represent otherwise. Other than money damages, there is typically no security for such representations and warranties. 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 care - fully evaluated by all buyers prior to investing.
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