What is Escrow
The concept of putting money down in an escrow account before you receive title to your property is such a familiar occurrence in most countries around the world, that we don’t often give it a second thought. In fact, in the U.S.A and many countries throughout the world, to transfer a property is to ‘close escrow’. In real estate terminology, an escrow can be defined as an impartial holding of documents or funds related to the sale and transfer of a property. An escrow is designed particularly with consumer protection in mind safeguarding your rights should anything go wrong before the transfer of the property. Nevertheless, an escrow system does offer equal protection to all parties involved including the buyer, seller, developer, and agent.
The real estate business is very different today compared to what it was five or ten years ago. Land prices have increased countrywide and foreign interest in the Thai property market has increased bringing with it different practices and expectations. Real estate transactions have increased and the numbers of unscrupulous developers have also inevitably increased. With this rise, we are also seeing more and more civil suits from unfortunate consumers losing their hard-earned money to projects that have never been completed or even started.
In December 2007, the National Legislative Assembly introduced the first draft of escrow law in Thailand. Again, the main point of this law is to protect home-buyers from losing money on down payments in the event property developers become unable to complete and transfer the property to them.
This is good news for property buyers as now there are options to be better protected from those dishonest, under-financed, or inexperienced developers. It is certainly a much better alternative than a long and difficult claim for civil damages in the event of default on the part of the developer.