Construction & Property Development Disputes in Thailand

Defective work and latent defects surfacing after handover

Defects spotted while a project is still underway differ from latent defects that only surface after handover. The first kind is usually resolved on the spot while crews remain mobilised; the second is far harder, because when leaks through structural work or cracks in a load-bearing wall appear months or years after handover, the first question is what actually caused it — design, materials, or workmanship — since each cause points to a different party under both the contract and the underlying law.

Standard construction contracts usually set a defined defects-liability period, but that period rarely covers structural defects that the underlying law protects for a longer stretch than the contractual warranty. An owner needs to separate a defect that falls within the contractual warranty period from a structural defect that carries its own statutory limitation period, because the remedies available and the time within which a claim must be brought differ. Left unaddressed for too long, a claim can lapse without anyone noticing.

Proving in practice that a defect traces to faulty construction depends on technical evidence rather than recollection — photographs taken during the works, daily site-supervision reports, and material test results retained from the start. Where none of this was filed systematically from day one, the party carrying the burden of proof starts a dispute at a real disadvantage, since establishing the cause of a defect typically falls to the party making the claim.

Delay, extension-of-time claims, and daily liquidated damages

Most construction contracts fix daily liquidated damages in advance for late delivery, but a contractor's right to claim an extension of time when a delay results from something outside its control — an owner-directed design change, late handover of the site, or a force-majeure event as the contract defines it — is routinely underused in practice, because many contractors never submit a written extension request within the contractual deadline. By the time liquidated damages are disputed, there is no paper trail showing the delay was not the contractor's fault.

Calculating daily liquidated damages has to sit alongside the principle that such a rate must function as a reasonable pre-estimate of loss rather than a penalty designed to intimidate the other party. Where the daily rate is plainly disproportionate to the contract value with no supporting rationale, a court or an arbitral tribunal has discretion to scale it back to reflect actual loss. Both sides should therefore prepare evidence of actual damage for comparison rather than treating the contract figure as automatically final.

On projects with several tiers of subcontracting, a delay by one subcontractor can throw off the whole schedule, yet liability to the owner still sits with the main contractor under the head contract unless the parties specifically agreed otherwise. A main contractor therefore needs a close tracking system for each subcontractor's progress and a documented record of delay notices, so that liability can later be passed down to the actual subcontractor responsible once the owner claims liquidated damages upstream.

Variation orders agreed only verbally on site

Almost no real construction project follows its original drawings to the letter. Site engineers or an owner's project manager routinely instruct changes or extra work verbally to keep progress moving, meaning to sort out the paperwork and price later. By final-account time, the owner often denies ever giving the instruction, or concedes it happened but disputes the contractor's price, because no written variation order was ever issued as the contract itself required.

Standard construction contracts typically require variation or change instructions to be in writing and signed by an authorised person before they bind the owner. In practice, conduct can create an exception — where the owner accepts and continues benefiting from work done under a verbal instruction without objection, that conduct may help prove an agreement existed even absent complete paperwork. But it demands far more circumstantial evidence to establish than a properly signed variation order would have needed in the first place.

The practical habit that actually reduces disputes is confirming every verbal instruction in writing straight away, even a short email or message through whatever project communication channel is in use, naming the scope, the date, and who gave it, then asking the other side to countersign within a short window. Even where the other party ignores it, a clear record of when it was sent still carries far more weight in a hearing than having nothing on file at all.

Retention money and final-account disputes

Retention money withheld from each payment instalment exists to guarantee that a contractor will fix defects found during the warranty period before receiving the balance in full. In practice, many owners hold retention past the due date, citing minor unresolved defects or the absence of a formal handover certificate, even where the building has already been in use for some time. Delayed release of retention is one of the leading triggers for a dispute that ends up in litigation or arbitration.

The final account is usually where every accumulated grievance surfaces at once, because it consolidates variations, omissions, liquidated damages, retention, and every other set-off into one figure. Where neither side confirmed running totals along the way, the numbers each party arrives at when they first sit down to close the account can diverge sharply, and reaching agreement at that stage is far harder than settling the running balance instalment by instalment.

One approach that keeps the final-account dispute manageable is producing an interim reconciliation each quarter or at each major milestone, with both sides signing off on the running figure even though it is not yet final. When a dispute does arise, those jointly signed interim reconciliations narrow the contested issues down to whatever arose in the last stretch alone, rather than reopening the whole project's history.

Contractor abandonment mid-project

Abandonment mid-project causes harder-to-value damage than ordinary delay, because the owner must scramble to bring in a new contractor to finish work whose true condition nobody can verify. Before taking any step, the owner should first check whether the reason work stopped actually meets the termination threshold set by the contract and the underlying law, because terminating the wrong way can leave the owner the one in breach, even where the contractor walked off first.

Once the right to terminate is established, the step most often skipped is a joint site survey with an independent witness, photographing and filming the entire state of the works before a replacement contractor moves in. Without a record of conditions at the moment the site is taken back, it later becomes very difficult to prove which damage traces to the original contractor and which arose only after the replacement crew began work.

Damages claimable for abandonment typically include the price premium paid to bring in a replacement contractor above the original contract rate, the knock-on costs from the resulting overall delay, and in some cases damage to already-completed work left unmaintained while the site sat empty. Every item needs supporting documentation with a traceable figure rather than a rough estimate, since courts and tribunals tend not to credit damages that cannot be verified back to a source.

Payment chains among subcontractors and material suppliers

Large construction projects run on a payment chain with several links — owner to main contractor, main contractor to subcontractor, subcontractor to material supplier. When one link stalls, say an owner withholds an instalment from the main contractor over a quality dispute, the effect flows down to subcontractors and suppliers who have no direct contractual relationship with the owner at all, leaving parties uninvolved in the underlying dispute to absorb its risk regardless.

Subcontractors and suppliers should therefore scrutinise their own payment terms closely, particularly any pay-when-paid clause tying the main contractor's payment obligation to it first receiving payment from the owner, a term that quietly transfers the whole chain's cash-flow risk downstream. Where such a clause exists, it is worth negotiating either its removal or a firm maximum payment deadline regardless, so a party's right to be paid does not hang indefinitely on a dispute one or two tiers removed.

Where payment genuinely does not come through, subcontractors and suppliers can pursue their own contractual claim directly against their own counterparty, and depending on the facts and the nature of the work performed, may in some cases hold statutory rights over the goods or work already supplied. Assessing these options is worth doing early, well before an accumulating unpaid balance starts squeezing the claimant's own cash flow.

Defect claims by condominium buyers and the juristic person

Defect disputes in condominium projects have a shape of their own, distinct from ordinary construction cases, because the affected parties include individual buyers finding defects inside their own units and the condominium juristic person responsible for common property such as lifts, shared electrical systems, and the roof structure. Each buyer holds a claim against the developer under their own sale-and-purchase contract, while the juristic person needs a resolution from the co-owners' meeting before suing on the common property's behalf, which usually means gathering resolutions and evidence takes longer than in an ordinary case.

One recurring point of contention is the line between individually owned property and common property, since some defects — pipework embedded in a wall shared between two units, or waterproofing on a roof slab sitting above only certain units — can be read either way. Getting the classification right matters because it determines who has standing to sue and who bears the interim repair cost while the dispute is unresolved, and that interim cost frequently falls on the buyer or the juristic person even where the developer is ultimately found liable.

Where a juristic person discovers a common-property defect after the contractual warranty has expired, it is worth checking whether the general statutory limitation for structural defects still runs, since that right is entirely separate from the sale-contract warranty and often runs longer than many parties assume. Getting the limitation assessment right early prevents a juristic person from forfeiting a claim needlessly on the mistaken belief that time had already run out.

Expert inspection and building quantum evidence

Almost every construction dispute turns on the opinion of an independent engineer or architect, since neither a court nor an arbitral tribunal has the technical grounding to determine causation on its own. Independence should be the first criterion in choosing an expert, because an opinion produced by someone with a close relationship to either side invariably gets challenged on credibility, whatever the technical substance actually says.

Site inspection should happen as soon as possible after a defect is found, because damage conditions keep changing with weather, continued use, or even a temporary patch-up one side makes before a joint inspection occurs. Where feasible, the other party should be invited to observe the inspection to head off any later argument that it was not conducted fairly, and photographs, video, and the precise location of each item of damage should be logged in detail from the very first site visit.

Quantifying loss in a construction case needs a clean split between the cost of remedial work to restore the contracted standard, consequential delay damages, and any other flow-on cost such as substitute accommodation during repairs. Each component should be backed by at least two quotations from independent remedial contractors, so the figure put before a court or tribunal carries more weight than a self-generated estimate from the party claiming the loss.

Court versus arbitration, and preserving evidence on a live site

Standard contracts used on larger projects commonly route disputes to arbitration instead of the courts, since arbitration allows the parties to choose a decision-maker with direct engineering knowledge, the process is more flexible, and the award enforces abroad under the conventions Thailand has joined. But the cost of running an arbitration is usually significantly higher than litigation, particularly the arbitral institution's administration fee and the arbitrator's fees, both calculated against the amount in dispute.

Where the contract does not clearly settle the choice, or where the question is whether to hold the parties to an arbitration clause at all, several factors deserve weighing together: the amount in dispute, the technical complexity calling for a specialist decision-maker, any need for confidentiality over project information, and the urgency of interim relief — for instance, an order preventing evidence from being destroyed or a defective section from being demolished before inspection — since some interim measures are quicker to obtain and more clearly enforceable when sought directly from a court.

Whichever route is ultimately chosen, preserving evidence on a site that is still in active use has to happen the moment a dispute looks likely, because a construction site changes condition faster than most other locations — urgent safety repairs, weather, and continuous use by occupants or building users all move quickly. Assigning someone to keep a daily photographic log, setting aside disputed material samples separately, and giving the other side written notice before any repair that might destroy evidence are all basic steps that keep a case from weakening simply with the passage of time.

When to act, and when waiting is fine

• A leak or crack surfaces after the works have already been handed over

  Photograph and give written notice immediately, then check whether the item still falls within the contractual warranty or the longer statutory limitation, before either window closes

• A variation is instructed verbally during construction

  Confirm it in writing right after the instruction is given, even briefly, since documentation sent closest in time carries more weight than a later recollection

• A contractor stops work abruptly without explanation

  Confirm the correct termination procedure before taking any step, and conduct a witnessed survey of the works left unfinished before a replacement contractor enters the site

• The contract routes disputes to arbitration

  Weigh the claim value and any need for interim relief before automatically following the clause, since urgent court protection can still be necessary alongside an arbitration