Thailand buyers should beware of currency exchange pitfalls

Many foreigners who have decided to buy a residential property in Thailand are required to use funds which are held in a foreign currency account in their home country.

Property transactions in Thailand use many different ways in which a buyer pays the purchase price to the seller. For instance, a buyer may be required to make payments to the seller upon signing of the sale and purchase agreement. This will be followed by instalment payments in accordance with constructions progress, and then remit a final payment on completion.

In some cases, full payment against registration of title transfer will take place.

No matter what the terms of payment have been agreed upon between the parties, one important issue is prevalent in most property purchases in Thailand.

When a buyer is keeping the funds for his property purchase in a foreign currency in an offshore bank, and the parties agree to a sale and purchase price in Thai Baht (usually the case), the buyer is required to remit his foreign currency into Thailand in an amount equivalent to the stated Thai baht purchase price.

A crucial issue to consider is that currency exchange rates experience volatile fluctuations; therefore, the foreign currency equivalent to the stated Thai baht purchase price may vary considerably from the date the contract was signed until the time payments are made.

Read more in Asia Property Report...