This was definitely needed imho and has (to my knowledge) always been used in most western countries (at least in my lifetime). Had this been common practice during the past building boom years here it would have saved many home buyers, and in some cases developers, millions of baht in Hua Hin.
Somluck Srimalee
The Nation September 28, 2011 8:02 am
Kasikornbank launched its escrow-agent business by signing contracts with six property developers yesterday to provide an escrow account service, which will benefit home-buyers.
The six property firms are Kanda Decor Co, Chaream Nakorn Co, Suetrong Group Co, Tararom Enterprises, Thanasiri Group, and Supalai.
The bank is targeting at least 1,000 customers, KBank senior executive vice president Preedee Daochai said.
This will be the first use of the Escrow Account Act after it became effective on May 20, 2008.
Somchai Pulsawas, deputy permanent secretary at the Finance Ministry, said the ministry wanted to push this act to be used more often. But the market, especially home-buyers, did not know that this law would benefit them. This is the first time a commercial bank and property developers have linked up to use the act.
The Escrow Account Act aims to protect both home-buyers and developers when they enter a transaction for purchase of property.
Home-buyers who sign a contract under the act will get protection for their down payment, which they will pay to the bank. The bank will keep the down payment until the home is completed and ready to be handed over to the buyer. If the property developers fail to honour the contract to build the home, the buyer will get the down payment back from the bank, with interest.
According to the Escrow Account Act, both parties have to pay a fee to the escrow account agent at 0.3 per cent of total value of the down payment.
Preedee said the bank was not aiming to bring in a lot of fee income from this service, but it wanted to create a secure system for the property market. This also would generate new customers, as when they use its escrow agent service, they may also go for a mortgage from the bank.
Kanda Decor Co managing director Issara Boonyoung, who signed the contract with the bank yesterday, said the act would create more confidence for purchases of its residential projects because buyers will receive assurance that they will take delivery of their homes.
"We will use the escrow-account contract with people who buy our residences now and the next six residential projects worth Bt3 billion next year," he said.