“Is the deposit refundable?” is the question buyers most regret not asking before wiring funds. The honest answer in Thai practice is: only as far as the contract makes it refundable. Default Thai practice is buyer-cancels-forfeits, seller-cancels-refunds-plus-damages, and you have to write specific conditions into the contract to change that pattern. This article covers how each kind of payment works and what to insist on before signing anything.
The three stages of payment
A typical Phuket property purchase moves through three escalating payment commitments:
1. Reservation deposit (booking fee). Small initial payment (THB 50,000-300,000 or 1-5%) made before the sale and purchase agreement is drafted, to hold the unit. Held by the developer or seller. Convertible to the first SPA instalment if both parties proceed.
2. SPA deposit / down payment. Paid on signing the sale and purchase agreement. Typically 10-30% of price for off-plan, 5-10% for resale. Held by the seller (or escrow agent for projects covered by the Escrow Act).
3. Milestone instalments and final balance. For off-plan, paid against construction milestones (foundation complete, roof complete, fit-out complete, handover). For resale, paid at transfer.
Each stage carries different refund logic. The earlier the stage, the more flexible the buyer’s position; the later the stage, the more enforceable the seller’s claim if you walk away.
Reservation deposits in default Thai practice
A reservation deposit (called jong) is governed by the contract that creates it — usually a one-page reservation form. The default Thai legal position, codified through Sections 377-378 of the Civil and Commercial Code on earnest money, is:
- Buyer cancels (or buyer-caused impossibility): deposit forfeit to seller (Section 378(2))
- Seller cancels (or seller-caused impossibility): seller must return the deposit — simple return, no doubling under the statutory default (Section 378(3))
- Force majeure not the fault of either party: deposit returned, contract released (general impossibility rules under Section 219)
- Both parties perform: deposit applied to the purchase price (Section 378(1))
The statutory default for seller cancellation is simple return of the earnest money. Some Thai contracts add a contractual penalty that doubles the seller’s exposure — buyer gets the deposit back plus an equal amount as liquidated damages — but that doubling is contractual, not statutory. If your reservation form is silent on the seller-cancels case, you get the deposit back; you do not automatically get double.
Buyers can additionally claim provable damages above the returned deposit (lost legal fees, lost mortgage application fees, opportunity cost) under general contract-breach principles, but those have to be proven. The clean way to get double recovery is to negotiate a doubling clause into the reservation form itself.
Less reputable forms sometimes try to cap the seller’s liability below even the simple return — these clauses can be struck down in consumer cases under the Unfair Contract Terms Act B.E. 2540, but the protection is not absolute.
The cooling-off period. Thai law does not guarantee a statutory cooling-off period on property purchases (unlike some EU jurisdictions). The buyer’s right to cancel within X days exists only if the contract creates it. Some developers offer a 7-day cooling-off in their reservation forms; many do not. Insist on at least 7 days, used to commission a basic due diligence check before the SPA stage.
SPA-stage deposits and refunds
Once the Sale and Purchase Agreement is signed, the payment terms are governed by the SPA itself. Key clauses determining refundability:
Force majeure / impossibility. If construction becomes impossible (the land is rezoned, the developer goes bankrupt, the project is cancelled), Section 219 of the Civil and Commercial Code releases both parties and requires return of payments. Most SPAs spell this out.
Material delay. Standard SPA language gives the buyer the right to rescind if the developer is more than 6 months past the contracted handover date (some contracts use 12 months). Rescission gives the buyer back all payments plus interest. Without this clause, the buyer’s remedy is to wait and claim damages, which is procedurally slower and weaker.
Substantial defects. If the delivered unit materially differs from the specifications (significantly different size, missing features, structural defects), the buyer can refuse handover and demand return of payments. This is contract-specific — get the unit specifications attached as an annex to the SPA.
Financing contingency. A clause stating that if the buyer fails to obtain mortgage approval within 30-60 days of signing, the SPA is rescinded and deposits returned. Not standard in Thai SPAs — must be negotiated in. Critical for any buyer using Thai bank financing.
Force majeure for the buyer. Some SPAs include a clause allowing buyer rescission on serious illness, death, or specified other events. Rare but worth asking for.
No-questions-asked cancellation. Effectively never granted by developers. The closest is a cooling-off period of a few days post-signing, which a few developers offer.
The Escrow Act protection
The Escrow Act B.E. 2551 (2008) provides a legal framework for property escrow when the parties contractually adopt it. Escrow is not automatic under the Act — it applies when the sale contract specifies an escrow agent and the parties register the escrow arrangement. The Ministry of Finance regulates and licenses escrow agents (Sections 4-5 of the Act); the licensed agents are predominantly the major Thai commercial banks (Bangkok Bank, Kasikornbank, SCB, Krungthai, Krungsri, TTB).
Where escrow is contractually adopted:
- Buyer payments go into a dedicated escrow account at a licensed bank, not directly to the developer
- Funds release to the developer only against verified construction milestones
- If the developer defaults, the escrow agent returns unreleased funds to the buyer
The standard escrow fee runs 0.1-0.3% of the contract value, typically split between buyer and developer. Confirm in the sale contract that escrow is being used and that the named agent is on the Ministry of Finance’s licensed list before signing. See Escrow for property purchases in Thailand — what the 2008 Act actually does for the full mechanics.
Refund routes if things go wrong
If you have paid deposits and the deal does not proceed, the practical recovery routes:
Friendly demand letter. A formal demand letter from a Thai lawyer (cost: THB 5,000-15,000) recovers deposits in roughly 60-70% of disputes with reputable developers. The letter cites the relevant SPA clauses and CCC sections, sets a 14-30 day deadline, and threatens court action.
Consumer Protection Board complaint. For consumer property purchases (foreign or Thai), the Office of the Consumer Protection Board (OCPB) accepts complaints and can mediate or refer to court. Free to the consumer. Slow (3-12 months) but effective for clear contract breaches.
Civil court action. Filed in the court of the property’s location. Filing fees scale with the disputed amount (typically 1-2.5% of the claim). Resolution timeline 12-24 months for first instance. Court orders for refund are enforceable against the developer’s assets.
Arbitration. If the SPA specifies arbitration (some larger developer contracts do), the Thai Arbitration Institute or international arbitration apply. Faster than courts but more expensive up front.
For foreign buyers, the practical reality is that recovering a forfeit deposit from a small or financially distressed developer can be slow and partial. Due diligence on the developer’s financial stability before the reservation stage materially reduces the risk that you ever need to use these routes.
What to insist on before paying anything
Before wiring a reservation deposit:
- Written reservation form (not just a verbal hold)
- Explicit refund conditions stated on the reservation form
- A defined window (7-14 days minimum) for the SPA to be presented
- Reservation form signed by an authorized officer of the developer or seller, with company stamp
Before signing the SPA:
- Material delay clause (right to rescind after 6 months past handover date, with full refund plus interest)
- Force majeure clause (release on impossibility)
- Specifications annex attached to the SPA defining unit size, finishes, and features
- Financing contingency clause if using a mortgage
- Escrow Act coverage confirmed for off-plan projects (or escrow voluntarily provided by the developer)
- Penalty clause if developer is late on milestone deliveries
- Bilingual contract or certified Thai-language translation
- Independent legal review by a Thai lawyer not paid by the developer (cost: THB 15,000-40,000)
The pre-signing legal review is the single highest-leverage spend in any Thai property purchase. It identifies missing clauses, flags unfavorable terms, and frequently negotiates 1-3 changes that materially improve buyer protection.
Who this is right for
- Buyers using a mortgage who need a financing contingency
- Off-plan buyers committing to 1-3 years of construction risk
- Resale buyers with due diligence still in progress at reservation time
Who needs to be especially careful
- Buyers from smaller developers with limited financial transparency
- Off-plan purchases not covered by the Escrow Act
- Anyone wiring more than THB 500,000 without an independent legal review