The handover and Warranty
The introduction of the transfer method will be the same whether you are buying from a Crown Developer or a First-Time Developer. When the date of completion approaches, the developer will send you a notification letter and email (usually 30 days in advance) informing you the property will be soon ready for transfer.
Often, the developer will also schedule a date for a joint visit at the condominium preceding to the final transfer. If you are abroad and unable to come quickly, the developer will typically assist you to a certain extent and reschedule the meeting for a more suitable date.
This method starts to change after the routine visit. Prime Developers don’t make a habit of forcing their buyers into the transfer of faulty condominium (at least they don’t do in Thailand).
On the opposite, they will first correct the defects and schedule another appointment or send images to the buyer attesting to the completion of repairing and only after all errors have occurred corrected will they request that the customer accepts the transfer of the property.
Nevertheless, First-Time Developers often do not view into account the improvement of errors and defects as restricting the transfer of the condominium to the buyer and the payment of the last instalment.
As a matter of fact, they will often promise to correct the mistakes after the transfer and try to get their customers to accept the transfer of the condominium and pay the last instalment before taking any action in the way of repairs.
Since you have agreed to buy from a First-Time Developer, check your agreement. A good clause for the buyer should specify the resulting minimum requirements: The work inside and outside of the condo is complete, except for minor imperfections and minor scratches.
Minor imperfections or minor defects are those that do not prevent the condo from being reasonably used for the dedicated purpose whereby the rectification of minor omissions or minor errors will not disadvantage the beneficial use of the apartment. For example, a scratched window or chipped wall edge is acceptable, but missing or malfunctioning parts or devices is unacceptable.
Any rectification activity is causing the contractor to remove tiles, wooden floors or work that creates unreasonable amounts of dust and noise are considered to prejudice the available use of the condo. Ultimately, all equipment listed in the Specifications List attached within has been correctly tested and found to be in working order.
In other words, the contract should not allow the developer to restrict the transfer of a condominium to the buyer as long as defects and omissions are affecting the property logically used for the designated purposes, or cannot be rectified without prejudicing the proper use of the property.
Be cautious to review the Specification List in detail to ensure that everything the developer has promised is listed as a specification and that the standard actually conforms to your needs.
What sort of warranty should condo buyers request? Warranty terms differ from one country to the other, and there are no universal rules. A warranty should be no less than five years on of all the property’s structural elements (pilings, foundations, supports, beams, floors, roof and bearing walls) and two years on non-structural items such as wall partitions and ceiling plasterboards.
If you buy a condominium in Pattaya from a Top Developer, you won’t need to bother about the doing of the warranty. As previously explained, well-known Top Developers with land development as their centre business have too much to lose regarding reputation by not honouring their warranty assurance.
The same cannot be said of First-Time Developers, who are often new to the business. Furthermore, First-Time Developers use small contractors they don’t pay well, and the construction agreements First-Time Developers have with their contractors overlook the matter of the defect warranty. The safest way to ensure that a First-Time Developer executes his warranty assurance is to negotiate a clause of retention.
This clause will entitle the buyer to retain asymmetry of the contract value (usually 5% to 10%) of the property purchase price for a determined period (usually one to two years) after the transfer of the condominium has taken place to ensure that the First-Time Developer fulfils his warranty commitment.
If he fails to do so, the clause should entitle the buyer to hire third-party contractors and pay them out of the retention money after a stipulated notice period. In this way, buyers can at least be sure the warranty will be done, and it’s always better to be safe than sorry.