Law firm devises developer test

Rene Philippe & Partners

Rene Philippe & Partners

Scoring system can protect buyers

The law firm Rene Philippe & Partners Ltd suggests property buyers check developers’ credibility before signing deals that cause losses and legal troubles. Managing partner Rene-Philippe Dubout said the developer test compiled by the company [see chart] was 90% accurate when tested on developers ranging from strong, listed firms to small, financially weak companies.

The test was designed after the company accepted a case for customers of a Koh Samui residential project who got nothing after paying for villas.

He did not disclose the name of the project or its developer, saying only that around 100 buyers out of 200 faced the problem and almost all were foreign.

”Usually, the development of a project worth almost two billion baht needs at least 900 million baht as capital. But this developer has registered capital of only four million baht,” he said.

He added that this developer did not acquire all plots promised to buyers, and those it had were held by many companies. This project had no land allocation permits and the firm had no other activity in the property market.

The test is based on five criteria to assess the reliability of developers. The type of company is the first factor and capitalisation is a key indicator of financial health.

Buyers should also consider how long a company has been in operation _ the longer, the more reliable. A company’s experience also tells its story. The more projects successfully completed, the better for buyers.

Another is its financing scheme. The terms of payment proposed say a lot about its financial situation and its ability to complete projects, he added.

”After answering these points, the potential buyer obtains a score of each developer, giving a strong and viable indication of its overall capabilities,” said Mr Dubout.

He said most well-known or listed developers usually scored above the 75-point mark but those scoring below 40 should be seriously assessed and reconsidered by potential buyers.

”The key question for buyers is how to separate reliable developers from risky ones,” said the Swiss lawyer who has been in Thailand as a legal consultant for more than 10 years.

“Our customers have been asking about the political problems. Some of them have delayed their investment until the country’s situation becomes clearer”, said Patima.

About the author

Kanana Katharangsiporn Kanana Katharangsiporn
Kanana Katharangsiporn is a senior journalist with The Bangkok Post, Thailand's first English language newspaper and specialises in property and real estate areas.
Other posts by Kanana Katharangsiporn ( 37 )
Website: http://www.bangkokpost.com/

One Comment on “Law firm devises developer test”

  • Rene-Philippe
    11 March, 2009, 2:42

    Hi
    I just published a book on the subject of HOW TO PURCHASE REAL ESTATE OFFSHORE SAFELY: THE CASE OF THAILAND
    The must have book written by a lawyer with 20 years of experience in real estate that will teach buyers of offshore real estate all they need to know about the critical issues to be considered and how to avoid the many pitfalls or traps awaiting the unwary buyer. Subjects discussed range from how to recognize good developers from bad ones, leasehold vs freehold, can you trust your agent, foreign currency exchange and so on…
    The subject is approached in a clear manner; the style is easy to understand and is also conducive to reflection and questioning. The objective of the book is not only to impart knowledge and experience but to raise buyers’ awareness to all potential dangers and how to avoid them.
    The book is divided in two sections. In the first section Rene Philippe discusses the general issues to be addressed by a buyer who purchases real estate outside his home country. In the second part he explains how those issues are dealt with in Thailand. Because the author deals in the first part with general issues this book is a worthwhile read not only for foreigners who want to buy real estate in Thailand but also for foreigners or Thais purchasing real estate overseas.
    This book contains a unique easy to follow guideline called the Rene Philippe Developer Test which is a checklist that will help you reduce your risks when purchasing real estate.
    The book can be ordered at contact@renephilippe.com and will soon be available at bookstores in Thailand. Readers outside Thailand may order the printed or eBook version online. For more information please contact@renephilippe.com

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