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Refinance entirely through another bank and both your wife and the new bank will be registered on the chanote removing the current owner from any claim. You can get your name on the title with a usufruct but will need a lawyer for that

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3 hours ago, Beck1976 said:

I fully get your point, but find his situation "believable", in lack of better word.

He build a 4-unit apartment building, right next to his house, which was financed by selling another house 3 years ago, and then a smaller loan from family. He only got one tenant so far though, who recently moved in, at 9000/month I think. We are in one of the tourist villages on the west coast of Phuket, so a lot of vacancies due to Covid. We've been paying 15k/month, and both he and his wife are retired, so have been relying on rental income.

 

Despite sufficient networth and income, we have not been able to obtain a loan, unfortunately. My wife is a stay-at-home mom for many years, and I make my income primarily from rental income from Denmark. Thai banks wants us to work in Thailand, and Danish banks wants me to live and work within EU.

sounds like you know the business... and the guy involved... make your own judgments - go with your gut but if you have even small misgivings, forget it... there are countless other properties for sale in Phuket and even more business opportunities for investment... 

 

best of luck to you.. 

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5 hours ago, khunPer said:

...and in principle the bank is the owner of the property, as the bank might also have a power of attorney to move the title; i.e. when you have a mortgage, you don’t really own your home, but isn't that’s how it is almost all over the World?

 

Actually not. A fundamental principle of a mortgage is that the bank does not own the property.

 

Ownership of the property remains with the purchaser while the bank has an encumbrance over the property.

 

This is a very important distinction as the bank has no right to evict you from the premises without first following due legal process.

 

What you refer to in your post is, "Sale with the right of redemption"; a very different procedure indeed.

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I recently purchased a property under ‘owner finance’

We paid a 3mil deposit on a 5mil property (discounted from 6.5). We attended the land office and the chanote was registered in my wife’s name with the finance stipulation recorded on the back. We also signed a contract that laid out the finance, 30K a month over 3 years with 3-5% interest and a final payment of 1.08mil and loss of rights with 60 day default of payment. 
We were sure to do due diligence with a reputable lawyer before going ahead. 

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If it was me, I would want to keep it simple and if it couldn't be, then I would walk away....there always another deal..........

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Once again, thank you all for the replies, I am very grateful.

 

 

Quote

 

Q: I believe we would stand a good chance of recovering our money, as he owns a few more properties (at present time debt free, although that can change of course).

 

A: I am sure the seller and his family are honourable people and that you will have no problems at all.

 

I obviously dont expect him to be a bad actor, but just trying to get a grasp of what we possibly could be facing.

 

Quote

 

Q: Exactly how would that lien protect us? We would be able to block any further encumbrances on the property.

 

A: No, because you would not have a mortgage. You would have a different type of encumbrance, which would allow the owner in some circumstances to place other types of encumbrance against the property without your consent.

 

So even with a lien, our claim would be different, than a bank holding a mortgage? Could he obtain further debt (mortgage the house again)? Or are you referring to leases, usufructs and similar? 

 

 

Quote

 

Q: ...as well as preventing him from selling it?

 

A: You cannot stop the owner selling their property. They do not need your consent to do so, but they must repay you any money owed before the sale is officially recorded. If you refuse to accept the money or you are not available the owner can pay the full sum to the land office who will keep the money until you claim it from them.

 

If your encumbrance is for 1 million, but towards the end of the contract you have paid 3 million in total, the owner can pay you 1 million, sell the property and keep the additional payments of 2 million. You would have to pay to take the owner to Court for the 2 million and hope they had any assets left to claim against after the Court case was finally completed.

 

So if we had a contract, stating that he had agreed to sell the house to us, and the encumbrance were related to that, if he insisted on selling it to a third party, we would have to take him to court, if we wanted him to honor the original contract. Could he still sell the property while the court proceedings was going on? 

This is relevant to me, as I believe we buy it at a good price (partly due to him wanting to pay of other debt, and partly covid), but the property could potentially be worth more in 3-4 years, but before the payments are finalized and the deed is in my wifes name.

Basically, if we after 4 years have paid 3 million (out of a total price of 3.5 million), and he happened to find a buyer who wanted to pay 4.5 million, then what? Would the sale be obstructed until it was settled in court? or would he still be able to sell it, and the very best we could hope for (after potentially years of court appearances and associated costs), was to recover the 3 million paid?

 

 

21 hours ago, khunPer said:

About deed registration and ownership 

To my experience and knowledge, a title deed cannot be transferred to a new registered owner, before all debt and interest declared as servitude (i.e. mortgage) has been fully paid.

 

In theory you, or rather your wife, owns nothing. You have an agreement with the seller, and if anything goes wrong it’s a question of taking the seller to court and claim compensation.

 

So it’s a question of thrust between the parties – the bank holding the mortgage servitude will act accordingly to the law – however, often people are trustworthy, but you don’t have a guarantee; i.e. what if the owner dies and you are going to negotiate with heirs about “your home”?

 

The best way would be to pay off the mortgage, and fully pay the seller for the property, move the title deed to your wife’s name, and obtain a new mortgage registered as servitude. This might also be what you are used to from your home country, so it is in my home country. The bank will normally hold the title deed, and in principle the bank is the owner of the property, as the bank might also have a power of attorney to move the title; i.e. when you have a mortgage, you don’t really own your home, but isn't that’s how it is almost all over the World?

 

About land occupying public area 

Concerning some of the land being on public land, which might cause a problem in the future, it might also widely depend on how it’s locally handled, and other external circumstances. In older time the land was not measured very correctly, and later upgrades to higher title deeds often changed the land borders, so when for example upgrading from Nor Sor Sarm-title to Chanote-title, the borderline could have been moved; the process could have been over a number of various titles from originally claiming land, or a family being granted land.

 

Snip...

 

Seller finance may happen in my home country rarely and then only for a small amount of the price, usually the remainder of what the mortgage and downpayment can cover. It is a safe way for the buyer though (although expensive), as the deed is transferred, and the seller is then holding a debt claim against the buyer.

 

Regarding occupying public land, Im fully aware that at any point they could claim it back, and we would lose the right to use it, I have factored that in to the price.

It is more the prospect of possibly being sued, and repercussions that worries me. The owners comment was "nobody have ever complained about it" and he seemed surprised that I actually found it to be a problem 🙂

Several other houses in the area have built just as close to the road, but whether they are outside their chanote, I dont know.

 

 

9 hours ago, MadMuhammad said:

I recently purchased a property under ‘owner finance’

We paid a 3mil deposit on a 5mil property (discounted from 6.5). We attended the land office and the chanote was registered in my wife’s name with the finance stipulation recorded on the back. We also signed a contract that laid out the finance, 30K a month over 3 years with 3-5% interest and a final payment of 1.08mil and loss of rights with 60 day default of payment. 
We were sure to do due diligence with a reputable lawyer before going ahead. 

This is exactly, how I at first thought it would be done. Transfer of deed to my wife, and he would then hold a debt claim towards us, with the property as collateral.

 

7 hours ago, Pmbkk said:

 

If it doesn't feel right( too many ifs and buts that can't be answered) - it isn't.

 

Stop now and stop wasting time and effort.

So far I have gotten very informative answers to all my questions.

If nothing else, this is a great learning experience for me, how real estate transactions are done here, and which pitfalls there can be.

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28 minutes ago, Beck1976 said:

 

This is exactly, how I at first thought it would be done. Transfer of deed to my wife, and he would then hold a debt claim towards us, with the property as collateral.

 

 


the vendor was hesitant at first but with a bit of persistence they went through with the name charge. As always polite but firm with any negotiating. Good luck 

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  • 2 weeks later...
On 2/13/2021 at 12:21 AM, MadMuhammad said:

I recently purchased a property under ‘owner finance’

We paid a 3mil deposit on a 5mil property (discounted from 6.5). We attended the land office and the chanote was registered in my wife’s name with the finance stipulation recorded on the back. We also signed a contract that laid out the finance, 30K a month over 3 years with 3-5% interest and a final payment of 1.08mil and loss of rights with 60 day default of payment. 
We were sure to do due diligence with a reputable lawyer before going ahead. 

So after some talk back and forth with the seller, we came to an agreement.

Downpayment now, monthly installments for a year, at which point, we pay out the mortgage he has, and the chanote is transferred to my wifes name. After that we would still pay 50 monthly installments.

I found the risk acceptable this way.

 

The plan was to have his lawyer draw up a contract, I would then run it by my guy, just to make sure everything was ok.

 

We had a quick meeting with them, and despite knowing nothing about our financials, his lawyer was afraid, we wouldnt be able to make the payments. The seller had no concerns about it at all.

However, we have now been noticed, that according to his lawyer, it simply cant be done this way. That the chanote cant be transferred untill all payments are done. Not that the lawyer advised against it, but simply "cannot make such contract!"

 

I find that odd? It is a simple payment plan, with amounts and dates for both payments and transfer of ownership all determined and agreed upon.

 

Are there any actual reason why such a contract cant be made?

 

Or is it just the lawyer, who is either making up his own rules or advising the seller against it, and the seller then presents it as a rule?

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6 hours ago, Beck1976 said:

So after some talk back and forth with the seller, we came to an agreement.

Downpayment now, monthly installments for a year, at which point, we pay out the mortgage he has, and the chanote is transferred to my wifes name. After that we would still pay 50 monthly installments.

I found the risk acceptable this way.

 

The plan was to have his lawyer draw up a contract, I would then run it by my guy, just to make sure everything was ok.

 

We had a quick meeting with them, and despite knowing nothing about our financials, his lawyer was afraid, we wouldnt be able to make the payments. The seller had no concerns about it at all.

However, we have now been noticed, that according to his lawyer, it simply cant be done this way. That the chanote cant be transferred untill all payments are done. Not that the lawyer advised against it, but simply "cannot make such contract!"

 

I find that odd? It is a simple payment plan, with amounts and dates for both payments and transfer of ownership all determined and agreed upon.

 

Are there any actual reason why such a contract cant be made?

 

Or is it just the lawyer, who is either making up his own rules or advising the seller against it, and the seller then presents it as a rule?

I don’t understand why you wouldn’t get the wife to get a loan from the bank ? The banks are as shady as the west and will give anyone with a pulse a loan as long as money is going in and out of their bank . 

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7 minutes ago, chrisandsu said:

I don’t understand why you wouldn’t get the wife to get a loan from the bank ? The banks are as shady as the west and will give anyone with a pulse a loan as long as money is going in and out of their bank . 

She have had extremely low activity on her account for several years, so not an option.

 

Furthermore, big difference between paying off the house in interest-free installments over 5 years, compared to borrowing the entire sum, and paying interest to the bank,

But for future reference, are you saying, that as long as money is coming in and going out, she could be eligible for a loan, despite not holding a job (and therefore no pay-slips etc)? So I could send her 50.000 every month, she would withdraw it over the course of the month, use it for our regular expenses, and then repeat every month, and then she would qualify?

 

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14 minutes ago, Beck1976 said:

She have had extremely low activity on her account for several years, so not an option.

 

Furthermore, big difference between paying off the house in interest-free installments over 5 years, compared to borrowing the entire sum, and paying interest to the bank,

But for future reference, are you saying, that as long as money is coming in and going out, she could be eligible for a loan, despite not holding a job (and therefore no pay-slips etc)? So I could send her 50.000 every month, she would withdraw it over the course of the month, use it for our regular expenses, and then repeat every month, and then she would qualify?

 

The mortgage companies are starving right now . Go to them and give it a shot . Tell them you will be the guarantor (not that that means much in Thai law ) but they will see a possibility of it being paid . If the bank does give you a loan make sure there is no penalty for early repayment .

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On 2/22/2021 at 3:23 PM, Beck1976 said:

So after some talk back and forth with the seller, we came to an agreement.

Downpayment now, monthly installments for a year, at which point, we pay out the mortgage he has, and the chanote is transferred to my wifes name. After that we would still pay 50 monthly installments.

I found the risk acceptable this way.

 

The plan was to have his lawyer draw up a contract, I would then run it by my guy, just to make sure everything was ok.

 

We had a quick meeting with them, and despite knowing nothing about our financials, his lawyer was afraid, we wouldnt be able to make the payments. The seller had no concerns about it at all.

However, we have now been noticed, that according to his lawyer, it simply cant be done this way. That the chanote cant be transferred untill all payments are done. Not that the lawyer advised against it, but simply "cannot make such contract!"

 

I find that odd? It is a simple payment plan, with amounts and dates for both payments and transfer of ownership all determined and agreed upon.

 

Are there any actual reason why such a contract cant be made?

 

Or is it just the lawyer, who is either making up his own rules or advising the seller against it, and the seller then presents it as a rule?


when we initially agreed to buy we made a 100000 baht deposit with the agreement to be finalise ‘subject to finance’. Our loan was rejected due to 60 baht outstanding on my wife’s credit card from 2 years previous (they were fully paid out by me). Even after being denied the seller was still happy to continue with their financing of the purchase. 
We had them draw up a contract of which we had checked by our lawyers and we also made quite a few changes ourselves to mitigate our risk and then checked once more. 
After we got the ho ahead we drew up a repayment plan so everyone could easily understand the agreement and had all documents witnesses and signed by both husband and wife vendor and myself and my wife. 
One would think the denial of finance would be a concern but there was a 30 day late payment clause added to the contract which gives the vendor full rights to the property should we default.  Everyone walked away happy and comfortable 

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