Thai banks: Full title deeds for collateral

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Thai banks: Full title deeds for collateral 
Bangkok Post: 25 Jan 2010
BUSINESS FOCUS: PROPERTY & THE LAW
Banks wary of anything less than full title deeds

* Published: 25/01/2010 at 12:00 AM
* Newspaper section: Business

For local banks, the rules are quite simple - only proper land deeds may be used as collateral against loans.

Retail customers hoping to borrow against their properties can expect a thorough examination of their documents by any bank, including verification with the Lands Department and independent assessments by third-party appraisers.

Pakorn Partanapat, an executive vice-president of Kasikornbank, said the bank would only accept title deeds as surety against a loan.

Other documents, whether they be Sor. Por. Kor. 4-01, Nor. Sor. 3 or local tax registration documents, may not be used as collateral.

Local banks are also wary about lending for land purchases, with many refusing outright to finance deals solely for speculation.

Mr Pakorn said KBank was one bank that would not approve loans of undeveloped land. A borrower must have a clear objective for the investment, whether it be for commercial development or personal use.

The investment plan in turn would be incorporated into the loan agreement itself, and serve as an additional obligation for borrowers.

Rungruang Sukkirdkijpiboon, an executive vice-president at Siam Commercial Bank, said that for any property loan, the bank would focus on two issues - the project objective and the financial status of the borrower.

Credit lines and loan terms would be tailored to match the risk of the borrower and the project.

A loan to finance a holiday home might be limited to just 50% of the land price, compared with credit lines of 80% to 90% for a first-home mortgage.

"We interview each customer to check the purpose of the loan. And of course, we also verify important information through various databases and records, including credit bureau information," Mr Rungruang said.

http://www.bangkokpost.com/business/economics/31715/banks-wary-of-anything-less-than-full-title-deeds

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Developers favour title deeds over Nor. Sor. 3

Bangkok Post * Published: 25/01/2010 at 12:00 AM

The title deed or Chanote is the most secure land-related document as it is the only document affirming land ownership that has been accurately surveyed, say property developers.

Accurate survey is one of the strong points of a Chanote.

Dilokpol Sundaravej, managing director of the property firm TGR Group, said property buyers and investors have more confidence in title deeds than in other land documents.

Nor. Sor. 3 is another land certificate that - like the title deed - can be sold, leased and used as mortgage collateral. But the Nor. Sor. 3 survey process may not be as accurate as that for the title deed.

"A title deed is surveyed with global positioning systems (GPS). It's more accurate," said Mr Dilokpol.

"The Nor. Sor. 3 [survey] is likely to have a chance of some mistakes, such as the land being smaller or bigger than in reality."

Government agencies including the Lands Department and Royal Forest Department can be expected to seek action on ownership issues, he said.

"Every government always scrutinises land issues," he said. "Every time they announce they will take serious action, there's an impact on property investment."

He said his company's project on Koh Raet in Phuket was registered with title deeds. The luxury Jumeirah Private Island Phuket will be on 175 rai, which will be developed for luxury villas and hotels."To make sure, it should be a title deed," he said.

Sukit Traiwanapong, managing director of Fine Home Housing Development, also buys only land plots with full title deeds as the company has buyers' security of ownership as a prime objective.

This year Fine Home will start developing the 500-million-baht Monte De Sea in Hua Hin, a villa and condominium project with mountain and sea views.

He said most developers look for title deeds and check with the Lands Department before agreeing on a purchase. But developers who need land for a large-scale project may need to buy several small adjoining land plots, and they may consider buying some plots with Nor. Sor. 3, he added.

"Developers will buy plots with Nor. Sor. 3 only when they are quite certain that the document can be later upgraded into a title deed," he said.

In his view, established developers with a goal of continuing in the business are unlikely to buy plots with Nor. Sor. 3 as they must strive to avoid problems that could jeopardise their reputation and image.

http://www.bangkokpost.com/business/economics/31714/developers-favour-title-deeds-over-nor-sor-3