Eleven traps in developers' contracts

Disclaimer: the material is not legal advice. The nuances depend on the type of transaction, the status of the land, the form of ownership, etc.

To avoid this, at Undersun Estate we carefully review our clients' contracts: we verify the title and status of the land, terms and guarantees, terms of payments and registration, acceptance and management; we carefully coordinate the obvious edits — without complicating the process. Below is a short checklist of 11 points: the essence, the risk and what to do to complete the transaction calmly and without surprises.

The land does not belong to the developer

The bottom line: The project is on leased land; the owner of the site /the lease term has not been disclosed or confirmed.

Risk: Unpredictability of ownership and reduced liquidity by the end of the lease term.

What to check: Chanote (title) and lease agreement indicating the owner and the term, no encumbrances by the date of transfer.
There is no responsibility for delayed delivery

The bottom line: There is no compensation/mechanics in the contract when rescheduling deadlines.

Risk: A multi-month delay without refund and with associated costs.

Solution: Specify the allowable delay, the reasons for the postponement and a fixed compensation for each full month of delay and / or the extension of guarantees for the period of delay.
"Flexible installments" with severe penalties

The bottom line: Fines for minimal delay, unclear grounds for termination, non-refundable amounts.

Risk: Loss of deposit/payments, termination "on formal grounds".

How to avoid: Request a full schedule; fix the grace period (e.g. 7 days), transparent penalties and the procedure for restoring the schedule; mark non-refundable amounts in advance.
Lack of guarantees for construction and decoration

The bottom line: The warranty period for finishing / engineering / constructive is not specified.

Risk: The cost of repairing defects in the first months of operation.

Solution: Specify the warranty periods in the contract. Standard: finishing/engineering — 12 months, construction — ≥5 years; starting from the date of transfer.
Acceptance and elimination of defects "without deadlines"

The bottom line: It is not described how the comments are recorded and when they will be corrected.

Risk: Long-term elimination, disputes about the composition of defects.

Solution: Fix the inspection procedure; for example, the window for the list of minor defects is 7 days, elimination is 30 days at the expense of the developer; significant defects are subject to a separate warranty.
The "default" control transfer clause

The bottom line: The buyer automatically agrees to transfer the apartment to a rental management company associated with the developer.

Risk: Unexpected restrictions on personal use, fees, the difficulty of changing the manager.

How to avoid it: If possible, consolidate the voluntary nature of participation and a separate management agreement with disclosed commissions/conditions.
Increased registration fees for freehold registration

The bottom line: The contract vaguely or incorrectly states the state fees for registration of ownership; sometimes, everything is pinned on the buyer.

Risk: "Surprise" at the stage of registration in the Land Office and budget overruns.

What to check: Check which Transfer Fee registration tax is specified in the contract. It is 6.6-6.8% and the buyer pays no more than half (no more than 3.4%).
Errors in the contract

The bottom line: It is not uncommon for someone else's data/typos/discrepancies to remain in the contract.

Risk: Delayed registration, difficulties in disputes and inheritance.

How to avoid: Carefully check all data, verify passport, address, transliteration, family status in all documents; provide for the obligation to correct errors before registration without additional costs for the buyer.
Signatures/initials are not on all pages

The bottom line: Not all pages of the bilingual agreement are signed.

Risk: Version disputes and delayed registration.

What to check: Signatures/initials on each page of all language versions and applications; indication of the priority language for interpretation.
Leasing and promises of "auto-renewals"

The bottom line: The extension of the term of ownership, presented in the contract as guaranteed, is recognized by the court as null and void, therefore, the auto-renewal prescribed in the contract does not make sense.

Risk: The next term may not be extended; the resale price will decrease by the end of the current term.

Solution: Recognize that the extension is a new agreement. To agree with the developer to include in the contract the option of compensation in proportion to the unused years of the current term in case of refusal to extend.
Inheritance is not spelled out

The bottom line: There is no mechanics of transferring rights to heirs.

Risk: Delays/ additional costs during the reissue, time constraints of the order.

Solution: Immediately specify the heirs in the contract or add a clause stating that in the event of the death of the owner, the property is transferred to his heirs.

Checking the contract is not a formality, but your way to keep the deadlines, budget and liquidity of the facility under control. We know where the risks usually "hide" in Phuket and what changes developers make without unnecessary bureaucracy. Therefore, we work simply: we highlight the important things, gently adjust the wording and fix the conditions so that you feel calm and profitable.

At Undersun Estate, we take care of the contractual part from the first viewing to the registration of the right: we check the land and form of ownership, terms and guarantees, payment terms, management and acceptance — without complications, but in your favor.

Do you need a quick look at the project or the contract?

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We will select a solution for your strategy and coordinate the details with the developer.