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What is Preliminary Deposit in Thailand?
Fact-checked by a REMAX Thailand Real Estate Expert
The Definition
A preliminary deposit (also called "earnest money" or "reservation deposit") is an initial payment made by a buyer to a seller or developer to demonstrate serious intent and secure a property reservation in Thailand. Typically ranging from 5-10% of the total purchase price, this deposit is held either by the seller directly or in an escrow account and counts toward the final purchase price.
Global Expectations vs. Thai Reality
Western buyers often expect preliminary deposits to function like escrow-protected earnest money held by neutral third parties. In Thailand, however, deposits are frequently held directly by the seller or developer and are treated as non-refundable commitments unless the contract explicitly states otherwise. Thai contracts contain fewer automatic protections for buyers, meaning safety depends heavily on the specific terms written into the reservation agreement.
The Problem It Presents
Non-refundability and weak legal protection create the primary friction point: if a buyer backs out for reasons not explicitly covered in the contract (such as personal financial difficulty), the deposit is often forfeited. Additionally, temporary contract instability means developers can sometimes increase the purchase price between the preliminary agreement and final contract, while the lack of standardized escrow requirements risks funds if the seller faces insolvency.
Foreigner vs. Thai Citizen Rules
Foreigner restrictions apply primarily to land ownership, not deposit mechanics. For preliminary deposits on condominiums, the rules are identical for foreigners and Thai citizens—both must pay the same deposit percentage and follow the same contract terms. However, foreigners should exercise extra caution because legal recourse under Thai law is more limited if a dispute arises. Foreign buyers are strongly advised to use escrow accounts rather than paying directly to developers.
The Thai Legal Context
Preliminary deposits are governed by the Thai Civil and Commercial Code (Sections 657-671) and the Condominium Act (B.E. 2522), which requires escrow accounts for pre-construction condos. The Department of Lands oversees property registration, while the Consumer Protection Act provides limited recourse. Unlike Western jurisdictions with unified regulatory bodies, oversight in Thailand is fragmented across various departments.
Benefits & Risks
Advantages
- Lower entry cost: Allows buyers to reserve premium properties with only 5-10% down.
- Counts toward final purchase: The deposit reduces the remaining balance due at settlement.
Risks & Disadvantages
- Non-refundable in most cases: Buyers lose the deposit if they withdraw unless the contract has specific protective clauses.
- Deposit held unsecurely: If held directly by the developer rather than in escrow, funds are at risk during insolvency.
Showcase: How It Works
Let’s look at a real-world scenario to understand how Preliminary Deposit is applied during a property transaction.
The Scenario
- Buyer selects a 9M THB condo and pays a 10% (900,000 THB) preliminary deposit to an escrow account.
- The contract specifies the deposit counts toward the purchase price and is forfeited if the buyer withdraws without cause.
- At settlement, the buyer pays the remaining balance minus the deposit and mid-stage payments.
The Result
The preliminary deposit of 900,000 THB was applied directly to the total price, reducing the final settlement amount. It secured the unit for 18 months during construction.
Outcome:Final Due: ~5,200,000 THB (after deposit & installments)
Preliminary Deposit vs. Reservation Deposit
A quick breakdown of how this term compares to its closest alternative.
| Feature | Preliminary Deposit | Reservation Deposit |
|---|---|---|
| Purpose | Secure property & show intent | Synonymous term; same function |
| Refundability | Non-refundable unless specified | Non-refundable unless protected |
| Typical Amount | 5–10% (Pre-construction) | 1–5% (Resale/Negotiated) |
Frequently Asked Questions
Can I get my preliminary deposit back if I change my mind?
In most cases, no. Unless your reservation agreement explicitly includes refund conditions (such as failed legal clearance or financing denial), withdrawing as a buyer forfeits the deposit under Thai law.
Is my preliminary deposit protected if the developer goes bankrupt?
Only if it is held in an escrow account with an independent third party. If held directly by the developer, your deposit is an unsecured claim and may be lost if the developer faces insolvency.
Does the preliminary deposit count toward my final purchase price?
Yes, entirely—the deposit is the first installment of the total purchase price, not an additional fee.
What is the legal difference between a preliminary deposit and earnest money?
In Thailand, these terms are used interchangeably; both refer to the same initial payment made to reserve a property and demonstrate buyer intent.
Can a developer raise the purchase price after I've paid the preliminary deposit?
Yes—unless your contract explicitly prevents it, Thai law permits developers to increase the agreed price between the preliminary agreement and the final sale agreement.
Related Terms
Rx
REMAX Thailand Editorial Team
Expertly curated real estate insights, fact-checked by local professionals.
Why It Matters
Your preliminary deposit is your first financial commitment and often the largest unprotected sum in a Thai property transaction. Understanding escrow requirements and non-refundability is essential to safeguarding your investment.
💡 REMAX Pro Tip
Always insist on escrow protection. Before signing, demand in writing that your deposit be held in an independent third-party escrow account. If a developer refuses, it is a red flag signaling financial instability.
Common Misconceptions
Myth: A preliminary deposit is always refundable in Thailand, just like in Western countries.
Reality: Unless the contract explicitly includes refund conditions, the preliminary deposit is non-refundable in Thailand.
Myth: Deposits are always protected in third-party escrow accounts.
Reality: While required for pre-construction condos, many private sales allow sellers to hold deposits directly, leaving them unprotected.
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