The Rene Philippe
Developer Test is a unique and
easy “do it yourself test” that allows
buyers of real estate to check the
reliability of the developer they are
purchasing from.
The test uses five criteria to evaluate
the reliability of a developer.
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BANGKOK POST 05.09.08: “
Scoring System Can Protect Buyers
”
BANGKOK POST 12.03.09: “
Law firm Rene Philippe & Partners Ltd
has introduced a Developer Test, a method enabling
condo buyers to check the reliability of developers
themselves
”
POST TODAY 05.09.08: “
Innovative Test For Real Estate
Buyers: To Avoid False Purchases Bangkok-based law
firm Rene Philippe proposes a ‘Developer Test’ to
help potential buyers avoid a number of unfortunate
situations and legal troubles when buying a property
in Thailand
”
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The Rene Philippe
Developer Test |
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Criteria |
Points |
Developers |
|
1 |
2 |
3 |
4 |
1. Type of the Company *
- Is a Public Company quoted on the
SET
- Is a Public Company not quoted on
the SET
- Is a Private Company
- Is an Individual
|
15
10
5
0 |
15 |
10 |
5 |
5 |
2. Capitalization **
- Has a Capital of 1 Billion THB or
more
- Has a Capital of 100 million THB or
more
- Has a Capital of less than 50
million THB
- Has a Capital of less than 10
million THB
|
15
10
5
0 |
15 |
10 |
5 |
0 |
3. Longevity ***
- Has been registered for 10 years or
more
- Has been registered for 5 years or
more
- Has been registered for 3 years or
more
- Has been registered less than 2
years ago
|
15
10
5
0 |
15 |
5 |
5 |
0 |
4. Experience ****
- Has completed more than 10 projects
- Has completed more than 3 projects
- Has completed 1 project only
- Has never completed a project in
Thailand
|
15
10
5
0 |
15 |
5 |
10 |
0 |
5. Schedule of Payments *****
- Conditions of Payment are 30% or 40%
prior and 60 to 70% upon completion and
transfer of the property at the land
department
- Conditions of Payment are 80% prior
and 20% upon completion and transfer of
the property at the land department
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15
5 |
15 |
15 |
15 |
5 |
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TOTAL |
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75 |
45 |
40 |
10 |
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Results
- 40 to 75
- you can buy.
- Less than 40
- ask a lawyer do to a full due diligence
(including corporate documents and balance
sheets) and take additional precautions if you
still want to buy.
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* Type of company
Is the developer a public or a private
company and if the developer is a public company it
is listed on the Stock Exchange? To incorporate a
public company is more difficult than establishing a
private company. A listed public company indicates
better financial resources as well as better
transparency when compared with a non listed
company.
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** Capitalization
The paid-Up capital is a major gauge of
the financial status of a development company’s. It
is an important criterion because many first time
developers lack the capital to build their projects
and tend to rely on their clients payments to fund
ongoing construction. Buyers should examine a
company’s capital strength along with the schedule
of payments for the property (see 5 below).
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*** Longevity
For how long has the developer company been
incorporated? Note that buyers should always examine
this criterion along the experience (see 4 below).
Indeed a company that has been incorporated 20 years
ago but has been idle for 20 years is not better
that a newly incorporate company.
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**** Experience
Related to longevity, buyers should also examine the
developer’s previous projects. The number of
projects completed indicates the experience of the
developer in the business.
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***** Terms of Payments
If a developer asks for buyers to pay up 80-90% of
the purchase price during the period of
construction, it is likely the project relies on
customer money for completion, making it riskier.
Reliable developers only use a table of payments
indicating several installments totaling a maximum
of 30-40% of the purchase price during the period of
construction. The balance of the payment, which is
60-70% of the price, is paid upon the completion and
handover of the property to buyers.
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