Land selection consulting service

Points for land selection or building survey before sale /lease contract

What is Land selection consulting?

When looking for sites, lands, and buildings in ASEAN, Unfortunately, you can meet a malicious local real estate agency and confuse your project. In ASEAN countries, real estate agents are not obliged to explain before making a contract when buying, selling or brokering land or buildings, even if the land or building is defective. Therefore, it is very difficult to pursue the liability for defect warranty against the seller after the contract.

In order to reduce the risk of clients who are considering purchasing or renting an existing building or site, our staff who are familiar with the land and building survey will support you.

Flow of Real Estate Purchase

"Offer letter/agreement" signed by both parties
Payment of the deposit to the agent (usually about 2% of the purchase price）
Create sales contract (SPA)
4.8% deposit after signing the sales contract (SPA)
Prime Minister's Office Economic Planning Agency (EPU), 90% payment after obtaining the state government license
Land registration (support from contract drafting to registration by Solicitor (Solicitor)

Quote: JETRO（Japan External Trade Organization）

Points to note when buying properties in ASEAN

There are only 4 things to be aware of when buying properties in ASEAN.

1. Problems discovered in Land Registry Document!

After the deposit payment to the existing industrial land, it is the case that we entered the investigation

Three problems have been found:

The form of the current site differs from the drawing of the registered document
The procedure for transfer of ownership has been suspended for more than 10 years at the registry office
In addition to No. 2 above, it may take a considerable amount of time to apply for a building permit or to apply for a building permit.

Solution

In order to solve the problem from ① to ③ and complete the construction, the project will be delayed by more than one year, so the purchase of land will be abandoned. Abandoned of 2% of the deposit and completed the project by purchasing another land.

2. Problems discovered in the land surrounding infrastructure!

This is a case of our company entered the PM (Project Management) work after purchasing the land.

Although the land price seemed to be cheap and favourable, two problems were discovered as a result of the investigation.

Solution

Fortunately, the construction of another factory in neighbourhood site which commenced at the same time, thus we negotiated and were able to reduce the cost to half of the cost of infrastructure, including electricity in the neighbourhood site. Since infrastructure surveys have a large impact on costs and schedules, an inspection is always required when purchasing land.

3. Problems discovered in Engagement letter!

This case is about our company entered in the investigation before signing the sales and purchase agreement (SPA) of the developer's development site.

Two problems were identified during the inspection of the Engagement Letter.

Regarding ①, the control of building cost and quality will not work entirely once agree on the condition.

Regarding ②, if a defect is discovered in the development site or construction work and it is stopped due to any reason, it will becomes impossible to receive the land.

Solution

For ①, we negotiated tenaciously, removed the contractor conditions from the contract, and changed the condition of ② to full payment after completion of the contract through a lawyer. Since the lawyer will only check on the written document of the Engagement Letter, the purchase and sale with the construction work for like this case, it’s essential with construction consultant who is able to determine the contents of the contract and the contents of the project from the clients’, viewpoint.

4. Problems discovered in the situation investigation of existing buildings!

This is the case that our company entered into the investigation before the lease contract to rent a second-hand property

Four major problems were discovered.

If there were more than 5 illegal additions or renovations that are not indicated in the drawings
Discovered numerous defects such as, the existing equipment and the equipment is different from the drawings, broken, etc
The ownership of the transformer, etc., remains as the previous tenant, and additional costs were incurred
Delay in payment of property taxes and other taxes

Solution

As this was before the lease contract, the owner was able to bear the above expenses