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Seemingly unique to Koh Samui, and its surrounding islands, the Reservation Agreement is a simple one-two page agreement signed by the buyer, the seller, and the real estate agent, in which the buyer agrees to pay a small holding deposit [the Reservation Fee] in exchange for a window of time. Usually 100,000-200,000 baht, and preferably held by the buyer’s lawyer in their Client/Escrow Account, temporarily removes the property from the open market, for a thirty (30) day period usually, whilst the buyer’s lawyer undertakes Due Diligence and prepares [or reviews] the Sale & Purchase Agreement on behalf of the buyer.

The Reservation Agreement may include clauses allowing the buyer to terminate the sale/purchase and obtain a full refund of the Reservation Fee in the event of:

• • an unsuccessful Due Diligence [for any valid legal reason whatsoever] and/or,
  • viewing the physical property [if different from the advertised or described property] and/or,
  • reviewing the contractual documentation [Sale & Purchase Agreement] thereafter.

Whilst a properties’ land title deed [Chanote, Nor Sor 3 Gor etc] describes exactly what and where the property is located and who owns the property, the ‘Sale & Purchase Agreement’ describes exactly when and how the property can/will be sold/purchased and under what terms and conditions. When you’re purchasing a property in Thailand, the seller/developer will either:

• • provide a Contract of Sale or Sale & Purchase Agreement after you make the initial deposit, or
  • ask that you engage your lawyer to draw up the Contract of Sale or Sale & Purchase Agreement instead.

The Sale & Purchase Agreement is a legally binding contract between two [or more] parties that confirms a transaction between the buyer and the seller, and this contract is widely used for property transactions in Thailand. The contract may be drawn up in English and/or Thai but, most importantly, it must be reviewed carefully prior to signing. Depending on the nationality and fluency levels of both parties, you may need to consider having the contract translated and executed in the appropriate [mother tongue] languages.

As with any contract, the interests of both parties should always be considered. You should then have a contract reviewed. A Contract Review will enable both parties to:

• • Ensure that the sale goes smoothly, it is important to have a good understanding of what the sales contract says, and
  • In some cases the sales contract may be lacking some of the conditions you have negotiated with your counterpart and agreed that it should be contained in the contract, and
  • The sales contract could be missing other essential provisions that only become important when problems arise, and
  • It may cover provisions around the completion of construction of off-plan developments and makes no references to the penalties the developer must pay in the event of delay.

Although many sellers or developers insist that their sales contract is ‘standard’, we see many errors and omissions whilst reviewing these standard contracts. There should be no obligation to use their standard contract if it does not meet your requirements. It is always a good idea to have your lawyer review the contract to ensure it’s legal, complete, and enforceable in the event that something goes wrong.

A Partnership Agreement is a contract between two or more individuals who have decided to pool their resources, skills and/or experience in order to capitalize on a synergetic business opportunity. Under normal circumstances, each partner shares a portion, usually commensurate with their initial financial contribution, of the partnership’s profits and losses, as well as the debts and obligations of the Partnership.

The agreement should clearly define whether the partnership is for a fixed or floating [indefinite] time-frame, if and how new partners may enter the partnership, if and how existing partners may exit the partnership, why and when the partnership dissolves, compensation [salaries and/or commissions] for any/all partners, dedicated functions of each partner, who’s responsible for the day-to-day activities, how often the partners meet as well as consent for expenditure.