Thailand has no escrow accounts: what happens if a developer goes bankrupt and how to check the land

Thailand has 0 escrow accounts for off-plan homes: the buyer's payments go straight to the developer. If the developer goes bankrupt, contractors and suppliers are paid first and buyers after them. Two things reduce the risk: checking the land in the state registry and not buying at the pre-sale stage.

What happens when a developer goes bankrupt?

The company's assets — money in its accounts, the land, the unfinished building — are sold through the court. Contractors and suppliers are first in the queue; unit buyers come after them.

The developer is usually left with the land and a building at some stage of completion. Another developer may buy the project out, or it is sold at auction. Participants at the session noted that by then the accounts are usually empty.

Does the developer have to own the land?

By the time condominium units are sold, the land must be fully bought: unit owners become co-owners of the plot. At the pre-sale stage, however, the plot may only be leased or bought in instalments.

Hence the rule from a practitioner with 12 years in the Thai market: if you do not want the risk, do not buy at pre-sale. Come in when the land is registered to the developer and the registry shows it.

How do you check the developer's land?

Thailand has a state land registry. It shows who owns the plot and whether it is encumbered. The website is in Thai, but an online translator copes with it.

• Owner of the plot — must match the developer.
• Encumbrance — a bank mortgage means the land was bought on credit or in instalments.
• Project stage — pre-sale, or sale under a registered project.

How do you check a developer's reputation?

The market is tight-knit. Lawyers who run disputes with developers know one another and know how many cases each company faces. Two or three calls are enough to learn whether buyers are suing a company.

The country has developers with a 30–40 year history. Yet the barrier to entry is low: a newcomer can put down a deposit on land, draw up a project and open sales.

How does a bankruptcy end after the building is handed over?

That is a separate scenario: the keys are handed over, but the unit's documents remain pledged to the bank. We covered it in our piece on why title deeds take up to five years.

Frequently asked questions

Does Thailand have escrow accounts like Dubai?

No. Payments for an off-plan unit go to the developer itself; the law does not require a separate protected project account.

Who is paid first when a developer goes bankrupt?

Contractors and suppliers. Unit buyers stand in the queue after them, and the company's assets are sold through the court.

Where can you see who owns the land under a project?

In Thailand's state land registry. It lists the owner of the plot and any encumbrances; the website is in Thai.