Are Older Men in Thailand Trading Love for Financial Ruin

[homeseeker]

I have a long term Thai acquaintance who is seeking to borrow funds (to build a house on land which my acquaintance owns).

If I as a foreigner living long term in Thailand decide to give  a loan interest free(though I may decide to charge interest)-to be repaid over a number of years annually- is there any legal or other restriction for me entering into a written agreement for such a  loan?

Is such an agreement valid and enforceable in the event of default?

 

Edited September 10, 2017 by homeseeker

[worgeordie]

Just call it a gift,as that's what it will turn out to be.dont do it.

 

regards worgeordie

[meatboy]

that has got to be a joke or a troll.

surely no farang would be that stupid.

[blackcab]

Such an agreement would be valid. The problem is enforcement. It would take years to go through Court and you would have to pay the legal fees for that to happen. At the end of it you would be lucky to get any money anyway.

 

Personally I would steer clear of the idea. The best option for security would be a sale with the right of redemption, but you can't do that as a non Thai person. Registering a loan against the title deed? Even if you can it won't get you your money back while the owner is alive. Nothing forces the owner to pay, even if they can, unless you go to Court.

 

Fast forward a few years and you have paid a lot of money in legal fees to enforce the debt. Nobody in the area likes you because you have a black heart and the land is forcibly put up for sale. Nobody is going to buy the land because anyone looking will get warned off... and you will still be waiting for your money, even more out of pocket.

Edited September 10, 2017 by blackcab

[piersbeckett]

IMV a mutually satisfactory conclusion to such an arrangement, assuming it were possible, is unthinkable.

 

Because you are an 'outsider', the cards are too heavily stacked against you - a definite 'no, no'!

[NanLaew]

If the OP wants to give unsecured loans to people they basically don't really know, can they please PM me for my bank account details.

[homeseeker]

Thanks for the replies so far and any more are greatly appreciated. As to meatboys comment about my post being a joke or a troll, I can assure him my question is serious and genuine though no decision yet; and I do not want to deter others from posting helpful responses as they may not do so if it is thought I am joking in my question.

If the event my loan financed the building of a house I know I could take out a secure lease to live in the place for a nominal rent or even make an arrangement to buy the house in my name, though not the land.

There are other issues involved too with my acquaintance that are neither appropriate or relevant to my basic question which actually now has been answered namely such an agreement is on the face of it legal. Grateful to blackcab in particular for his post.

 

Edited September 10, 2017 by homeseeker

[blackcab]

16 minutes ago, homeseeker said:

...my basic question which actually now has been answered namely such an agreement is on the face of it legal.

 

That's not quite true. It's more a case of different government departments not being on the same page.

 

The land office might register the loan, but the police might take an entirely different view should a complaint be made.

 

Have a read of this, especially the last few sentences:

 

http://www.khaosodenglish.com/news/crimecourtscalamity/crime-crime/2016/11/25/1464782716/

Edited September 10, 2017 by blackcab

[homeseeker]

Yes thank you blackcab and the last sentence in the article is specifically  concerning. Certainly if I decided to make any loan I would first consult a reputable Thai lawyer to make sure any loan agreement even without any interest charge  is legally possible by a farang to a Thai.

 

[meatboy]

20 hours ago, homeseeker said:

Yes thank you blackcab and the last sentence in the article is specifically  concerning. Certainly if I decided to make any loan I would first consult a reputable Thai lawyer to make sure any loan agreement even without any interest charge  is legally possible by a farang to a Thai.

 

how much deeper is the hole goner be,consulting a thai lawyer over the loan,

why don't you give the money to your gf.then she can have the house and land in her name,and make an agreement to the tenant to pay back the amount. when its paid its his.

[homeseeker]

4 minutes ago, meatboy said:

how much deeper is the hole goner be,consulting a thai lawyer over the loan,

why don't you give the money to your gf.then she can have the house and land in her name,and make an agreement to the tenant to pay back the amount. when its paid its his.

Thank you meatboy for an astute and sensible suggestion. 

[inThailand]

29 minutes ago, meatboy said:

how much deeper is the hole goner be,consulting a thai lawyer over the loan,

why don't you give the money to your gf.then she can have the house and land in her name,and make an agreement to the tenant to pay back the amount. when its paid its his.

Yes and No its a good idea. To protect him from her not selling the land or mortgaging it, he must register this mortgage on the title deed. Some say as foreigner you need a work permit for such. I tend to agree and he will be liable for taxes. 

 

Of course, he could register a lease with a sublease clause and at least have the opportunity to liquidate the property if so desired. No work permit required and no taxes. One percent tax on the value of the lease must be paid at registration.

[Pib]

I expect what you want to do is fully legal.  

 

Just keep in mind enforcement of loan payback will be very, very hard because I expect you will not be able to maintain control of the property as collateral like a bank does when a person gets a bank loan/defaults on the loan.  A loan where the borrower has signed all kinds of legal documents to protect the bank in order to ensure loan payback or the property returns to bank ownership (i.e., foreclosure).

 

I know  you said the person is a long time friend.  I know from watching my Thai family members (i.., on  my wife side) loan other family member money over the decades....and I mean very big amounts of money in some cases like in the 100,000 to 500,000 baht range to help buy a car or property, that there have been several cases where the loan payback did not occur and it created big problems/arguments between whole "parts of the family."  And a similar thing has really damage the relationship between a brother-and-brother and a brother-and-mother with the neighbors that live right next to me in my moobaan....another case of loaning of big money to a family member to buy property and payback is not occurring as planned.

 

Loaning family members (or friends) money is a common practice but sometimes it ends up damaging the relationship when loan payback does not occur as planned...a person then realizes the personal loan actually ended up damaging or destroying a relationship where if the loan had occurred from a bank the relationship would not have been damaged (or destroyed).

 

 

[homeseeker]

Thanks so much to inThailand and Pib for the excellent advice.