Seeing is not believing

Article Source: Phuket Post

THERE is a crucial difference between buying a condominium unit that you can see and buying the condominium dream appearing on a glossy brochure or poster.

However, when purchasing a new condominium unit, our common sense is clouded by the ability to purchase the condominium unit at the cheaper price available before it is built.

We pay a deposit (Plus subsequent installments) to a developer for a condo that appears only on a brochure or poster. Such a bargain purchase, however, exposes the buyer to several risks:
(a) The condo, when completed, may not match how it appears on the glossy brochure or poster; or
(b) The materials used to built the condominium or other specifications may not be as promised by the developer; or
(c) The completion of the condominium unit may be delayed and ownership title transfer of the unit cannot take place at the time anticipated.

At the initial stage, the condominium project developer usually gets the buyer to sign a ‘to sell and to buy’ condominium unit contract or, in some cases, incorrectly called a sale contract or reservation contract. In this contract, the developer promises to sell a condominium unit to the buyer at a future time and the buyer promises to purchase the unit at the future time.

If any of (a), (b) or (c) above occurs, the buyer certainly has the right to sue the developer in court for breaching the to sell and to buy contract. However, unless there are clear stipulations in the contract on the materials, specifications or ownership title transfer date of the condominium unit, it may be difficult for the buyer to substantiate a breach of contract claim.

In addition, even when the breach of contract can be substantiated to the court, few buyers will want to go through the litigation process hoping to claim back the money that they had paid to the developer.

If the advertising material, text or photos differs from the to sell and to buy contract or sale contract of condominium unit, it shall be interpreted for the benefit of the buyer”.

In practice, “part of the to sell and to buy contract” means that all advertising materials i.e. brochures, posters, text, photographs, and sale letters must be attached to and made part of the contract.

As a result of the new law a ‘to sell and to buy’ contract must now protect buyers against developers who lure buyers’ money with empty promises or cannot fulfill their promises due to whatever reasons.

Developers will now have to think twice about the information that they provide to potential buyers of their condominium units. Buyers, the next time you enter into a contract to purchase a condominium unit with a developer, make sure that the glossy brochure and other related sale documents are attached to and formed part of the to sell and to buy contract.

David Tan is a Lecturer of Business Law at Asian University and author of the book - A Primer of Thai Business Law.

blas.inter@yahoo.com