This is a fundamental introduction to an escrow account in Thailand.
The escrow account is seen as beneficial as it provides confidence to home buyers and protects both parties involved in the transaction, the seller and buyer, from possible fraud and deceit.
Let’s find out more.
What is an escrow account?
Real estate jargon defines an escrow as an impartial holding of documents or funds related to the sale and transfer of a property. In a broader context, it is viewed as a temporary pass-through account held by a third party during the process of a transaction between two parties.
Who is an escrow agent?
An escrow agent must be either:
- A juristic person as prescribed in the Ministerial Regulation
- A financial institution
An escrow agent must obtain an escrow business license to operate the business, which the license shall be obtained from the Minister recommended by the Committee.
What are the duties of an escrow agent?
Under the Escrow Act B.E 2551, the escrow agent must monitor the performance of obligations by the parties to the contract in accordance with the period of time and conditions stipulated in the escrow contract.
Another duty of the agent is to take care of money, property or documents embodying the obligations that the parties to the contract have delivered to his or her possession and to deliver the money and cause the transfer of ownership or property rights to the party to the contract (section 7).
Escrow business license application and issuance
According to the Ministerial Regulations, a financial institution that will be granted the escrow business license must demonstrate its ability and readiness for operation by considering the following conditions:
- Successful maintenance of the capital fund or provision of reserves
- Good and efficient management
- A work system ready for operation or provision of service in the undertaking of the escrow business
- Efficient internal control measure
The financial institution that wishes to apply for the license, must file an application with the Fiscal Policy Office and submit the required documents or evidence.
The Committee will consider the application within 60 days the Fiscal Policy Office receives the application. If the Committee considers that the qualifications are in accordance with the Ministerial Regulations, the Minister will review the application within 45 days and the escrow business license will be prescribed by the Director of the Fiscal Policy Office.
What must be included in an escrow contact?
According to section 6, the escrow contract must be made in writing, signed by the escrow agent and the counterparty, and at least contain the following information:
- The names and addresses of the parties to the contract and the escrow agent
- The date of entering into the escrow account
- The name of the reciprocal contract as stipulated between the parties to the contract
- The period of time or conditions for delivery of property or document embodying the obligations and delivery of money by the parties to the contract
- The rules for the transfer of money from the escrow account
- The rules, duties and liabilities of the parties to the contract and the escrow agent
- Remuneration and other charges in relation to escrow
- Any other particulars as prescribed by the committee
What are the authorised banks in Thailand?
Escrow agent services were not offered by financial institutions or commercial banks in Thailand until in May 2008, when the Escrow Act was introduced.
Authorised banks include:
- ABN Amro N.V Bangkok Branch
- Bangkok Bank
- Citibank Bangkok Branch
- HSBC Bank
- Kasikorn Thai Bank
- Krung Sri Ayuthaya Bank
- Siam Commercial Bank
- Standard Chartered (Thailand) Bank
- Sumitomo Mitsui Banking Corp
An escrow account is commonly used for real estate transactions and Thailand introduced the Escrow Act to protect transaction activities between the buyer and seller of property.
Do not hesitate to contact Acclime for guidance on escrow accounts.