Thailand defines new rules for condo reservations

• Thailand’s Office of the Consumer Protection Board has announced new regulations for selling condominium units through reservations, effective January 31, 2025.
• The new notification requires reservation contracts to be drafted in Thai, including specified terms and conditions, and to be provided to the consumer in duplicate upon signing.
• Key rights and clauses include consumer and business operator termination rights, conditions for the return of payments, and prohibition of certain clauses, such as those limiting business operator liability or allowing reservation payment confiscation when the consumer is not in default.

An overview

Recently, Thailand’s Office of the Consumer Protection Board (OCPB)’s Contract Committee announced the Notification Prescribing the Business of Selling Condominium Units Through Reservations as a Contract-Controlled Business, B.E. 2567 (2024).

Announced in the Government Gazette on 3 October 2024, the Notification is expected to come into force on or around 31 January 2025.

The key aim of the Notification is to enhance the protection of consumers with regards to their dealings with condominium project operators and developers. The Notification has been introduced in part to tackle numerous consumer complaints about the seizure of reservation payments for condo units.

The new Notification

Under the new Notification, the process of selling condominium units through reservations involves consumers entering into reservation contracts with business operators to secure a unit by paying a reservation fee (or a similar benefit) that is neither a security deposit nor a down payment.

As such, this will result in the consumer in signing a sales contract to purchase their preferred unit in the prospective condominium. These rules also apply to condominium units reserved via electronic channels.

To ensure that the Notification is followed, a reservation contract must be drafted in Thai and must include the various terms and conditions as specified in the Notification.

Furthermore, the business operator must prepare the reservation contract in two identical copies and provide one physical copy to the consumer upon both parties signing the reservation contract.

The key clauses include the following:

• Rights of termination for the consumer: The consumer has the right to terminate the contact if there is a material failure by the business owner. For example, failure to receive the required building and construction permits by an agreed date, or if the project runs afoul of an environmental impact assessment.
• Rights of termination for the business operator: The business operator has the right to terminate the contract in various circumstances, including when the consumer cannot secure a loan to satisfy the deposit requirements.
• Conditions for the return of payment: The business operator has limited rights to confiscate the reservation payment made by the consumer.

Furthermore, the Notification has included various terms and conditions that are prohibited from featuring in a condominium unit reservation agreement as follows:

• Any clause that excludes or limits the business operator’s liability.
• Any clause that permits the business operator to confiscate all or part of the reservation payment when the consumer is not in a position of default.
• Any clause that mandates the consumer to pay an assignment fee for transferring the condominium unit reservation.

If a business operator fails to comply with the new Notification, they may be subject to a prison sentence of not more than one year and/or a fine not exceeding THB 200,000.

Final thoughts

With a strong real estate practice that works with individual condo owners on various commercial and legal issues, WSR International is well positioned to protect your interests.

For tailored advice and support on navigating these new regulations, please reach out to our experienced team at WSR International.