Can a developer keep your whole condo deposit?
Plans change. A loan is refused, a job moves abroad, or the market falls. Many condo contracts say that if the buyer does not complete, the developer keeps everything paid. Thai law does not always let it.
In short
- If you break the contract, the developer is entitled to forfeit the deposit.
- But if the deposit is out of proportion to the developer's real loss, the court can reduce the amount it keeps.
- In decision 8942/2554, the developer kept 50% of a 1,273,258 baht deposit and returned 636,629 baht.
What happened
On 26 June 1998 the buyer signed a contract to buy a condo unit for 4,218,720 baht and paid 1,273,258 baht on the day. The balance was due on 17 July 1998, the date set for transfer at the Land Office.
Clause 15 said that if the buyer failed to pay the balance for any reason, or breached the contract, the developer could end the contract and keep everything paid, and the buyer would claim nothing back.
The developer extended the deadline to 2 September 1998. The buyer still did not pay or take the transfer. On 3 September the developer ended the contract and kept the whole amount. On 15 January 1999 it sold the unit to someone else for 4,100,000 baht, 118,720 baht less than the original price.
Deposit or penalty?
The court treated the money paid on signing as a deposit (มัดจำ): it was evidence that the contract was made and security for performance, to count towards the price or be forfeited if the buyer defaulted.
Under the Civil and Commercial Code, a court can reduce a penalty that is too high (section 383), but that section does not let it reduce a deposit. The Unfair Contract Terms Act fills that gap.
If your loan is refused. Read what your contract says about a refused mortgage before you pay the booking fee. If you cannot complete, tell the developer in writing early. A developer that resells the unit quickly may have suffered little loss.
The rule
Under section 7 of the Unfair Contract Terms Act, where a deposit is to be forfeited and it is out of proportion, the court may reduce the amount forfeited to the actual damage.
The developer argued that the buyer had freely agreed to lose everything. The court held that section 7 concerns public order, so the parties cannot contract out of it.
What the Supreme Court decided
In decision No. 8942/2554, the Supreme Court noted that:
- The developer said it had borrowing costs, but did not prove how much it actually lost or how that compared with the deposit.
- It resold the unit about six months after the first missed transfer date, for 118,720 baht less.
The lower courts had let the developer keep 500,000 baht. The Supreme Court found that too low and allowed it to keep 50% of the deposit, 636,629 baht. The developer had to return the other 636,629 baht to the buyer.
What this means for buyers
- If you are the one who breaks the contract, expect to lose part of what you paid. You may not lose all of it.
- The larger the deposit compared with the price and the developer's real loss, the stronger the case for a reduction.
- The same rule applies to other purchases. See Can a car dealer keep your whole deposit?
Legal references
- Unfair Contract Terms Act B.E. 2540 (1997), section 7
- Civil and Commercial Code, sections 377, 378 and 383
- Supreme Court decision No. 8942/2554 (2011)
This explainer gives general information about Thai law as at 14 October 2026. It is not advice on your situation. Interest rates and amounts in court decisions reflect the law when each decision was made. Contact the office before you act.