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The Seller Will Not Transfer: Enforcing a Property Sale in Thailand

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First Question: Is Your Agreement Enforceable?
Section 456 of the Civil and Commercial Code draws a distinction that decides whether you have a case at all.

A sale of immovable property is void unless it is made in writing and registered with the competent official. That is the completed sale, executed at the Land Office. The same rule applies to a sale of a ship of five tons or more, a floating house, a beast of burden, and other property which the law treats in the same way.

An agreement to sell or to buy such property is different. It is not void for want of registration, but no action may be brought to enforce it unless there is some written evidence signed by the party to be charged, or a deposit has been paid, or part performance has taken place. The third paragraph extends the same requirement to sales of movables at a price of 20,000 baht or more.

Read practically, this is good news for most buyers. You do not need a formal notarised contract. A signed reservation agreement, a signed booking form, a receipt for the deposit, or bank evidence of a part payment accepted by the seller will normally carry you over the threshold in section 456. Even an exchange of signed documents can be enough.

What does not work is a purely oral agreement with nothing paid and nothing signed. And a payment made for some other purpose will not be treated as a deposit merely because you call it one later.

Case in point — Supreme Court Judgment No. 3171/2000: money handed over by the seller to the buyer as security for the seller's own performance was held not to be a deposit or part payment within the meaning of section 456 paragraph two, and could not create a new enforceable agreement in place of the original one which had already become void.

One practical warning for off-plan condominium purchases in Phuket. Check what you actually signed. Buyers frequently hold nothing but a reservation form in the developer's favour, with the real contract to follow, and then discover that the document in their hands does not identify the unit, the price or the parties with enough certainty to enforce.

The Remedy: The Court Signs for the Seller
Section 213 is the provision that makes this remedy work, and it is considerably stronger than most foreign buyers expect.

Where the debtor fails to perform, the creditor may apply to the court for an order compelling performance, unless the nature of the obligation does not permit it. Where the subject of the obligation is the doing of some act, the court may authorise a third person to do it at the debtor's expense. And, most importantly here, where the subject of the obligation is the making of a juristic act, the court may order that its judgment be substituted for the debtor's declaration of intention.

That last sentence is why a Thai seller cannot defeat the claim simply by refusing to appear. The transfer at the Land Office is a juristic act. If the court orders the transfer and the seller will not attend, the judgment itself stands in place of the seller's consent.

The enforcement machinery is set out in section 357 of the Civil Procedure Code. Where the judgment requires the debtor to make a juristic act capable of being replaced by the judgment but does not say so expressly, the judgment creditor may apply for an order to that effect. Where the declaration of intention is only complete on registration with a registrar or competent official, the judgment creditor may apply for an order directing that the registration be carried out, and the official must then register in accordance with the court's order. If the title deed, certificate of utilisation, register or other document of right needed for registration has been lost, damaged or cannot be produced, the court may order the official to issue a substitute, and once issued the original document is cancelled.

That last provision answers the question clients ask most often, which is what happens if the seller simply hides the chanote. The answer is that it does not stop the transfer.

The relief is routinely granted in this form. In Supreme Court Judgment No. 5746/1994, Judgment No. 6797/1994 and Judgment No. 3354/1988, the claims were framed as an order that the defendant register the transfer and receive the balance of the price, and that failing compliance the judgment be taken in lieu of the defendant's declaration of intention. Judgment No. 2701/1994 shows the same order being carried through to execution, with the buyer depositing the balance of the price with the court when the seller refused to accept it.

Two drafting points follow from those cases, and both matter. First, ask for the substitution order in the prayer for relief, not afterwards. Second, plead your own readiness to pay the balance and offer it, because this is a reciprocal contract and the court will order the transfer against payment, not instead of it.

The Seller Cannot Buy His Way Out by Returning the Deposit
Sellers frequently argue that the contract gives them a choice: transfer the property, or hand back the deposit and pay the stipulated penalty. On the usual wording, that argument fails.

Case in point — Supreme Court Judgment No. 3354/1988: the seller contended that under clause 3 of the agreement she was entitled to elect not to sell, by returning the deposit and paying the agreed 20,000 baht. The clause provided that if the buyer defaulted the seller could forfeit the deposit, and that if the seller defaulted she would pay the buyer a further 20,000 baht. The Court was not persuaded that this gave the seller an option to refuse to perform, and ordered the transfer against payment of the outstanding 175,000 baht, with the judgment to stand in place of the seller's declaration of intention if she did not attend.

A penalty clause is a measure of damages, not a price for walking away. Unless the contract clearly confers an express option to withdraw, the buyer may still insist on the property itself.

Make Sure You Are Not the Defaulting Party
The most common reason a buyer's claim for specific performance fails has nothing to do with the law. It is that the buyer cannot prove readiness to complete on the appointed day.

Case in point — Supreme Court Judgment No. 6745/1995: the buyer had agreed to purchase six titles for 16,530,000 baht and paid a deposit of 1,000,000 baht, with the balance due on the transfer date. The buyer sued for specific performance. The seller proved that he had attended the Land Office from opening until the close of business, that the buyer had not attended and was not ready to pay the balance, and that he had reported the matter to the police. The claim was dismissed at first instance, on appeal and in the Supreme Court.

Case in point — Supreme Court Judgment No. 6797/1994: the Court of Appeal had ordered the transfer, but the Supreme Court found that the buyer alone was in default, with the result that the sellers were entitled to forfeit the 30,000 baht deposit.

The lesson is procedural rather than legal, and it is cheap to follow. Attend the Land Office on the agreed date whether or not you expect the seller to appear. Have the funds available in a form you can evidence, such as a cashier's cheque or a bank confirmation. Have the officer record your attendance, or record it yourself in writing on the day. Where the seller refuses to accept payment, deposit the balance with the court or the Legal Execution Department, as the buyer in Judgment No. 2701/1994 did. That record is frequently the whole case.

The Double Sale: The Point Most Guides Get Wrong
Suppose the seller, having agreed to sell to you, registers the land to a different buyer. Many articles state confidently that you can have that registration cancelled under section 1300. The position is considerably narrower, and the distinction is one of timing.

Section 1299 provides that an acquisition of immovable property or of a real right in immovable property is not complete without registration, and an unregistered right cannot be set up against a third person who has acquired in good faith, for value, and registered.

Section 1300 allows a person who was already in a position entitled to have his own right registered in priority to apply to cancel a registration made to his prejudice. But it carries an express exception. Where the transfer was for value and the transferee acted in good faith, the registration cannot be cancelled in any circumstances.

The critical question, then, is whether a buyer under an agreement to sell is in that protected position. The answer is normally no.

Case in point — Supreme Court Judgment No. 5113/1997: the plaintiff had an agreement to sell of land with a commercial building, and the first defendant then registered a transfer of the same property to the fourth defendant. The plaintiff sought cancellation of that registration under section 1300. The Court held that the plaintiff's right under the agreement to sell was a purely personal right, entitling him only to compel the first defendant to transfer to him under the contract. He had no real right that could be enforced against the fourth defendant as purchaser. He was therefore not a person in a position entitled to have his right registered in priority within the meaning of section 1300, and had no standing to seek cancellation under that section.

Now compare the position once the court has acted.

Case in point — Supreme Court Judgment No. 576/1952: once the buyer had brought the case to court and obtained judgment ordering the seller to transfer the land under the agreement to sell, the buyer stood in the position of a person entitled to have his right registered in priority under section 1300, even though the case had not yet become final. Accordingly, where the seller sold the land to another person while the case was still pending and that purchaser was not in good faith, the buyer had standing to apply to have that transaction cancelled.

Case in point — Supreme Court Judgment No. 702/1957: the second defendant bought in good faith, for value, and registered. The Court held that because the plaintiff had not registered her right under section 1299, she could not set it up against that third party, and there was no way to have the sale cancelled.

Case in point — Supreme Court Judgment No. 2084/1982: here the plaintiff was already a co-heir entitled to registration of inherited land, and the Court held that the correct provision was section 1300 rather than section 237, so the transfer to the second defendant could be cancelled unless it was a transfer for value made by a transferee in good faith, which on the facts it was not.

Put these together and the commercial advice writes itself. Suing quickly is not merely about limitation periods. Until you obtain judgment, your right against a third-party purchaser is weak, and a good-faith purchaser for value who registers will defeat you altogether. Which is precisely why the first application in a case of this kind should not be the claim alone.

Protecting the Property Before Judgment
Section 254 of the Civil Procedure Code allows a plaintiff, on filing the claim or at any time before judgment, to apply ex parte for interim protection. Three of the available measures matter in a property case.

Under section 254(1), the court may order seizure or attachment of the property in dispute, or of the defendant's property, before judgment.

Under section 254(2), the court may make an interim order prohibiting the defendant from transferring, selling, moving or disposing of the property in dispute, or from repeating or continuing the breach complained of, until the case becomes final or the court orders otherwise.

Under section 254(3), the court may order the registrar or other competent official to suspend registration, suspend any alteration of the register, or suspend cancellation of a registration relating to the property in dispute, again until the case becomes final or the court orders otherwise.

That third measure is the one that, in practice, saves these cases. An order directed at the Land Office stops the double sale from ever being registered, which keeps section 1299 and the good-faith purchaser exception in section 1300 out of the picture entirely. Applying for it at the same time as filing, rather than after the transfer has happened, is the difference between recovering the property and recovering a money judgment against a seller who may have nothing left.

A caveat lodged at the relevant Land Office is a further administrative step that can be considered alongside the court application, though it is limited in duration and is not a substitute for a court order.

If the Property Genuinely Cannot Be Transferred
Sometimes transfer has become impossible, because the land was already registered to a protected good-faith purchaser or because of a foreign-ownership restriction. Section 213 preserves the right to damages alongside the right to compel performance, so the claim should be pleaded in the alternative from the outset.

Judgment No. 2701/1994 illustrates the structure of the order: the court directed the defendant to transfer his share of the title against payment of the outstanding 468,750 baht, and provided that if he could not transfer, he must return the deposit of 156,250 baht together with 100,000 baht in damages. Pleading both heads of relief in this way protects the client whichever way the facts fall.

Foreign buyers should note one limit candidly. A foreigner cannot be ordered into ownership of land that a foreigner may not own. Where the structure involved a company, a lease, a usufruct or a superficies, the enforceable obligation may be to deliver that interest rather than freehold title, and the claim has to be framed accordingly.

Common Mistakes to Avoid
Assuming the only remedy is the return of the deposit, when the court can compel the transfer itself.

Failing to attend the Land Office on the appointed day, or being unable to evidence readiness to pay the balance.

Filing the claim without applying at the same time for an order suspending registration under section 254(3).

Believing that an agreement to sell gives a right enforceable against a later purchaser, when before judgment it gives only a personal right against the seller.

Omitting from the prayer for relief a request that the judgment stand in place of the seller's declaration of intention.

Relying on an oral agreement with no signed document, no deposit and no part performance.

Pleading specific performance alone, with no alternative claim for the deposit and damages.

Frequently Asked Questions
The seller refuses to go to the Land Office. Can a court force the transfer?

Yes. Under section 213 the court may order that its judgment be substituted for the seller's declaration of intention, and under section 357 of the Civil Procedure Code the court may direct the competent official to carry out the registration. Even a missing title deed does not prevent it, because the court can order a substitute to be issued.

All I have is a signed reservation form and a deposit receipt. Is that enough?

Very likely. Section 456 requires written evidence signed by the party to be charged, or a deposit, or part performance. Any one of those satisfies it. What the document must still do is identify the property, the price and the parties with sufficient certainty.

The seller has already sold the property to someone else. What now?

If that purchaser bought in good faith, for value, and registered, you will normally be confined to a claim for damages against the seller, because an agreement to sell gives you only a personal right. If the purchaser was not in good faith, or if you had already obtained judgment ordering the transfer before the second sale, you may apply to cancel the registration.

Can the seller cancel by returning my deposit and paying a penalty?

Generally no. A penalty clause measures damages rather than purchasing a right to withdraw. Unless the contract expressly confers an option to withdraw, the buyer can still insist on the property.

What is the single most important step to take immediately?

Apply for an interim order under section 254(3) suspending registration at the Land Office at the same time as filing the claim. That prevents the property from passing to a protected good-faith purchaser while the case is heard, and it preserves every other remedy you have.

Speak to a Thai Property Litigation Lawyer
When a seller refuses to complete, the property can usually still be obtained, but only if the claim is filed and protected quickly and framed correctly. Our litigation team reviews the agreement for enforceability under section 456, documents your readiness to complete, files with an application to suspend registration at the Land Office, seeks an order that the judgment stand in place of the seller's signature, and pleads damages in the alternative. We act for foreign buyers of land, houses and condominium units in Phuket and throughout Thailand, including off-plan and developer disputes. Contact us before the property is transferred to someone else.

Disclaimer
This article provides general legal information only and does not constitute legal advice. Property litigation outcomes depend closely on the wording of the agreement, the registration history of the title and the evidence of each party's readiness to perform. Please consult a licensed Thai attorney before acting on any matter with legal consequences.

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