Escrow Accounts in Thailand. Escrow is a neutral holding arrangement where money, documents, or property are kept by a licensed third party and released only when agreed conditions are met. In Thailand, escrow is most visible in real estate and large commercial deals, where it reduces counterparty risk and streamlines Land Office or closing-day logistics. Below is a practitioner’s guide to the legal basis, who may act as agent, how Thai escrows are structured, and the pitfalls to avoid.
Core statute: Escrow Act B.E. 2551 (2008).
Key features practitioners rely on:
Licensing: Only licensed financial institutions (e.g., banks) and approved escrow businesses may provide escrow services. Non-licensed “informal” holding of client funds is not an escrow under the Act.
Neutrality & mandate: The agent must follow the escrow agreement exactly; it is not a party’s advocate.
Segregation & release: Funds or documents are held separate from the agent’s own assets and released solely upon satisfaction of contractually defined conditions.
Remedies: If performance is disputed, the agent must hold (or interplead) until the parties resolve it or a competent authority orders release.
Escrow providers are also subject to Thai anti-money laundering (AML/CTF) rules (KYC, source-of-funds), and banks remain under Bank of Thailand prudential supervision. Practically, this means identity documentation, transaction rationales, and sanctions screening are standard at onboarding.
Off-plan condominiums: Stage-based releases (e.g., piling completed; structure topped-out; unit registered at Land Office).
Completed unit resale: Single release upon registration of ownership transfer (condo) or lease/usufruct at the Land Office.
Land with structures: Multi-condition closings—clearance of encumbrances, municipal approvals, utility arrears.
Completion accounts & price adjustments
Warranty/indemnity holdbacks
Regulatory or BOI-approval conditions precedent
Settlement sums held until filings are withdrawn and court orders recorded.
A Thai escrow has two backbone contracts:
Underlying deal (sale & purchase, JV agreement, settlement deed).
Escrow agreement among seller, buyer, and the agent. This governs:
Conditions precedent (CPs): All factual/legal conditions the agent must see before releasing funds.
Evidence and verification standard: What documents the agent will accept (e.g., Tor Dor 21 FET form for foreign inward remittances on condominium purchases; Land Office receipt; juristic person confirmation of no common-fee arrears).
Release mechanics: One-time or staged tranches; who signs release instructions; timing windows.
Default/failed-deal path: Refund logic if CPs aren’t met, including who bears bank charges and FX loss.
Dispute & interpleader: Where the agent will deposit funds if parties disagree (often the Civil Court) and cost allocation.
Fees: Flat, tiered, or % of consideration; who pays; VAT.
Flow for a condo resale (foreign buyer)
Buyer deposits purchase price (or agreed tranche) to escrow.
Agent completes KYC/AML and documents checklist.
Parties attend Land Office; transfer registered; new title deed and official fee receipts obtained.
Agent verifies CPs and releases funds to seller (often same day).
Any residual items (e.g., condo juristic refund of sinking fund) handled per escrow schedule.
Identity & authority: Passports, Thai IDs, corporate affidavits (not older than 3 months), board resolutions, POAs.
For foreign-currency funded condo purchases: FET form or bank letter evidencing inward remittance in foreign currency for the specific unit (required later for future repatriation).
Property hygiene: Latest juristic person letter confirming common-area fee status; copies of Chanote (title deed) or Condo unit title; Tabien Baan (house book) where relevant; building permit for land/house deals.
Encumbrance clearance: Bank release letter and mortgage discharge plan if seller’s unit is pledged.
Tax receipts: Specific business tax/transfer fee/stamp duty/withholding tax calculations and proof of payment.
Fees: Typical ranges are 0.25%–1.00% of consideration for property deals; large commercial escrows trend lower on a % basis with minimums.
Time: The KYC/AML phase drives timing; expect a few business days for individuals and longer for multi-layered corporate chains.
Currencies: Property escrows with foreign buyers often hold THB, but the inbound funds arrive in FX; banks convert and issue the FET documentation. Align your escrow bank and remitting bank early to avoid mismatches.
FX risk: If a deal fails, refunds in THB may expose the foreign buyer to FX loss. Sophisticated escrows set the refund currency and rate basis (TT buying/selling rate at a defined time) or permit same-currency refund net of costs.
Deadline slippage: Include a long-stop date; if missed, refund is triggered less specified costs.
Ambiguous CPs: Thai agents avoid subjective conditions. Draft CPs objectively (“Land Office receipt code … present”) rather than “satisfactory due diligence.”
Partial performance: For staged construction, attach a milestone matrix with dated engineer certificates and statutory approvals.
If seller and buyer give conflicting instructions, the agent will freeze and (i) follow the dispute clause—court or arbitration—or (ii) pay into court (interpleader). Courts apply the escrow agreement strictly; agents risk liability only if they deviate from the mandate or act negligently. Parties bear their own losses from the underlying deal except as the escrow contract reallocates (e.g., forfeiture or liquidated damages clauses).
A. Off-plan condo delay:
Milestone-based escrow releases 20/30/30/20%. Developer misses EIA-related milestone. Agent withholds the 30% tranche. After 60-day cure fails, buyer elects termination under the SPA; escrow refunds buyer-minus agreed admin fees. Result: time lost, capital preserved.
B. Mortgage discharge at closing:
Resale unit pledged to Bank X. Escrow holds buyer funds; on closing day the agent wires the exact redemption figure to Bank X, obtains discharge letter, and only then releases the balance to seller. Land Office registers transfer and mortgage cancellation in sequence—clean title delivered.
C. JV contribution escrow:
Two companies commit THB 80m each to a JV. Escrow agreement releases both contributions simultaneously when DBD registration and shareholder structure are complete. Prevents the classic “one contributes, one stalls” asymmetry.
Condominium Act: For foreigners, funds must be remitted from abroad and evidenced (FET) to qualify for ownership and future repatriation. Build this into escrow CPs.
Land Code restrictions: Foreigners can’t own land freehold (outside exceptions), so escrow often supports long-lease + usufruct/surface structures—release occurs upon registration of the real rights, not just contract signature.
Tax at transfer: The agent commonly verifies withholding tax and transfer fee calculations to prevent post-closing liabilities becoming a dispute trigger.
Data protection: KYC packets contain sensitive personal data; agents should apply PDPA safeguards and limit use to escrow purposes.
Lawyer trust/clients’ accounts: Common but not statutory escrow; carries higher counterparty risk.
Bank guarantees/standby LCs: Strong for performance security but costlier and less flexible than escrow.
Retention in the purchase contract: Simpler for small sums, but enforcing retention disputes still lands in court—no neutral holder.
Precise CPs with document codes and issuing authority.
Release timetable (cut-off times, weekends/holidays, SWIFT windows).
Authorized signers and specimen signatures for instructions.
Refund currency and FX rule (bank and rate source named).
Fees & VAT and who bears them in each outcome.
Dispute venue and agent’s right to interplead.
KYC pack required up front (so the clock starts early).
Interest on balances (who gets it, if any).
Force majeure (Land Office closures, system outages).
Survival & records (retention period, PDPA notices).
Using “notarized lawyer holding” as if it were escrow: Not equivalent; no statutory neutral duties.
Missing FET trail for condo buys: Jeopardizes both registration and future repatriation.
Vague construction milestones: Leads to release fights; require objective third-party certificates.
Ignoring currency controls at home jurisdiction: Some buyers face outbound controls; align with the Thai bank’s compliance early.
Assuming escrow is standard market practice: It’s not yet universal; many counterparties resist unless educated on benefits.
Thai escrows work best when the escrow agreement is as detailed as the sale contract: objective conditions, documentary proof, clear release/refund logic, and pre-wired compliance (KYC, FET, taxes). Used correctly, they neutralize the riskiest interval in Thai transactions—the gap between paying and actually registering rights—transforming high-stakes closings into predictable, auditable workflows.