New Consumer Protection Law helps Real Estate buyers and other consumers

Local Thai lawyer Paisan Thunnok says, “My firm has successfully represented the rights of foreigners who bought into condominiums which did not live up to the contract. Before the only recourse was to file a complicated lawsuit and submit a deposit to the court of two percent of the value of the contract. So if a buyer contracted to buy a condominium for 20 million baht and it is not ready when agreed or is not to the standard set forth in the contract the deposit maid by the buyer to the court was 400,000 baht. Under the new law the buyer only pays 250 baht to file the case.”

In addition, under the new revision, the buyer can file the claim in any court convenient to him in Thailand and if the seller counter-sues, he must do so in the same court, thereby making the case much more convenient for the buyer to address, he said.

Lawyer Paisan records a consumer's statement with the court, collect evidence and ask the developer in question to attempt to settle with the complainant. If they cannot, a lawsuit could proceed.

In the past, he said, some consumers had lost cases, as they were unable to travel to the civil court because it would be too far from home and many postponements would occur to deter the attendance of the victim.

Now consumers can complain to the OCPB, by mail, e-mail, the 1166 hotline or at the city hall in each district, including Pattaya. The Consumer Protection Board is located in Building 20, Government House; Rachadamnoen Nok Avenue, Dusit, Bangkok. The phone number is 02 629 8258-60. Send emails to consumer@ ocpb.go.th or go to the website: www.ocpb.go.th

According to the official website, “The Office of the Consumer Protection Board (OCPB) is a government agency attached to the Office of the Prime Minister. There is a Board called the ‘Consumer Protection Board’, of which the Prime Minister is the chairman and the Secretary- General of the Consumer Protection Board is a member and secretary. Its main duties are to handle complaints received from consumers and institute legal proceedings when an infringement of consumer rights is recognized. OCPB covers three major areas of consumer protection: consumer protection on advertising, consumer protection on labeling, and consumer protection in contract. In addition, any other consumer matters not fallen under specific law shall be also under OCPB's jurisdiction. Its operational language is English.”

Lawyer Paisan said, “If a new suit by a consumer is a repeat of an earlier case against the same developer for the same reason, there will be no trial and the judgment would be based on the previous complaint. Courts will process cases with a minimum of delays; only one postponement of 15 days or less is allowed. Trials will be handled by only two courts: the court of first instance and the appeal court. The new act is fairer to consumers. Consumers will be exempt from fees including court fees, commissions, witness and lawyers' fees unless the suit is found to be unreasonable or the damages sought are judged excessive. It will force developers, which have more bargaining power than consumers do, to prove their cases. If it has proved that the developer is at fault, the developer will be ordered by the court to pay all expenses including those of consumers."

The changes will have significant impact for the real estate industry because all action against the developer and the amount of claim awarded to the consumer by the court exceeds the assets of the company then shareholders of the company can be sued for the remaining amount owed.

The Act has been around since 1979. But the new amendments offer further consumer protection and convenience with less expense. According to OCPB figures from October 2007 to June 2008, consumer complaints totaled 4,210. Real estate accounted for 1,901 cases or 45%. Of the complaints about contracts and real estate, 1,200 were real estate cases and most ended with reconciliation as both consumers and developers tried to avoid court action.

Lawyer Paisan says buyers should keep all contracts, receipts, brochures or advertising documents to support their cases. The revisions to the Condominium Act of 1999, which took effect also last year, give added teeth to consumer protection as it strictly prohibits renderings and other pictorial promises for design and amenities, which are not fulfilled, to the buyers.

Most cases are less complicated and deal with construction deficiencies, delivery dates and lack of promised amenities like swimming pools. However, a reputable real estate developer in Bangkok mistakenly hired its Project Vice President who was later accused of fraud charges for over 100 million baht construction and deposit money embezzling. The case was disclosed at the beginning of June stating that the reputable socialite Project Vice President of The Beach Condominium, Mr. George Morgan was arrested and accused of issuing fake documents to project customers, planned to build in the Jomtien area. He was finally arrested at the area of Arena Garden Village, Nontha Buri Province.

He is accused of providing very special offers to customers by using his position’s privileges. Afterward, it is alleged, he issued fake documents for those customers who made deposits. The total amount of paid deposits is alleged to be over 100 million baht according to the reports, while most of the customers who affected are Swedish and Russian.

The case like this has actually happened main in other places in Thailand.

Another kind of case also resulted in buyers paying deposits for condominiums not yet built at a project called “The Sails Pattaya”. According to one buyer who asked not to be identified, “After trying to maintain an optimistic attitude to my investment in The Sails Pattaya, I now accept it as the worst investment of my life. As we know, Lehman Brothers now owns most of Grand Asset Hotels and Property Pcl, which I thought would have injected some much-needed cash to finish the project - and my condominium. Unfortunately it is now "Crunch Time at Lehman Brothers" (The Sunday Times, U.K., 24 August 2008) and it seems that they are now almost bust.”

Another example recently happened to a very famous Thai movie star, Khun Paula Taylor who had already paid almost three million Baht deposit money for a condominium on Ekamai area, in Bangkok. Almost three years passed with no indication of condominium constructional starting. She tried many times to contact the project’s management in order to sort the problem out, which she had regularly been refused. She finally made decision to lean on laws and is currently in the court process.

She said, “I was really disappointed to experience stuff like this. I have been working very hard to earn money and trying to spend every penny worthily. For me, buying property is another way to save money, as I am not good in managing cash. Actually, I have been many times trying to contact the project management in order to sort the problem out but I was totally refused. The only thing I feel secure to lean on now is the process of judgment and I do hope the results will come out positively. This will be my most valuable lesson in my life to consider everything carefully before making any decisions.”