On September 18th, 2018, the Cabinet has approved in principle a draft bill on Sale with Consignment for agricultural or residential land (“Draft Bill”) in order to protect a consignor’s right.
The sale with consignment is a transaction whereby the owner of the property (called “consignor”) sells and transfers its ownership on its land to the buyer (called “consignee”) with the condition that the consignor has the right to redeem its ownership of property within a certain period of time.
In practice, lots of dispute have occurred under this kind of transaction especially the sale with consignment for agricultural or residential land as most of the consignors are agriculturists or farmers who are uneducated and not be able to reach to financial resources from financial institutions and also they have low bargaining power in negotiating on legitimate terms and conditions of this transaction with the consignees. Then, such consignors may end up losing their lands without any right to redeem so.
This Draft Bill has determined special measures, which are in addition to those general provisions for sale with consignment under the Civil and Commercial Code, to protect the right of agriculturists or farmers as well as other persons who own the land for agricultural or residential purpose from losing the same from this kind of transaction.
Significant provisions stated in the Draft Bill are as details below:
- Sale with consignment for agricultural or residential land is a controlled transaction under the Consumer Protection Act B.E. 2522 (1979) (“CPA”), and the transaction must be conducted under written contract containing the provisions specified by the Draft Bill and CPA. The provisions specified in such contract must be reviewed by the public prosecutor or land officer prior to register for transferring of ownership of land at the land office. If there is any amendment or revision of such contract, the amended or revised terms and conditions must also be reviewed by the public prosecutor or the land officer before registering of the same.
- The period for redemption of the agricultural or residential land must not be less than 1 year, but not exceed 10 years. However, the consignor has the right to redeem its land in any time from the consignee before the period for redemption has lapsed.
- The consignee has the duty to notify in writing to the consignor at least 6 months before the period for redemption of the agricultural or residential land has lapsed in order to notify the consignor to use its right to redeem. Such notification must contain the provisions specified by the Draft Bill.
- The redemption price shall not be more than the consignment price with the interest not more than 15 percent per annum.
- In case the consignor redeems its land within specified period of time, but the consignee refuses, avoid or is unable to accept such performance. The consignor can deposit the price of redemption to the Subdistrict Administration Organization (called Or-Bor-Tor).
Now, the Draft Bill is under consideration of the Council of State. After that it will be returned to the Cabinet for approval and then passed to the National Assembly for its final consideration and approval before publishing in the Royal Gazette for enforceability. We hope that the provisions contained in the Draft Bill will be in a form of fairness to all relevant persons otherwise the disputes occurring at this moment are still not being solved.
Author: Panisa Suwanmatajarn and Danuvis Bunnag