THE CONSTRUCTION AGEEMENT- THE MONEY AND THE BUILD
How payments and plans should be written
This is the contract for the villa itself, and the golden rule is simple. Your money should follow the building, never run ahead of it.
HOW THE PAYMENTS USUALLY FLOW:
• A deposit of around 10% to reserve and start the paperwork.
• Once due diligence is clear and the sale and purchase agreement is signed, a larger payment to begin work, often around 30%.
• After that, each payment is tied to a finished, visible stage. One stage might cover foundation, walls, and roof. The next, internal works, plumbing, and electrical. And so on.
• Before you release each stage payment, ask for photos or videos of the finished stage, so you are paying for work you can actually see. This matters most when you are buying from abroad.
• Every stage and the payment that unlocks it must be written down clearly.
THE PRICE ITSELF:
• A fixed, total price that covers everything, with VAT stated. Construction may carry 7% VAT, so check whether the figure you were quoted already includes it.
• A clear list of what is included and what is not. Furniture, kitchen appliances, the pool, fencing, and landscaping are the usual grey areas. One builder may include the furnishing, another may leave out the kitchen and all furniture, so never assume.
TIME AND LATENESS:
• A completion date, with a penalty for every day the builder runs late, set as a fixed daily amount. Without it, a delay costs you and nothing else.
WHAT YOU SHOULD GET ON PAPER, AND AT THE END:
• Floor plans signed off by the architect, plus the electrical and plumbing plans.
• Materials and specifications listed and agreed, down to the tiles, the sinks, and the fittings. If you want time to choose some items later, write that in as a condition, but still include the agreed preliminary specs.
• A valid building permit, issued for the exact plans you agreed. Where possible, check whether the building permit can be transferred into the buyer’s name before construction begins, once due diligence is complete and the first construction payment has been made. This can provide an additional layer of protection.
• If changes are made to the design during construction, ensure revised plans and any amended permits are properly documented and approved.
• At handover, the builder hands you the building permit, the house registration book (Blue Book / Tabien Baan), the villa plans, utility documentation, and all the keys.
• Utilities connected before handover. Bringing electricity, water, and plumbing to the villa is the builder’s job, at their cost, before they pass you the keys.
PROTECTING YOUR MONEY AND YOUR RISK:
• The strongest protection is a clear exit. If the builder stalls or clearly cannot finish, the contract should let you end it, bring in another builder, keep the work already done, and get back any money you paid for stages that were never built.
• You can also discuss routing the stage payments through a lawyer’s escrow account, which is done here in practice. Keep in mind it adds cost, since lawyers charge to run it.
• Risk on site before handover, theft, fire, or damage, should sit with the builder, ideally backed by insurance, not quietly with you.
• You can appoint someone to inspect and supervise on your behalf, which is worth a lot when you are not on the island.
One smart move at the very end: hold back a small final payment, often 5 to 10%, until every item on your final walkthrough snag list is fixed.
I am not a lawyer, so this is not legal advice. But a vague construction contract is where good projects quietly go wrong.
𝑵𝒆𝒗𝒆𝒓 𝒑𝒂𝒚 𝒂𝒉𝒆𝒂𝒅 𝒐𝒇 𝒕𝒉𝒆 𝒃𝒖𝒊𝒍𝒅. 𝑻𝒊𝒆 𝒆𝒗𝒆𝒓𝒚 𝒑𝒂𝒚𝒎𝒆𝒏𝒕 𝒕𝒐 𝒔𝒐𝒎𝒆𝒕𝒉𝒊𝒏𝒈 𝒚𝒐𝒖 𝒄𝒂𝒏 𝒘𝒂𝒍𝒌 𝒖𝒑 𝒕𝒐 𝒂𝒏𝒅 𝒕𝒐𝒖𝒄𝒉.
If you’re curious about what types of villas currently offer the strongest investment potential on the island, you can browse Jane’s latest Koh Samui property listings here.
