Usufruct Or Superficies

[johnnyk]

I'm thinking of throwing in the towel on company ownership of property and going to usufruct or superficies.

I'm not crazy about leasehold because of the 30 yr limit and I don't trust so-called 30+30 "guarantees".

My aim is to legally get more than 30 yrs so my house could either be sold or be left to my daughter for use or sale. Is there a way to achieve this through usufruct or superficies?

As far as I know, usufruct would seem to die with me and is not otherwise transferable through sale or inheritance.

Many thanks for any help you can offer.

[Lost in LOS]

I am in the same boat, it doesn’t look like companies are going to work anymore. there was an article in the Bangkok post today where many western countries are writing to the Thai government asking them to reconsider these next set of rules for companies.

I have been considering the 30 year lease route with a clause in it that at any time during the lease I can transfer it to some other ownership depending on Thai. laws at the time. I also want to own the improvements and do some kind of mortgage in favor of myself. I don’t know if this is possible but I am checking with a lawyer Monday and will let you know. Any help or any clauses that should be in a lease of this sort would be appreciated.

Jimmy

[Sunbelt Asia]

I'm thinking of throwing in the towel on company ownership of property and going to usufruct or superficies.

I'm not crazy about leasehold because of the 30 yr limit and I don't trust so-called 30+30 "guarantees".

My aim is to legally get more than 30 yrs so my house could either be sold or be left to my daughter for use or sale. Is there a way to achieve this through usufruct or superficies?

As far as I know, usufruct would seem to die with me and is not otherwise transferable through sale or inheritance.

Many thanks for any help you can offer.

The usufruct does not end on the usufructury death, if they have granted a lease to a third party( before the death). Upon the usufructury death, the lease then is directly between the lessee and the landlord. The land owner must honor the lease.

www.sunbeltasiagroup.com

[lannarebirth]

I'm thinking of throwing in the towel on company ownership of property and going to usufruct or superficies.

I'm not crazy about leasehold because of the 30 yr limit and I don't trust so-called 30+30 "guarantees".

My aim is to legally get more than 30 yrs so my house could either be sold or be left to my daughter for use or sale. Is there a way to achieve this through usufruct or superficies?

As far as I know, usufruct would seem to die with me and is not otherwise transferable through sale or inheritance.

Many thanks for any help you can offer.

Why don't you put it in your daughters name now and get a usufruct from her? You're both in for as long as you like then.

[johnnyk]

I'm thinking of throwing in the towel on company ownership of property and going to usufruct or superficies.

I'm not crazy about leasehold because of the 30 yr limit and I don't trust so-called 30+30 "guarantees".

My aim is to legally get more than 30 yrs so my house could either be sold or be left to my daughter for use or sale. Is there a way to achieve this through usufruct or superficies?

As far as I know, usufruct would seem to die with me and is not otherwise transferable through sale or inheritance.

Many thanks for any help you can offer.

Why don't you put it in your daughters name now and get a usufruct from her? You're both in for as long as you like then.

lanna,

I didn't entertain the thought because she is 13 years old and AFAIK she would have to be at least 18. Am I correct in assuming that 13 yrs old would not be recognized? And she is not part Thai either, if that has any bearing.

[sometime]

I'm thinking of throwing in the towel on company ownership of property and going to usufruct or superficies.

I'm not crazy about leasehold because of the 30 yr limit and I don't trust so-called 30+30 "guarantees".

My aim is to legally get more than 30 yrs so my house could either be sold or be left to my daughter for use or sale. Is there a way to achieve this through usufruct or superficies?

As far as I know, usufruct would seem to die with me and is not otherwise transferable through sale or inheritance.

Many thanks for any help you can offer.

The usufruct does not end on the usufructury death, if they have granted a lease to a third party( before the death). Upon the usufructury death, the lease then is directly between the lessee and the landlord. The land owner must honor the lease.

www.sunbeltasiagroup.com

Now i am a little confused.!!!

USUFRUCT (Sitthikepkin in Thai)

One way of getting round the Thai laws on land ownership for foreigners is to hire a Thai lawyer to draw up a usufruct. This is a legal term allowing a person the right to utilise or earn revenue from another person's property. The agreement can be for a specific period of time or until a specific event such as the death of the person granted the rights. The agreement can also be constructed such as to prevent the family or other inheritors of the property owner from being able to change it in the event that the owner dies before the person granted the right. This is legal in Thailand. A usufruct is normally valid for 30 years in Thailand and the usufruct right ceases on the death of the holder therefore it cannot be transferred (inherited) on death.

[lannarebirth]

I'm thinking of throwing in the towel on company ownership of property and going to usufruct or superficies.

I'm not crazy about leasehold because of the 30 yr limit and I don't trust so-called 30+30 "guarantees".

My aim is to legally get more than 30 yrs so my house could either be sold or be left to my daughter for use or sale. Is there a way to achieve this through usufruct or superficies?

As far as I know, usufruct would seem to die with me and is not otherwise transferable through sale or inheritance.

Many thanks for any help you can offer.

Why don't you put it in your daughters name now and get a usufruct from her? You're both in for as long as you like then.

lanna,

I didn't entertain the thought because she is 13 years old and AFAIK she would have to be at least 18. Am I correct in assuming that 13 yrs old would not be recognized? And she is not part Thai either, if that has any bearing.

It doesn't matter that she is 13, but the fact that she is not partially Thai shoots down that idea. I mistakenly assumed she was. Good Luck.

edit: Or you could get a usufruct in your daughters name now, which should effectively give you a much longer period to control the property.

Edited February 11, 2007 by lannarebirth

[Sunbelt Asia]

I'm thinking of throwing in the towel on company ownership of property and going to usufruct or superficies.

I'm not crazy about leasehold because of the 30 yr limit and I don't trust so-called 30+30 "guarantees".

My aim is to legally get more than 30 yrs so my house could either be sold or be left to my daughter for use or sale. Is there a way to achieve this through usufruct or superficies?

As far as I know, usufruct would seem to die with me and is not otherwise transferable through sale or inheritance.

Many thanks for any help you can offer.

The usufruct does not end on the usufructury death, if they have granted a lease to a third party( before the death). Upon the usufructury death, the lease then is directly between the lessee and the landlord. The land owner must honor the lease.

www.sunbeltasiagroup.com

Now i am a little confused.!!!

USUFRUCT (Sitthikepkin in Thai)

One way of getting round the Thai laws on land ownership for foreigners is to hire a Thai lawyer to draw up a usufruct. This is a legal term allowing a person the right to utilise or earn revenue from another person's property. The agreement can be for a specific period of time or until a specific event such as the death of the person granted the rights. The agreement can also be constructed such as to prevent the family or other inheritors of the property owner from being able to change it in the event that the owner dies before the person granted the right. This is legal in Thailand. A usufruct is normally valid for 30 years in Thailand and the usufruct right ceases on the death of the holder therefore it cannot be transferred (inherited) on death.

Supreme court judgment 2297/1998; 'the lessor does not have to be the owner of the property. Therefore the usefructuary can rent out the land. Although in the event of death of the usefructuary within the lease term, only the usufruct will be terminated but not also the lease'.

Also in the civil commercial code, the usufruct is not limited to 30 years, it can be the lifetime of the usufructuary. We have registered many for the lifetime at the Land Dept. This is in the foreigners name on the title deed.

www.sunbeltasiagroup.com

[Sunbelt Asia]

It doesn't matter that she is 13, but the fact that she is not partially Thai shoots down that idea. I mistakenly assumed she was. Good Luck.

edit: Or you could get a usufruct in your daughters name now, which should effectively give you a much longer period to control the property.

Depends on the Land Dept, but very rarely would they let a daughter enter into a 30 year lease. As this is an obligation to pay rent.

On a Usufruct, depends on the Land Office, but most times they will allow a minor to be the usufructary, if no benefit changes hands.( No money commitment ) Nothing can be done with the land until she turns 20 years old. (Without a Court Order)

www.sunbeltasiagroup.com

[johnnyk]

Would that mean she could obtain a lifetime usufruct at age 18 for example?

[lannarebirth]

Would that mean she could obtain a lifetime usufruct at age 18 for example?

I think that's what Sunbelt was saying. Certainly at 20 and probably now depending on the particular Land Office. At 20 (regardless of whether or not she becomes the usufuctory now or then) she could then offer you a 30 year lease (if you think you need one).

[Mobi]

Just to advise that I am holding a lifetime usufruct on 'my ex' ( now wife's) property in Pattaya. The usufruct is registered on the Chanod.

It is at least possible that in the next few years, the government of the day may agree to extend the legal period of leases - maybe to 50 years or more. If this is so, by granting a long lease to your offspring in your old age will extend the period in which they can enjoy possession of the property. Even 30 years is better than nothing.

Edited February 11, 2007 by Mobi D'Ark

[Arkady]

Also in the civil commercial code, the usufruct is not limited to 30 years, it can be the lifetime of the usufructuary. We have registered many for the lifetime at the Land Dept. This is in the foreigners name on the title deed.

www.sunbeltasiagroup.com

This seems a good solution for many but, if it is easy to do, I am surprised that developers are not aggressively advertising "lifetime ownership" of villas using this method. What happens if the owner of the land dies, goes bankrupt or sells the land? Can foreign couples jointly own the usufruct for as long as one of them survives? If a foreigner signs a lifetime usufruct agreement with his Thai wife who owns the land, does she get half of the usufruct agreement in the event of a divorce, meaning the foreigner would have to move out of his house anyway?

[Sunbelt Asia]

Would that mean she could obtain a lifetime usufruct at age 18 for example?

She can accept to be a usefructuary( no benefit to be paid). She cannot grant or transfer a usufruct or grant a lease without a court order.( until she is 20 years old)

www.sunbeltasiagroup.com

[Sunbelt Asia]

What happens if the owner of the land dies, goes bankrupt or sells the land?

Whoever inherits or acquires the land has to honor the servitude of the usufruct.

Can foreign couples jointly own the usufruct for as long as one of them survives?

Yes.

If a foreigner signs a lifetime usufruct agreement with his Thai wife who owns the land, does she get half of the usufruct agreement in the event of a divorce, meaning the foreigner would have to move out of his house anyway?

Family law and land law codes are different. As this servitude was granted and registered at the Land Dept. by her to her husband. They should follow the Land Code where she already granted the servitude during the marriage.

We also are not aware of any case that a court has awarded the ex-wife, 50% interest in the usufruct agreement (when she owns the land 100% anyway) on the basis it was an unfair agreement or she was not of a rational mind when she granted the right. We still strongly advocate that a Statement in Support of the Usufruct Contract is issued and is in Thai. Independent Council should go over it point by point so the wife cannot claim she did not know what she was doing. Also a benefit should be given to her so she cannot claim it was an unfair agreement.

www.sunbeltasiagroup.com

[JohnC]

So what would be the cost to transfer a 1mil baht company to a usfruct and are there any ongoing annual cost like paying "nominal rent" and the owner of the land ( my partner) paying tax on that income?

[Sunbelt Asia]

So what would be the cost to transfer a 1mil baht company to a usfruct and are there any ongoing annual cost like paying "nominal rent" and the owner of the land ( my partner) paying tax on that income?

Most Land Offices will allow no annual benefit needed to be paid for the usufruct, just a one time payment for the servitude.

You would have the Land transfer tax, Specific Business Tax, Stamp Duties from the company to the Buyer ( Approximate 6 % of the Sales Price)

You would also have the registration tax of the Usufruct. (1% of the total benefit)

Our professional fee for the Usufruct is 9,500 Baht.

Registration at the Land Dept is 8,500 Baht.

www.sunbeltasiagroup.com

[JohnC]

You would have the Land transfer tax, Specific Business Tax, Stamp Duties from the company to the Buyer ( Approximate 6 % of the Sales Price)

You would also have the registration tax of the Usufruct. (1% of the total benefit)

Our professional fee for the Usufruct is 9,500 Baht.

Registration at the Land Dept is 8,500 Baht.

OMG If I understnad these figures correctly, that means for a 1mil baht compnay I would pay 60,000 baht as 6% of the sale price, 10,000 baht as 1% of the benefit plus 9500 baht professional fees plus registration of 8,500 a total of 88,000 baht! plus of course any one time payment for the servitude! Seems a very very expensive bit of legal work. I just pray someone buys my house first!!

[Naam]

Our professional fee for the Usufruct is 9,500 Baht.

Registration at the Land Dept is 8,500 Baht.

www.sunbeltasiagroup.com

*****

sounds peanuts to me when comparing what european lawyers/notaries charge for similar services.

my questions for sunbeltasia are:

-can a usufruct structure have TWO beneficiaries (e.g. a married couple, both foreigners and if 'yes' is the legal structure still valid if one of the beneficiaries dies)?

-is ist a difficult procedure to separate land and building when both are in the name of a company?

Edited February 13, 2007 by Dr. Naam

[lannarebirth]

Our professional fee for the Usufruct is 9,500 Baht.

Registration at the Land Dept is 8,500 Baht.

www.sunbeltasiagroup.com

*****

sounds peanuts to me when comparing what european lawyers/notaries charge for similar services.

my questions for sunbeltasia are:

-can a usufruct structure have TWO beneficiaries (e.g. a married couple, both foreigners and if 'yes' is the legal structure still valid if one of the beneficiaries dies)?

-is ist a difficult procedure to separate land and building when both are in the name of a company?

Hi Dr. Naam,

I hope you had a nice time in Brazil. If you scroll back a page you'll see SunbeltAsia answers your question, in the affirmative, in post #15.

[Arkady]

-is ist a difficult procedure to separate land and building when both are in the name of a company?

All the references to having a separate deed for a building seem to deal with registering a newly built house (with proper construction permit). Normally existence of the new building would be registered on the title deed anyway but in such a case you apply for a separate deed for the building. Theoretically it should be possible to create a new deed for an existing house which the company will then sell, just like when a developer divides up a plot of land and sells it. But I don't know, if the Land Dept will do it in practice. Another caveat is that the act of subdividing and selling a part of the property might put the company in Annex 1 as a developer. Last year's mysterious letter to Land offices specifically referred to foreigners buying land ostensibly for the company headquarters and then subdividing and selling it.

[Naam]

"I hope you had a nice time in Brazil. If you scroll back a page you'll see SunbeltAsia answers your question, in the affirmative, in post #15."

*****

BIG thanks! i missed that. still travelling, not in Brazil but in the Emirates where i have only intermittent access to internet.

[Naam]

-is ist a difficult procedure to separate land and building when both are in the name of a company?

All the references to having a separate deed for a building seem to deal with registering a newly built house (with proper construction permit). Normally existence of the new building would be registered on the title deed anyway but in such a case you apply for a separate deed for the building. Theoretically it should be possible to create a new deed for an existing house which the company will then sell, just like when a developer divides up a plot of land and sells it. But I don't know, if the Land Dept will do it in practice. Another caveat is that the act of subdividing and selling a part of the property might put the company in Annex 1 as a developer. Last year's mysterious letter to Land offices specifically referred to foreigners buying land ostensibly for the company headquarters and then subdividing and selling it.

i am aware that it might be a difficult and of course a costly procedure. however we are not talking of subdividing land but only separate land from the building. anyway, this is definitely a case which only experts like sunbeltasia can evaluate and perhaps provide a solution. i will contact them when back in thailand.

[Naam]

I am in the same boat, it doesn’t look like companies are going to work anymore. there was an article in the Bangkok post today where many western countries are writing to the Thai government asking them to reconsider these next set of rules for companies.

I have been considering the 30 year lease route with a clause in it that at any time during the lease I can transfer it to some other ownership depending on Thai. laws at the time. I also want to own the improvements and do some kind of mortgage in favor of myself. I don’t know if this is possible but I am checking with a lawyer Monday and will let you know. Any help or any clauses that should be in a lease of this sort would be appreciated.

Jimmy

Jimmy,

i'll be back in Thailand this weekend. call me and let's have another brainstorming with the help of a bottle of Sherry.

[Old Man River]

Why don't you put it in your daughters name now and get a usufruct from her? You're both in for as long as you like then.

Lannarebirth, have you done this? I was looking into it, but was told that if the wife deeded her property over to our child, the child then couldn't do anything relating to the property without the court being involved (since she is a minor).

[lannarebirth]

Why don't you put it in your daughters name now and get a usufruct from her? You're both in for as long as you like then.

Lannarebirth, have you done this? I was looking into it, but was told that if the wife deeded her property over to our child, the child then couldn't do anything relating to the property without the court being involved (since she is a minor).

Yes, that is what SunbeltAsia said. You can deed it your daughter at any age (for most Land offices), but she can not enter into any leases/usufructs till she reaches the age of majority in Thailand (20) without court approval.

[Sunbelt Asia]

Our professional fee for the Usufruct is 9,500 Baht.

Registration at the Land Dept is 8,500 Baht.

www.sunbeltasiagroup.com

*****

sounds peanuts to me when comparing what european lawyers/notaries charge for similar services.

Thank you for your comments. One thing we did in the industry was lower prices dramatically for legal fees.

Even though the work is reviewed by Foreign Lawyers who are employed as advisors. The actual work is performed by Thai Licensed Lawyers so the fees should be appropriate to Thai wages for lawyers not European./ American lawyers.

This business model has been successful and has not lower the quality of work versus an International firm with higher rates.

-can a usufruct structure have TWO beneficiaries (e.g. a married couple, both foreigners and if 'yes' is the legal structure still valid if one of the beneficiaries dies)?

Yes and yes.

-is ist a difficult procedure to separate land and building when both are in the name of a company?

In order to register your house under a different name from the land ownership (e.g. land owned by a company and house owned by you), things would be much simpler if the house is brand new and was never recorded at the land office (i.e. the seller sells a Thai national the land and there is no record that there was ever any structure on the land). After the land was transferred (empty land – according to the Land Office), the foreigner can then apply for a house registration number at the District Office (also known as Amphur), by providing the following documents:

1. Building permit (approved)

2. Building/housing plan

3. Location map

4. Copy of ID card and house registration of the applicant (copy of passport – in the case of a foreigner)

The process of applying/requesting for a house registration number would take seven days after the approval has been granted.

In order to obtain the building permit, you are required to apply at the Building and Construction Division, at the Land Office. You will need to show the usufruct or lease.

If the house has already been recorded then it would be difficult to separate the house and land as the two items have been combined into one purchase. In terms of difficulties, the Land Office would try their best to avoid registering the ownership of the two items separately as they would foresee that the Thai is trying to avoid paying taxes. ( as it cannot be registered at the same time and the value of the property would be lower)

In the Seller wanted to transfer the house and land separately to different people. On the land (alone) issue, there would be no need to advertise for this potential transfer in the newspaper, but if the Seller wanted to transfer only the house or any structural building to another individual, then they are required to advertise for 30 days the transfer of the house (Anybody that has a claim against this structure, can come forth) in the local newspaper, and get clearance from the Government sector that is responsible for that area (this could be the Village Headman, Sub-District Chief, Head of Sub-District Management Committee, District Office etcetera).

www.sunbeltasiagroup.com

[Arkady]

So what would be the cost to transfer a 1mil baht company to a usfruct and are there any ongoing annual cost like paying "nominal rent" and the owner of the land ( my partner) paying tax on that income?

Most Land Offices will allow no annual benefit needed to be paid for the usufruct, just a one time payment for the servitude.

You would have the Land transfer tax, Specific Business Tax, Stamp Duties from the company to the Buyer ( Approximate 6 % of the Sales Price)

You would also have the registration tax of the Usufruct. (1% of the total benefit)

Our professional fee for the Usufruct is 9,500 Baht.

Registration at the Land Dept is 8,500 Baht.

www.sunbeltasiagroup.com

How much would be a reasonable price to pay the new owner as the one time payment for the lifetime usufruct relative to the appraised value of the property? I mean this from the point of view both of what the Lands Dept will accept for its 1% tax and what this should be so it is harder to argue after the event that it was an unfair contract the new owner was forced into without understanding it. I assume that this amount should be paid to the owner and receipted too, even if it goes back to the farang immediately afterwards.

[Naam]

Our professional fee for the Usufruct is 9,500 Baht.

Registration at the Land Dept is 8,500 Baht.

www.sunbeltasiagroup.com

*****

sounds peanuts to me when comparing what european lawyers/notaries charge for similar services.

Thank you for your comments. One thing we did in the industry was lower prices dramatically for legal fees.

Even though the work is reviewed by Foreign Lawyers who are employed as advisors. The actual work is performed by Thai Licensed Lawyers so the fees should be appropriate to Thai wages for lawyers not European./ American lawyers.

Sunbelt, i don't agree with your latter statement BUT ARGUE IN YOUR FAVOUR! several years ago when we still owned immobile property in Germany and the United States we made simple wills. the will for our property in Germany consisted of a few sentences covering half an A4 page typed by a secretary (most probably copying a few paragraphs from a word processor and printing it out) but left the value open to be added just before signing. the notary (an old friend of mine) asked me what value he should insert and i told him the estimated market value of our property. he then smiled and asked "i mentioned to you some time ago that i am planning to buy a new Harley. are you really willing to pay half for it?" after a minute of being puzzled i remembered that german lawyers and notaries are required by law to charge their fees (plus value added tax of 16% at that time) according to the value mentioned in contracts , wills, etc.; so i smiled back and told him to reduce the value down to 20%. total cost was still several thousand Deutsch Marks for a maximum of 10 minutes work.

a similar procedure in the U.S. with an hour or so listening to boring legal advice and signing the next day a document consisting of a dozen pages we paid the princely sum of 175.- US-Dollars.

[Naam]

"In order to register your house under a different name from the land ownership (e.g. land owned by a company and house owned by you), things would be much simpler if the house is brand new and was never recorded at the land office (i.e. the seller sells a Thai national the land and there is no record that there was ever any structure on the land). After the land was transferred (empty land – according to the Land Office), the foreigner can then apply for a house registration number at the District Office (also known as Amphur), by providing the following documents:

1. Building permit (approved)

2. Building/housing plan

3. Location map

4. Copy of ID card and house registration of the applicant (copy of passport – in the case of a foreigner)"

*****

quite confusing. to the best of my knowledge my 6 months old house was never recorded/registered in the land office. for whatever strange reasons i received the "blue book" shortly after buying the land through my company BEFORE construction started. my builder thought i was joking till i showed him the document. nobody ever told me that the building has to be recorded too.

anyway, i will contact you personally as soon as possible to obtain legal advice. the only question remains whether your services are rendered in BKK only or in "remote" areas like Pattaya too. i recall that your offices are located in BKK. do i need an appointment? can you advice me by PM or e-mail what documents i have to prepare for that appointment?