Over the past few years, the phrase “Owner Finance” has become a term more commonly heard when referring to a property purchase directly from an owner. Because the local Thai banks have severe limitations on what (if any) money they can lend to a foreign national to purchase a property here in Pattaya, some owners have stepped in to allow a potential buyer to spread the cost of the purchase over a short period of time.
Owner finance can last between 6 months and 3 years (dependent on the seller), however longer periods have occasionally been agreed, normally with a very large initial deposit/down payment of between 25% – 50% of the sales price.
In many cases the owner does not add any interest (unlike a bank), however, some owners on longer loan periods will add a percent to the price each year.
It is important to check and confirm this as early as possible.
Once the loan payments have been agreed, the buyer accepts to pay off the balance within the time frame stipulated and understands that should they miss any payments, and not complete the payment plan, that they may lose all monies paid to the seller and forfeit the right to buy the property.
After receiving the initial deposit/down payment, the seller shall remove the property from sale, pass all legal ownership documentation on to a mutually agreed lawyer who will hold onto these until the balance has been fully paid. At the start of the loan period, the seller will also sign “pre-sale” transfer documents for the lawyer to hold. All payments are documented throughout the payment term until the full balance has been paid.
After all, payments have been made to the seller, the lawyer is instructed to transfer all ownership documentation to the new buyer using the pre-signed transfer documents from the seller.
Property Thailand Real Estate has with the help of our Lawyer experience in drafting secure and legal owner-financed contracts. To understand more about this process please contact us at email firstname.lastname@example.org to make an appointment.