Do Thailand developers use escrow for pre-construction?

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BAMBOOROUTES

A team specialized in real estate investing in APAC countries (Japan, Thailand, Indonesia, Australia, etc.).

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Thailand. If you'd like to learn more about us, you can check our presentation page.

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At BambooRoutes, we explore the Thai real estate market every day. Our team doesn't just analyze data from a distance—we're actively engaging with local realtors, investors, and property managers in cities like Bangkok, Chiang Mai, and Phuket. This hands-on approach allows us to gain a deep understanding of the market from the inside out.

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Attaya Suriyawonghae 🇹🇭

Real Estate Broker, Zest Real Estate

As a Thai Real Estate Broker based in Phuket, Attaya possesses deep knowledge of the Thai market. Her insider perspective and local connections provide invaluable insights for property investors who want to make their dream come true in the Land of Smiles. Speaking with her allowed us to go back to the blog post, improve a few elements, and include her personal insights for a richer experience.

How widespread is escrow use among Thai developers for pre-construction projects?

Escrow accounts are uncommon in Thailand's pre-construction real estate market, with fewer than 20% of developers offering this protection to buyers.

Most Thai developers prefer direct payment arrangements where buyers transfer funds directly to the developer's account rather than through a neutral third-party escrow service. This preference stems from cash flow considerations and the voluntary nature of escrow under Thai law.

The limited adoption means that the majority of pre-construction condo and housing developments in Bangkok, Phuket, and other major cities operate without escrow protection. As of September 2025, this trend continues despite growing awareness among international buyers about the benefits of escrow arrangements.

The reluctance to adopt escrow is particularly evident among smaller local developers who view the additional administrative burden and costs as obstacles to their traditional business practices.

What percentage of new residential developments actually provide escrow services?

Industry estimates suggest that less than 20% of new condo and housing developments in Thailand actually offer escrow accounts to buyers.

This low percentage is concentrated primarily among larger, well-established developers and international firms operating in premium market segments. Projects in Bangkok's central districts and high-end resort developments in Phuket are more likely to include escrow options.

The percentage varies significantly by developer size and market positioning, with luxury developments showing higher escrow adoption rates compared to mass market projects. International joint ventures and publicly-listed developers account for the majority of escrow-enabled projects.

As of September 2025, there has been minimal increase in these percentages despite regulatory encouragement, as most developers continue to rely on traditional direct payment structures.

Are escrow accounts legally mandatory for pre-construction purchases?

Escrow accounts are not legally required for pre-construction property purchases in Thailand under current legislation.

The Escrow Act B.E. 2551 (2008) regulates escrow services but does not mandate their use for real estate transactions. Developers are only obligated to provide escrow if specifically stated in the purchase contract or if they voluntarily choose to participate in escrow schemes.

This voluntary framework means buyers cannot automatically expect escrow protection and must specifically negotiate for it during the purchase process. The absence of mandatory requirements leaves significant gaps in buyer protection compared to markets where escrow is standard practice.

It's something we develop in our Thailand property pack.

Legal experts recommend that buyers understand this voluntary nature and take proactive steps to secure escrow arrangements when possible.

What alternative buyer protections exist when escrow is not available?

Without escrow, the primary buyer protection is the sale and purchase contract, which outlines payment schedules and delivery obligations.

Protection Type	Coverage Level	Effectiveness
Sale and Purchase Contract	Contractual obligations only	Limited enforcement
Government Project Approval	Planning compliance	No financial guarantee
Performance Bonds	Occasional developer guarantee	Rare and limited scope
Title Registration	Land ownership verification	Post-completion only
Government Oversight	Regulatory compliance	No fund recovery assurance
Developer Reputation	Track record assessment	Subjective evaluation
Legal Remedies	Contract breach litigation	Time-consuming and costly

Do foreign buyers have equal access to escrow services in Thailand?

Both foreign and Thai buyers have equal legal access to escrow accounts under Thai law, with no nationality-based restrictions.

The Escrow Act does not discriminate between Thai citizens and foreign buyers, allowing all parties to utilize escrow services when available. However, practical access depends entirely on the developer's willingness to offer escrow arrangements.

Foreign buyers often face the same limited availability as Thai buyers, with access primarily determined by the specific project and developer rather than citizenship status. International buyers may actually have slightly better access through luxury developments that cater to foreign investment.

Banking regulations for escrow services apply equally to all buyers regardless of nationality, ensuring fair treatment when escrow is utilized.

Which types of developers are more likely to offer escrow accounts?

Large, established, and internationally-oriented developers are significantly more likely to provide escrow arrangements for pre-construction projects.

1. **Public-listed developers** with strong financial backing and reputation concerns2. **International joint ventures** familiar with global real estate practices 3. **Luxury market developers** catering to high-net-worth buyers4. **Established Thai conglomerates** with diversified business portfolios5. **Resort and hospitality developers** in premium tourist destinations

Smaller local developers typically avoid escrow due to cash flow constraints, administrative complexity, and additional service fees. These developers often operate with tighter margins and prefer direct payment structures that provide immediate access to buyer funds.

Regional differences also exist, with Bangkok and Phuket developers showing higher escrow adoption rates compared to secondary cities where smaller developers dominate the market.

How much money typically goes into escrow for pre-construction properties?

Escrow deposits for pre-construction properties in Thailand generally range from 5% to 10% of the total purchase price.

The specific amount depends on the contract terms negotiated between buyer and developer, with some high-value projects requiring higher initial deposits. Premium developments may demand up to 15% of the purchase price to be held in escrow initially.

Additional payments are typically made directly to the developer according to construction milestones, with only the initial deposit and sometimes progress payments flowing through the escrow account. This structure provides limited protection compared to full escrow arrangements where all payments remain protected until completion.

Service fees for escrow typically add around 0.3% of the transaction value to the overall cost, which buyers must factor into their purchase calculations.

At what construction stages are escrow funds typically released?

Escrow funds are released in predetermined stages based on specific construction milestones outlined in the purchase agreement.

1. **Foundation completion** - Usually 20-30% of escrowed funds2. **Structural completion** - Additional 25-35% release 3. **Wall and roof completion** - Further 20-25% disbursement4. **Interior finishing** - Another 10-15% release5. **Final inspection and handover** - Remaining balance transfer

These release stages are designed to align fund disbursement with actual construction progress, providing buyers with assurance that developers receive payment only as work advances. The specific milestones and percentages can be customized based on project complexity and buyer negotiations.

Independent quantity surveyors or architects often verify completion of each stage before authorizing fund releases, adding an extra layer of verification to the process.

How do Thai banks regulate escrow services for real estate?

Licensed Thai commercial banks serve as escrow agents under supervision from the Bank of Thailand and the Ministry of Finance.

Banks must meet specific licensing requirements and maintain operational standards for escrow services, including proper segregation of escrow funds from their own assets. Regular reporting to regulatory authorities ensures compliance with established protocols.

The regulatory framework requires banks to establish clear procedures for fund disbursement, maintain detailed transaction records, and provide regular reporting to all parties involved in the escrow arrangement.

It's something we develop in our Thailand property pack.

As of September 2025, major Thai banks including Bangkok Bank, Kasikorn Bank, and Siam Commercial Bank offer escrow services with standardized procedures and fee structures.

What risks do buyers face without escrow protection?

Buyers face substantial financial risks when purchasing pre-construction properties without escrow protection in Thailand.

Risk Category	Potential Impact	Recovery Likelihood
Developer Insolvency	Total loss of deposits and payments	Very low - typically under 20%
Project Abandonment	Loss of investment with incomplete property	Low - depends on asset recovery
Construction Delays	Extended waiting periods without recourse	Moderate - through legal action
Quality Issues	Substandard construction with limited remedies	Moderate - warranty dependent
Specification Changes	Reduced property value or amenities	Low - contractual limitations
Legal Disputes	Expensive litigation with uncertain outcomes	Variable - case dependent
Fund Misappropriation	Developer using payments for other purposes	Very low - difficult to trace

Have there been significant cases where escrow affected buyer outcomes?

Several notable cases in Thailand's real estate market demonstrate the impact of escrow presence or absence on buyer protection.

Historical project failures in Bangkok and Pattaya have left hundreds of buyers without recourse when developers became insolvent, primarily because escrow arrangements were not in place. These cases typically involved buyers losing between 500,000 to 2 million THB in deposits and progress payments.

Conversely, projects with established escrow arrangements have shown better buyer protection during developer financial difficulties, with funds successfully returned to buyers or transferred to completion contractors.

Court cases consistently uphold escrow agreements when properly structured, but the majority of failed projects operate without escrow, leaving buyers with limited legal remedies beyond standard contract litigation.

As of September 2025, ongoing legal disputes from projects that collapsed between 2020-2023 continue to highlight the importance of escrow protection for pre-construction purchases.

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What practical steps can buyers take to negotiate escrow arrangements?

Buyers can take several concrete actions to secure escrow protection for their pre-construction property purchases in Thailand.

1. **Request escrow clauses** explicitly in the initial sale and purchase contract negotiations2. **Identify developers** with established escrow practices before beginning the search process3. **Engage property lawyers** to structure proper escrow agreements with clear release conditions 4. **Specify licensed banks** as neutral escrow agents rather than developer-controlled entities5. **Budget for escrow fees** (approximately 0.3% of transaction value) in purchase calculations6. **Document milestone requirements** clearly for fund release authorization7. **Include penalty clauses** for non-compliance with escrow arrangements

Buyers should research developers' track records and prioritize those with transparent financial practices and willingness to accommodate escrow requests. International buyers may have more leverage in negotiations due to their investment value to developers.

It's something we develop in our Thailand property pack.

Professional legal assistance is essential for structuring effective escrow arrangements that provide meaningful protection rather than cosmetic security measures.

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.

Sources

1. Udon Lawyers - Escrow Accounts in Thailand
2. Thai Law Net - Escrow Accounts in Thailand
3. Samui For Sale - Paying for Off-Plan Condo in Thailand
4. Pattaya Solicitor - Escrow Accounts in Thailand
5. Samui For Sale - Escrow Service for Home Buyers
6. Thailand Law - Escrow Accounts in Thailand
7. Thailand Real Estate - Pre-Construction Acquisition
8. Tilleke & Gibbins - Using Thailand's Escrow Act