The current state of Escrow in Thailand | Techsauce

The current state of Escrow in Thailand

The goal of this article is to inform readers of the current state of Escrow in Thailand. In brief, escrow services are unlawful in Thailand without the proper permission of the Thailand Ministry of Finance Department's Fiscal Policy Office. This department can only authorize 'financial institutions' and not real estate agencies or law firms, as is the case in other nations. Financial Institutions can be banks and finance corporations that meet the department's requirements.


People who want to acquire major products that are subject to contractual constraints, such as real estate or enterprises, can deposit their payments with a third party to be held and released or dealt with under an established set of conditions in many nations. A buyer of a house, for example, may deposit the final payment with their agent (in escrow) on the condition that it be paid to the seller only once the title deed for the property has cleared. 

In this case, the buyer can pay the money upfront and be assured that the money will not be reimbursed until the title deed is transferred. The seller, too, is at ease knowing that the sale will go through once the title is cleared (because the money has already been put up).

Escrow provides buyers and sellers with a sense of confidence over their purchase or sale, both in theory and in practice. When contractual requirements apply, the escrow concept has widespread use in many nations.

When an escrow payment is made (or withheld) and the buyer or seller disputes it, the dispute is settled through the normal legal process and, most crucially, in conformity with the country's escrow legislation. There is escrow legislation in place, as well as systems for dealing with accountability, distribution, and dispute settlement.


For a long time, the Thai government is in the process of enacting its own  Escrow legislation . This attempt is to make it more accessible and comparable to that of other nations. Unfortunately, the only legislation in place to date pertains to recognized financial organizations, which are essentially banks. Some Thai banks offer an escrow service, while others do not. 

You may locate a real estate agency or legal company in Thailand that offers an escrow service. High chances are there that they are doing it without proper approval. Therefore, you will surely face transaction issues while availing of such escrow service without proper approval.

Escrow payments and receipts usually have in and out-flow of a business account. Some businesses keep a separate account only for escrow, and in some countries, this is a legal obligation, with special compliance and reporting requirements for escrow accounts and transactions. Because there is no statute in Thailand dealing with a corporation receiving and disbursing escrow payments. Moreover, the Thai government can correctly interpret the 'deposit' as income and apply it to VAT.

Similarly, payments without proper documentation are considered unreceipted expenses and are not allowed to be deducted from income. Although the chances of this happening are slim, the ramifications for the company that is responsible for escrow receipt and disbursement are enormous.

Why Escrow In Thailand Is Confusing?

The question of 'what happens if the buyer or seller contests the money disbursement?' is of even greater importance and possibility. The buyer might remark, “You shouldn't have released the money on that date because…”, while the seller might say, “You should have released the money to me by now, and because you haven't, I'm going to claim a financial loss.”

These two scenarios, as well as others like them, are significantly more prevalent and emerge regularly. Moreover, this is due to people's differing interpretations of the escrow disbursement rules. So, who is correct and who is incorrect, and who is responsible and who is not? Questions that are extremely significant! And how to address such issues? Answers are quite easy for operators in nations with escrow laws. Moreover, they can handle and resolve them in accordance with the existing laws and the processes to deal with such circumstances.

However, there are no escrow laws in Thailand other than those that apply to financial institutions. Other than ordinary arbitration, there is no existing legal framework to deal with the mismanagement of an escrow payment. Therefore, the entire objective of employing an escrow service to offer transaction security is incorrect. Moreover, it may wind up not providing any security at all.

The company accepting escrow responsibility is greatly in danger if there are no proper escrow rules and processes in place. In terms of the buyer and seller, the risk is substantial. In case, any or both sides question the payment or non-payment, there is essentially no structure or process available to deal with it. Moreover, it is not the way they perceive or are deal with it in their own country. In Thailand, there are no underlying structures or even norms for dealing with this scenario.


In usual Thai practice, a buyer pays the seller directly according to agreed-upon terms in a sales and purchase agreement. That agreement specifies the circumstances under which the seller may keep the money or may restore it. It is possible only if it has proper documentation. 

Please contact us for more assistance with your buy, sell, and rental needs. We will also help you in registering your business in Thailand.

Feel free to email us at  [email protected].

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