New Regulations Governing Standard Form Condominium Unit Reservation Contracts in Thailand
The Contracts Committee (“Committee”) issued new regulations establishing the method of handling condominium unit sales involving reservations as a contract-controlled business, as outlined in the Notification Prescribing Business of Condominium Unit Sales Involving Reservations as a Contract-Controlled Business B.E. 2567 (2024), which was issued by the Committee in accordance with Section 35bis and Section 35octo of the Consumer Protection Act B.E. 2522 (1979) on 30 August 2024 (as amended) (“Notification”). The Notification was published in the Government Gazette on 3 October 2024 and will come into force 120 days after its publication, i.e. on 31 January 2025.
The Notification broadens the scope of regulations issued by the Committee that govern the business of condominium unit sales, in order to strengthen measures that protect consumers against unfair or disadvantageous terms in condominium unit reservation contracts. Previously, there were no regulations establishing a standard form condominium unit reservation contract; from the passage of B.E. 2543 (2000) until issuance of this Notification, only the terms and conditions of “condominium unit sale and purchase contracts” were regulated by the Committee. Once the Notification comes into force, the terms and conditions of any “condominium unit reservation contract” must comply with the Notification, and business operators are obligated to provide consumers with compliant contracts.
Scope of Application
The Notification applies to standard form condominium unit reservation contracts used in “condominium unit sales business involving reservations,” which means a business in which a business operator enters into reservation agreements with consumers, whereby the consumer agrees to purchase a unit in a condominium building and pays a reservation fee or other benefit of a similar nature (excluding deposits or down payments), as assurance that the consumer subsequently will enter into a purchase and sale agreement for a condominium unit. This includes condominium unit sales involving reservations made via electronic means.
Summary of Key Provisions
The key provisions in the Notification include the following:
1. Standard form for and items in condominium unit reservation contracts
The Notification requires that a condominium unit reservation contract made between a business operator and a consumer must be written in the Thai language, clearly visible and legible, with a font size no smaller than 2 mm and containing no more than 11 characters per inch. The contract terms must cover the essential elements and conditions specified in the standard form condominium unit reservation contract annexed to the Notification. A few examples of the essential items a standard form condominium unit reservation contract must include are:
- - Details the names, addresses, and telephone numbers of both the consumer and the business operator, the sales manager’s full name, and the sale agent’s full name;
- - Details and specifications of the condominium unit subject to the reservation, including condominium name, condominium address, condominium unit no., type and kind of materials used inside the condominium unit, list of accessories or benefits that the business operator will provide or arrange as compensation in the event that the consumer agrees to enter into the sale agreement (if any), and the date (day, month, year) when the permission for or notification of condominium construction was granted under building control and other applicable laws;
- - The date (day, month, year) the business operator and the consumer are entering into the agreement for purchase or the sale agreement for the condominium unit;
- - The reservation fee or any other benefits similar to a reservation fee (which is not a deposit or down payment), and the method of payment of the fee or benefits; and
- - The price of the condominium unit and any discounts (if any).
2. Consumer’s right to terminate the reservation contract
The standard form condominium unit reservation contract must contain a condition permitting the consumer to terminate the reservation contract in any of the following situations:
- - If the business operator fails to obtain approval of the Environmental Impact Assessment (EIA) report as required pursuant to laws on the enhancement and conservation of national environmental quality (if applicable);
- - If the business operator fails to ensure that the consumer enters into an agreement to purchase or a sale agreement by the date (day, month, year) specified in the reservation contract;
- - If the business operator fails to submit an application for a condominium construction permit or notify the relevant authority of the condominium construction by the date (day, month, year) specified in the reservation contract, or fails to obtain the condominium construction permit or acknowledgement of construction notification within the timeframe specified in the reservation contract without a valid reason, or as a result of the business operator’s fault;
- - If the business operator fails to ensure that the consumer enters into an agreement containing the conditions specified in the announcement/advertisement made by the business operator or any other conditions agreed upon in the reservation contract;
- - If the business operator makes alterations, modifications, or adjustments to the plans, project details (if any), or construction materials without obtaining the consumer's consent; or
- - If the business operator uses materials or equipment inside the condominium unit that do not comply with the terms set forth in the announcement/advertisement made by the business operator or any of the other terms agreed upon in the reservation contract.
3. Either the consumer or the business operator may terminate the reservation contract if the consumer cannot obtain a loan from a financial institution
The standard form condominium unit reservation contract must contain a condition that either the consumer or the business operator may terminate the reservation contract if the business operator is aware that the consumer needs to apply for a loan from a financial institution or other legal entity that provides loans for housing purposes, and the consumer’s loan application is not approved within the agreed-upon timeframe.
4. Refund of reservation fee
The standard form of condominium unit reservation contract must contain a condition that in the event of termination of a reservation contract due to the consumer’s exercise of the right to terminate the reservation contract (as mentioned in Item 2 above), or termination of the reservation contract if the consumer cannot obtain a loan from a financial institution (as mentioned in Item 3 above), the business operator must return the reservation fee or any other benefits similar to a reservation fee (which is not a deposit or down payment) received under the reservation contract, to the consumer, in full.
In the case of a refund paid in cash, by bank transfer, or by cheque, the business operator must make the payment to the consumer within 15 days from the date of notice of termination of reservation contract.
In the case of a refund via credit card, the business operator must make the refund to the consumer within 45 days from the date of notice of termination of reservation contract. The business operator may deduct any credit card processing fees (if applicable).
5. Conditions that are prohibited in a reservation contract
In addition to establishing essential items and conditions that must be included in a reservation contract, the Notification states that a reservation contract between a business operator and a consumer must not include terms nature in nature, or having equivalent meaning, to the following:
- - Terms that exempt, or limit, the business operator's liability for breach of contract;
- - Terms allowing the business operator to amend the contract or its conditions in a way that imposes an additional burden on the consumer beyond what was agreed upon at the time of entering into the contract;
- - Terms allowing the business operator to terminate the contract without written notice to the consumer, or where the consumer has not breached any material terms or conditions of the contract;
- - Terms allowing the business operator to confiscate part or all of the payment, except where the consumer is in breach of contract;
- - Terms allowing the business operator to re-designate reservation fees or any similar benefits, (which are not deposits or down payments under a sale contract), to be deposits or down payments;
- - Terms allowing the business operator to charge the consumer for the transfer of rights under the condominium unit reservation contract;
- - Terms allowing the business operator to benefit from the common property; and
- - Terms allowing the business operator to collect, gather, use, or disclose the consumer's personal data in contravention of the applicable Personal Data Protection laws.
Penalties
Pursuant to Section 57 of the Consumer Protection Act B.E. 2522 (1979) (as amended), any business operator who fails to deliver a contract with terms in accordance with Section 35bis, within a period of time in accordance with Section 35octo, shall be subject to imprisonment for a term not exceeding one year, a fine not exceeding Baht 200,000, or both.
This newsletter is intended merely to provide a regulatory overview, is not intended to be comprehensive, and does not constitute legal advice. If you have any questions on this or on other areas of law, please do not hesitate to contact:
Nuttaros Tangprasitti
Partner
Salisa Aninlabon
Counsel
Authors
Salisa first joined SCL Law Group’s Corporate & Commercial Practice Group in 2013, where she continued her professional career until 2021. She rejoined SCL Nishimura Law Group as an associate to resume her legal practice in 2022.
Whilst at the beginning of her legal profession, her practice focused on real estate transaction which encompasses lease, purchase or mortgage of property, later her areas of practice extends to variety of legal services, including laws relating to business operation, investment, compliance, commercial contracts, due diligence, merger and acquisition, joint venture, anti-competition law, consumer protection laws, including family law and law on succession.
As an associate in Corporate & Commercial Practice Group, her core practices include drafting, negotiating and advising on various commercial contracts and transactions; from simple to highly complex commercial agreements and challenging transactions for each individual projects . A to suit client’s needs. A dedicated and committed legal professional, she assists broad ranges of clients in various industries, which are both international and domestic corporate clients, on legal matters relating to mergers & acquisitions, corporate restructuring, counseling on investment, business operation, compliance including rendering legal advice on various legal issues such as commercial and/or contractual dispute.
Highly focused and well prepared, Salisa supports clients’ need by rendering high quality professional legal services in a well efficient manner.
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Nuttaros Tangprasitti specialises in corporate and commercial law. She regularly assists both international and domestic corporate clients (limited liability companies and partnerships, stock corporation in several industries) on the relevant laws of Thailand, which includes foreign direct investment, legal due diligence, M&A and cross-border M&A, joint venture, compliance, banking and finance. In addition to supporting clients on the above and a multitude of different legal formalities, she also has expertise in advising on various investment promotion policies of the Board of Investment (BOI), as well as compliance with foreign business, other laws on salient points for shareholders and joint venture agreements, which includes laws on immigration and foreign work under Thai law. Nuttaros speaks at many seminars and takes an active role in educating the clients on issues relevant to their businesses and her practice areas. She also writes various articles and newsletters on cutting-edge topics in several legal areas, which are widely distributed to existing and potential clients. Nuttaros aims to ensure the lawyers on her team are constantly developing and upgrading their skills, to ensure they meet or exceed the high professional standards of Nishimura & Asahi. She is committed to ensuring that both she and our firm deliver top-quality services to our clients and strong internal support for our colleagues. She recently began drafting a manual on several aspects of Thai law, as part of an “Investment promotion scheme,” and also wrote several newsletters on corporate law, and banking and finance laws. She also recently authored an article on the impact of Tax Reduction for Land and Buildings, which received excellent feedback from our clients, particularly those who are land and building owners. Nuttaros is committed to building a strong and progressive corporate and commercial practice, which also incorporates tax law, by adapting to new ideas in the legal industry.