Reviewed by ThaiLawOnline, a licensed Thai law firm practising in Thailand since 2006. Thai lawyer of record: Wichuda Atthamethakon, LL.M., Thai Bar Licence 3149/2556.
Last updated on September 5, 2026
Earnest (มัดจำ, mat jam or mud jum, also earnest deposit or deposit) is a sum of money or other thing of value handed over when a contract is made, as evidence that the contract exists and as security for its performance, governed by Sections 377 and 378 of the Civil and Commercial Code. If the party who gave it fails to perform, the earnest is forfeited; if the party who received it fails, it must be returned twofold. It is the legal form behind almost every reservation fee and deposit in a Thai property purchase, and its rules are stricter than most buyers assume.
Table of Contents
What the Civil and Commercial Code says
Section 377 defines earnest by when it is given. To be earnest, the sum must be delivered at the time the contract is entered into; money paid later is a part payment of the price, not earnest, however the contract labels it. Section 378 then sets the three outcomes: on performance the earnest is returned or credited against the price; if the giver’s fault prevents performance, the earnest is forfeited; if the receiver’s fault prevents performance, the receiver must return double.
The double-return rule is the buyer’s main lever against a seller who takes a deposit and then sells to someone else at a higher price, or who cannot deliver the title. It is also why sellers prefer to call the sum a “reservation fee” and to write their own refund terms. The parties may vary the statutory outcomes by contract, so the written agreement decides; only where it is silent do Sections 377 and 378 apply in full. Where the earnest is excessive in relation to the loss actually suffered, the court may reduce the amount forfeited under the Unfair Contract Terms Act B.E. 2540.
Deposits in a Thai property purchase
In a resale, the buyer typically pays 5% to 10% of the price on signing the sale agreement, with the balance at the Land Office on transfer day. That sum is earnest: the buyer loses it by failing to complete, and can claim double if the seller withdraws. A clause requiring the seller to refund only the single amount on default is common and, being a contractual variation, generally enforceable; a buyer who wants the double remedy must keep Section 378 intact.
Off-plan, the reservation fee paid on the day of booking is earnest and can be forfeited, but the instalments paid afterwards are part payments of the price and cannot be forfeited as earnest, whatever the developer’s form says. The standard contract prescribed under the Condominium Act for units sold by developers requires the developer to refund every payment with interest when the buyer terminates for the developer’s breach, and gives the buyer a daily delay penalty of at least 0.01% of the price, capped at 10%.
The common mistake is to pay a large reservation fee before any due diligence, on the strength of a form that says it is “non-refundable in all cases”. If the unit turns out to be outside the foreign quota or the land is mortgaged, the remedy is a lawsuit for the money, not an automatic refund.
Earnest compared with part payment and penalty
Three kinds of payment look alike on a receipt and behave differently in court.
| Payment | When made | If the buyer defaults |
|---|---|---|
| Earnest (mat jam) | At the moment of contracting | Forfeited under Section 378, reducible if excessive |
| Part payment of the price | After the contract, by instalment | Must be refunded, less proven damages |
| Penalty clause (bia prap) | Fixed in the contract, payable on breach | Payable, but the court may reduce it under Section 383 |
Escrow is different again: money held by a licensed escrow agent belongs to neither party until the conditions are met, so it is neither earnest nor part payment. In a deposit dispute the judge asks first when the money was paid and what the contract calls it, then whether the amount forfeited bears a reasonable relation to the seller’s actual loss.
Frequently asked questions
Is a deposit refundable in Thailand if the buyer changes their mind?
Not if it is earnest. A sum paid at the moment of contracting is forfeited under Section 378 of the Civil and Commercial Code when the buyer fails to complete, unless the contract says otherwise. A court can reduce the forfeiture if the amount is out of proportion to the seller’s real loss.
What happens if the seller backs out after taking a deposit in Thailand?
Under Section 378 the seller must return double the earnest, unless the contract has replaced that remedy with something else, such as a simple refund. The buyer may also claim damages for any further loss, but must usually sue to recover anything.
Is a reservation fee for a condo the same as earnest?
Yes, if it is paid when the reservation contract is made, which is the usual case. Instalments paid later under the sale contract are part payments of the price, not earnest, and a developer cannot simply keep them when the buyer defaults; at most the contract may treat them as liquidated damages, which a court can reduce.
See also: Penalty clause (bia prap), Escrow, Condominium Act, Off-Plan Condos in Thailand, Condo Deposit Forfeiture in Thailand and Risks of Buying Property in Thailand.
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