Escrow Accounts in Thailand is now a regulated, mainstream option for managing transactional risk — especially in real estate, M&A and construction deals. Since the Escrow Act B.E. 2551 (2008) and subsequent amendments, escrow is no longer just a commercial convention: it’s a statutory framework that prescribes who may act as an escrow agent, what duties the agent must perform, and how escrow property must be handled. This article explains the legal framework, how escrow arrangements are typically structured, practical examples, regulatory traps, and a concise checklist for drafting and due diligence.
The Escrow Act provides the legal basis for voluntary escrow arrangements in commercial transactions. Parties may appoint an escrow agent to hold funds, documents or other assets (the “escrow property”) and to release them only when agreed conditions are satisfied. The Act limits who can be an escrow agent: licensed financial institutions (commercial banks, finance companies and certain state banks) and juristic persons prescribed by ministerial regulation — all of whom must be licensed by the Ministry of Finance and supervised under the Act. The Bank of Thailand issues additional rules for commercial banks that offer escrow services and requires governance, control and reporting standards for those operations.
In practical terms that means you cannot appoint an unlicensed individual or an ad-hoc third party and call it a statutory escrow: if you want the legal protections of the Act you must use a licensed escrow agent.
The statute and implementing rules set out a tight operational brief: the agent must (a) safeguard and separately record each party’s escrow property (no commingling with the agent’s own assets), (b) monitor performance of the underlying obligations against the escrow conditions, (c) deliver or transfer the escrow property only on the strict fulfilment of agreed conditions or a lawful instruction, and (d) keep an escrow registry and copies of escrow agreements for supervisory review. Misconduct, negligent release or failure to segregate property can trigger administrative fines, license suspension and civil liability. The Escrow Supervision Committee also sets fee rules (agents may not simply deduct fees from escrow property).
Most commercial escrows in Thailand follow the same practical architecture:
Tripartite escrow agreement (buyer, seller and agent) that defines the escrow property, precise release conditions, evidence required to prove those conditions, who may give instructions, fee arrangements, and dispute resolution.
Escrow property is commonly: purchase price deposits, original title deeds or share certificates, performance bonds, or compliance certificates (completion, regulatory approvals). For property deals, agents typically hold title documents and the purchaser’s funds pending registration at the Land Office.
Triggering events are narrowly drafted (for example: “release when the Land Office registers transfer under Chanote no. XXX and the purchaser provides certified payment instruction”). The agent will require documentary proof and, where appropriate, a clearance certificate from a party specified in the agreement.
Accounting & interest: agents usually credit any interest to the escrow account per the agreement; agents cannot unilaterally appropriate interest or escrow balances.
Condo pre-sale / developer escrow — a buyer deposits funds into an escrow account to be held until the unit is registered (or handover criteria are met). The agent releases funds only after the developer delivers clear title and all statutory warranties have been met. This protects buyers from developer insolvency or improper diversion of pre-sale proceeds.
M&A / share purchase — purchase price is placed in escrow pending fulfilment of closing conditions (regulatory approvals, board consents, RE due diligence). The escrow preserves buyer leverage for indemnity claims (e.g., escrowed funds are used to satisfy post-closing indemnities). Large cross-border deals commonly use bank-escrow with strict release protocols.
Construction / performance holdback — a portion of contract payments is held in escrow and released when a completion certificate from an independent engineer is delivered. This aligns incentives between contractor and employer and speeds dispute-adjudication by removing cash leverage.
The Escrow Act (No.2) amendment (2019) widened permitted transactions (making the regime more flexible), clarified deposit evidence procedures and expressly recognized condominiums as immovable property that escrow agents may handle — a practical patch to support modern real-estate transactions. The amendment also strengthened the Escrow Supervisor Committee’s powers to issue guidance resolving implementation problems.
Confirm the agent’s license from the Ministry of Finance (and, if a bank, notification to the Bank of Thailand). Don’t accept self-certification alone.
Ask for governance documentation: internal segregation procedures, reporting lines, internal audit reports, and sample escrow registry entries. BOT-regulated banks should have formal internal controls.
KYC / AML: licensed agents are covered by Thai AML rules — expect full KYC on counterparties and source-of-funds checks.
Drafting detail: define the precise documentary evidence required for release (named certificates, Land Office extracts by title number, signed engineer’s completion certificates, etc.), fallback procedures for disputed releases, and a dispute-resolution clause (local courts vs arbitration).
Agent insolvency or misconduct — mitigate by using licensed banks with strong capital ratios; require the agent to carry professional indemnity or fidelity insurance where available.
Ambiguous release conditions — mitigate with documentary checklists and “certificate of release” templates attached to the escrow deed.
Cross-border complications — if the escrow involves foreign approvals or assets, make sure the escrow law in the other jurisdiction permits the same mechanics or include alternative release mechanics (LCs, standby guarantees).
Delay in Land Office registration (common in Thai property transfers) — build timed fallback releases or staged releases tied to specific events (e.g., partial releases on registration of certain documents).
Escrow in Thailand now sits on firm statutory ground: the Escrow Act plus BOT and Ministerial regulation make licensed escrow agents a safe, supervised conduit for conditional transfers of funds and documents. But the protections only work if the parties (1) choose a properly licensed agent, (2) draft precise release mechanics and documentary triggers, and (3) build fallback arrangements for disputes and delays. For sizeable deals, combine escrow with complementary security (bank guarantees, insurance and robust intercreditor arrangements) to reduce tail risk. Mayer BrownBot