Property Broker & Estate Agent

Does the Property Broker Agreement or Estate Agent Agreement need to be made in writing?   

Nowadays, the Real Estate Business is growing extremely  well in Hua-Hin. It’s improving the Estate Agents business (buying and selling property) through developments real estate projects and as one can see there are many constructions emerging in this area.  As the result, the agent’s business which supports the new business creats what is known as Property Broker & Real Estate Agencies.  In this issue, I would like to pass on some useful knowledge regarding broker, or agents as stated below:

The Definition of Property Broker and
Estate Agent

First of all, we should know how to simply differentiate between a Broker and an Agent in Legal terms

A Property Broker is one who gets paid for indicating an opportunity for fulfilling a contract between a buyer and seller. Commitments made between the Broker and the Buyer or third person are not bound to the property owner.

An Estate Agent is one who is legally appointed by the property. Activities of the agent are conducted on behalf of the property owner. Therefore commitments made by the Agent to third person and Buyer are bound to the property owner as well.

Does the Property Broker Agreement need to be made in writing?

Under Thai Law, the Property Brokerage Agreement is not required to be made in writing. This Agreement can be verbal and still be legal, as it affects the parties involved, and therefore the mentioned verbal Agreement is able to hold up in court.  In the testimony, respective witnesses must be provided by the broker to support the existence of such an Agreement.

The plaintiff has the burden of proving the existence of such an agreement.  However, the other party (defendant) can easily defend themselves by denying the existence of such an agreement.  Therefore, for the purpose of being practical, if the parties had made such  an agreement in writing, it would be more convenient for the broker and the Courts to provide a ruling and solution to the case.

 Affects from the Interior Ministry Instruction

There was no transaction at Hua Hin land office in the pass month caused by the mentioned instruction.  It has been widely considered that from now on, a company with Thai proxies set up to buy land is no longer practical. It has also been a concern that foreigners should try to lease land for 30 years or to buy a condominium unit instead.

Housing projects which target to foreign buyers have already started to revise their marketing plan to deal with such instruction.

I personally don’t see any beneficial aspects for the economy of Thailand from such an Interior Ministry instruction as of May 15, 2006.

There are some efficient solutions to try and overcome the new imposition of enforcement.  One such solution is to usufruct the land from a Thai.  In this case, a foreign party might loan the money to a Thai party in order to buy the land and they then register the usufruct in the Land Registry offices for a period of 30 years to life.  In such a case the usufructuary has the right to take any of the yields from the land in case of rent, etc…  It should have a penalty clause in case the Thai party decides to default on the contract in place.  This might be a good solution for businesses