Last updated on August 31, 2026
Thailand’s Supreme Court has set aside an arbitration award that let a developer keep almost 3 million baht from a buyer who could not complete a condo purchase. Decision 1511/2569 draws a sharp line between a genuine deposit, which can be forfeited, and later instalments, which cannot simply be kept. Here is what it means for foreigners buying off-plan in Thailand.
The case in one paragraph: Dika 1511/2569
A buyer signed an agreement on 2 April 2018 to purchase a condominium unit from a developer for 11,643,120 baht. He had paid a 100,000 baht reservation fee on 6 February 2018, before the contract, and then transferred a further 2,810,780 baht on 10 April 2018, eight days after signing. The balance was to be paid in instalments and at transfer of title. When the buyer ran into financial difficulty and stopped paying, the developer terminated the contract by letter dated 22 June 2019 and kept everything it had received.
The sale contract sent disputes to arbitration. The arbitrator ruled that both payments, the 100,000 baht and the 2,810,780 baht, were earnest money (มัดจำ, mat jam) and that the developer was entitled to forfeit the whole amount. The buyer asked the court to set the award aside. The Court of First Instance refused. The Supreme Court reversed and set the award aside.
The reasoning is compact. The 100,000 baht paid at reservation, before the contract was signed, was a true deposit under Section 377 of the Civil and Commercial Code and could be forfeited under Section 378(2). The 2,810,780 baht was different on two counts. First, it was paid after the contract was already concluded, so it could not have been given “at the time of entering into the contract” as Section 377 requires. Second, it was far too large a proportion of the price to be treated as security for performance; it was, in substance, part-payment of the purchase price. Treating an ordinary instalment as forfeitable earnest money was, in the Court’s view, contrary to public order and good morals, which is a ground for setting aside an award under Section 40(3)(b) of the Arbitration Act B.E. 2545.
What Thai law actually says about deposits
Three provisions of the Civil and Commercial Code do most of the work in deposit disputes.
- Section 377: if earnest money is given when a contract is entered into, it serves as evidence that the contract has been made and as security that it will be performed.
- Section 378: unless otherwise agreed, earnest money is (1) returned or credited against the price when the contract is performed, (2) forfeited if the party who gave it fails to perform, and (3) returned if the party who received it fails to perform.
- Section 383: a contractual penalty that is disproportionately high may be reduced by the court to a reasonable amount.
The practical consequence, confirmed again by decision 1511/2569, is that timing and proportion decide the character of a payment. Money handed over at the moment the deal is struck, in an amount that looks like security rather than price, is earnest money. Money paid later under a schedule of instalments is part-payment. If a contract says the developer may keep instalments on default, that clause is not a forfeiture of earnest money; it is a penalty clause (เบี้ยปรับ), and Thai courts have the power under Section 383 to cut it down to the developer’s real loss.
The consumer-protection layer for condominiums
Condominium sales by developers are a contract-controlled business. Under Section 6/2 of the Condominium Act B.E. 2522 a developer must use the standard sale-and-purchase form prescribed by ministerial regulation, and any clause less favourable to the buyer than the standard form is void. The Contract Committee’s notification on condominium sales (B.E. 2543, under the Consumer Protection Act B.E. 2522) limits what a developer may keep when a buyer defaults and requires the developer to give the buyer a written notice and a cure period before termination. A clause that lets the developer keep everything paid, whatever the amount, is precisely the kind of term these rules were written to prevent.
Deposit, instalment or penalty: how the courts classify your money
| Payment | When paid | Legal character | On buyer’s default |
|---|---|---|---|
| Reservation / booking fee | Before or at signing | Earnest money (CCC s.377) if modest and given as security | Forfeitable under s.378(2), but only that sum |
| “Contract deposit” that is a large share of the price | At or just after signing | Part-payment, not earnest money (Dika 1511/2569) | Cannot be forfeited as earnest; any retention is a penalty subject to s.383 |
| Scheduled instalments during construction | Monthly / on milestones | Part-payment of the price | Refundable less proven damages; contractual retention reviewed under s.383 |
| Balance at transfer | Land Office registration | Purchase price | Not paid, so nothing to forfeit; developer may claim damages |
Why the arbitration angle matters
Most developer contracts in Thailand now contain an arbitration clause, often naming the Thai Arbitration Institute. Arbitration is faster and private, but the losing party’s routes back to court are narrow. Under Section 40 of the Arbitration Act B.E. 2545 a court may set aside an award only on listed grounds, such as a party’s incapacity, lack of proper notice, an award outside the scope of the submission, or an award whose recognition would be contrary to public order or the good morals of the people (Section 40(3)(b)). Section 25 of the Act requires arbitrators to decide according to the law chosen by the parties.
Decision 1511/2569 shows that the public-order ground has real teeth when an arbitrator misapplies a mandatory rule of the Civil and Commercial Code. It does not turn the courts into a general appeal from arbitration. The buyer won because the award rested on a legal characterisation, “these instalments are earnest money”, that the Code does not permit. A buyer who simply thinks the arbitrator got the facts wrong will not get the same result. For how awards are enforced and challenged in practice, see our guide to enforcing judgments and arbitral awards in Thailand.
What this means if you are buying a condo in Thailand
Before you sign
Read the payment schedule with Section 377 in mind. A reservation fee of 50,000 to 200,000 baht is normal and you should assume you will lose it if you walk away. A “deposit” of 20 or 25 percent of the price at contract signing is not a deposit in law, whatever the contract calls it. Check that the developer is using the prescribed standard form and that the default clause gives you a written notice and a cure period. If the project is a foreign-quota purchase, confirm the quota position in writing before paying anything beyond the reservation fee; our article on what to do when the foreign quota is full explains why.
If you cannot complete
Do not simply stop paying and wait. Write to the developer, explain the position and ask for the account of what has been paid. Under the standard form the developer must notify you and give you a chance to cure before terminating. If the developer terminates and keeps the instalments, you have a claim for the return of the part-payments less the developer’s provable loss, and the court (or arbitrator, correctly directed) can reduce any contractual retention under Section 383. Keep every transfer slip: in 1511/2569 the transfer date, eight days after the contract, was decisive.
If the developer defaults
The rule runs both ways. Under Section 378(3) a developer who fails to perform must return the earnest money, and under the standard form a buyer who terminates for the developer’s breach (for example a project that is years late) is entitled to a refund with interest. Our overview of buying property in Thailand as a foreigner covers the due-diligence steps that reduce this risk before you commit.
Frequently asked questions
Can a Thai developer keep my whole deposit if I pull out of a condo purchase?
The developer can keep a genuine deposit given as security when the contract was made, typically the reservation fee. It cannot treat later instalments or a large “contract deposit” as forfeitable earnest money. Decision 1511/2569 set aside an award that allowed exactly that.
What is the difference between earnest money and a penalty in Thai law?
Earnest money (Section 377) is given at the time of contracting as security and is forfeited on default under Section 378(2). A penalty (Section 379 onwards) is a sum the contract says is payable on breach; if it is excessive the court reduces it under Section 383. Instalments retained under a contract clause are treated as a penalty, not as earnest money.
Does the arbitration clause in my sale contract mean I can never go to court?
You must arbitrate the dispute, but you can apply to the Thai courts to set aside an award on the grounds in Section 40 of the Arbitration Act B.E. 2545, including where the award is contrary to public order or good morals. That is what the buyer did successfully in 1511/2569.
How much of the price is a “reasonable” deposit for a condo in Thailand?
There is no fixed percentage in the Code. Thai courts look at whether the sum was given as security at the time of contracting and whether it is proportionate to the price. In 1511/2569 a sum of roughly 24 percent of the price, paid after signing, was held not to be earnest money.
Can I recover interest on instalments the developer must return?
Yes. When a contract is terminated the parties are restored to their former position under Section 391 of the Civil and Commercial Code, and money to be refunded carries interest from the date it was received. The standard condominium form also provides for interest on refunds where the developer is in breach.
Does this decision apply to houses and land, not just condominiums?
Sections 377, 378 and 383 apply to all contracts. The standard-form and Contract Committee protections are specific to condominium sales by developers and to certain housing-estate sales. For land, foreigners face separate ownership restrictions, so the structure of the purchase matters as much as the deposit rules.
Key takeaways
A reservation fee paid when the deal is struck is earnest money and can be forfeited. Instalments paid afterwards are part of the price, and a developer who keeps them on default is applying a penalty that the court can reduce. Arbitration clauses do not shield an award that misapplies these mandatory rules. If you are about to sign a developer’s contract, or you have already lost a deposit, have the payment schedule and the default clause reviewed before you pay or concede anything. ThaiLawOnline’s flat-fee property legal packages include contract review for exactly this situation.
About the author. Written and reviewed by Sebastien H. Brousseau, LL.B., B.Sc., founder of ThaiLawOnline.com, which has assisted foreigners with Thai property, family and succession matters since 2006. If you are dealing with a condo deposit dispute or an arbitration clause in a Thai sale contract, contact ThaiLawOnline for a consultation.
This article is general information about Thai law, not legal advice. Supreme Court decision 1511/2569 is summarised from the published text; outcomes in any particular case depend on its facts and on the contract terms.
Thai Law Updates, free by email
Plain-English updates on Thai law changes that affect foreigners: property, visas, marriage, business and wills. One short email a month from a firm practicing since 2006. No spam, unsubscribe anytime.