Lending money to a Thai

[BenDeCosta]

18 minutes ago, Airalee said:

฿1500 is a cheap price to find out someone’s true nature.

 

Money well spent.

 

Agree 100% with this sentiment. For the low price of $48 you have found out that your friend is a complete scumbag.

[khunPer]

15 hours ago, RobMuir said:

I am after factual information specificly about these two procedures, not about lending Thais unsecured loans which I won't be doing.

I don't know the difference about the two mentioned methods, but I know, that the only secure way to lent money out with land as guarantee is that the land has a high title deed, not lower than nor sor 3 or chanote, the latter preferred, and that the loan is registered as a servitude on the back of the title deed in a land office, just like registering a mortgage.

 

You will need a court order to get access of your rights, i.e. access to the property, in case of default. A court case about property and defaulted loan can be costly, and take long time (I talk from experience).

 

Any other methods I will recommend you to abstain from, in worst case scenario you can loose all your money.

[Leaver]

15 hours ago, Tagged said:

Jumnong is when you get to keep the paper of the land until she pays, kaifaak is when land paper is transfered to you, but she can buy back. Thats what my gf says. 

 

What kind of land title she have. 

 

 

 

Given a farang can't own land here, that puts her in the box seat, despite defaulting on the loan.  

 

There's no guarantee she even owns the land.  So many fake titles floating around.  

[khunPer]

14 hours ago, RobMuir said:

I will only lend it against a clean land title on the smaller resort at the land office. And I believe if I jumnong her I have to go to court to take her resort, whereas if I kaifaag it I simply just kick her out and can legally sell it straight away. That actually is my main question here.

It sounds like "kaifaag" includes a blank power of attorney to transfer the property to another owner in a land office, whilst jumnong is the normal kind of servitude, and later court order in case of default.

 

I'm not sure how strong a "blank" power of attorney is, when it comes to legal rights, and someone might make objection. I know about cases where it didn't work.

[RobMuir]

4 hours ago, jackdd said:

Would it be possible to do something like ขายฟาก but with a usufruct?

You get a usufruct for 30 years for lending her the money, once she pays it back you cancel the usufruct.

In case she doesn't pay you back she can't use her land for the next 30 years, and with 80 rai and a resort for 30 years you can probably earn more than just 2 million.

I like your thinking Jack, but the way to do it for me will be through another trusted Thai. 

 

I hope she pays it back otherwise I will be selling her resort. I would get more dividing it up into smaller blocks and selling it. 

 

I couldn't be bothered running it. The rooms only cover about 4 Rai. 

[Leaver]

11 minutes ago, RobMuir said:

the way to do it for me will be through another trusted Thai. 

 

What could possibly go wrong, with all these "trusted" Thai's?  ????

 

12 minutes ago, RobMuir said:

hope she pays it back otherwise I will be selling her resort.

 

Really?  Who will you be selling it to, and for how much, and when?  

[RobMuir]

9 minutes ago, khunPer said:

It sounds like "kaifaag" includes a blank power of attorney to transfer the property to another owner in a land office, whilst jumnong is the normal kind of servitude, and later court order in case of default.

 

I'm not sure how strong a "blank" power of attorney is, when it comes to legal rights, and someone might make objection. I know about cases where it didn't work.

 

I spoke to a lawyer today.

 

The difference is with jumrong she remains the owner and I just have a lien on it. Then can be various problems.

 

Kaifaag means it gets transferred into my trusted Thais name, but the borrower has an option to buy it back until a certain date. If they don't cough up as they promised they lose the option to buy it back.

 

Good system. The lender is protected. Despite seemingly most people here not knowing about it it is very common. 

 

Can you tell me the specifics of the cases you know that didn't work? How didn't it work? Only kaifaag cases please, I know jumrong can be a stuff up as defaults go to court.

 

Really interested to hear how?

 

Thanks

 

 

[RobMuir]

6 minutes ago, Leaver said:

 

What could possibly go wrong, with all these "trusted" Thai's?  ????

 

 

Really?  Who will you be selling it to, and for how much, and when? 

 

A year after if she renegs.

Which will definately happen according to the consensus here.

 

 

The kaifaag agreement gives her the right to buy it back for a year after the payback date. 

 

At least 80 million. 

 

Highest bidder.

[RobMuir]

27 minutes ago, Leaver said:

There's no guarantee she even owns the land.  So many fake titles floating around.  

 

 

You think she has been squatting there for the last 26 years. Built a resort, a large house for herself husband and child, a restaurant, filled it with palm trees, durian and a three storey birds nest building, employed three live in staff and hoped the real owners would never come back? 

[RobMuir]

14 hours ago, Tagged said:

I still do not understand why she do not want to take a bank loan, and sell the properties involved with the bank loan included. That is perfectly normal, or? 

Banks will only lend for three years minimum,. 

If she pays it back in three months as she is planning she will still have to pay three years interest to pay it out early and the bank fees.

[Leaver]

11 minutes ago, RobMuir said:

 

 

You think she has been squatting there for the last 26 years. Built a resort, a large house for herself husband and child, a restaurant, filled it with palm trees, durian and a three storey birds nest building, employed three live in staff and hoped the real owners would never come back? 

 

If what you say is true and correct, do you really think she needs the loan?  

[Leaver]

20 minutes ago, RobMuir said:

 

A year after if she renegs.

Which will definately happen according to the consensus here.

 

 

The kaifaag agreement gives her the right to buy it back for a year after the payback date. 

 

At least 80 million. 

 

Highest bidder.

 

Take a look around you.  It's covid time.   

 

The will be no highest bidder.  There will be no bidders at all for probably the next few years.  

 

Edited April 30, 2021 by Leaver

[RobMuir]

2 hours ago, NCC1701A said:

my friend May called me up and asked me for 1,500 baht. i transferred it to her.

 

after three years of friendship that was the last time i heard from her. 

 

i am still disappointed but i guess not really surprised. 

 

what's your friends name?

 

 

 

 

There seems to be a lot of farangs here that have lost lending money to Thais.

 

And none of them had a kaifaag agreement. 

 

You would think that a thread about how to profit from Thais not paying money back would be popular.

 

You would think that would interest many people. You would think they would want to learn how not to lose money to Thais ever again by lending them money ONLY if the sign over assets they will only get back if they and nothing less.

 

And tragically farangs will continue to lend unsecured money without a kaifaag to Thais for years to come and they won't be paid back.

 

If May had of signed over her land (kaifaag) to you, you would have got the 1500 back.

 

Next time tell her " No kaifaag then sorry, no loan" 

 

Don't be stupid, protect yourself.

[Leaver]

OP, you seem set on doing it.

 

Why post on this forum seeking some sort of acknowledgment that you have crossed your "t's" and dotted your "i's?"

 

99% of foreigners in Thailand wouldn't consider doing what you are contemplating doing, but that doesn't matter because the only person considering doing it here is you.  

 

It's like the "my girl is different" scenario.  

 

You shoot every post down that warns you against it, so just go and do it and ask the Mods to close the thread.  

[expatjustice]

@RobMuir What you haven't though of is that if at some point she is unable to pay you back, have no doubt that she has also not paid the banks back. And the banks will come for her hotel and land. 

 

And trust me, it's gonna be the banks first. 

[RobMuir]

4 hours ago, Sheryl said:

 

Indeed foreigners cannot own land, it appears OP's plan is to have the land transferred to a Thai business partner whom he trusts. Thsi of course means he is now reliant oin trust in 2 people: the woman he loans the money too and his partner.

 

30 year lease can be given but all it does is give you the right to live on or otherwise use the land. It does not enable you to sell the land so you still have no way of getting your money back. And even if you want to live on the land, in practice doing so if the landowner is hostile would be very difficult/unpleasant. All sorts of ways they could make life difficult.

 

 

 

 

That sounds like a good idea.

I knew this thread would be worthwhile!

 

The kaifaag goes in my trusted Thai friends name, and I put my name on the lease for thirty years. 

Farangs are legally allowed to get a thirty year lease.

 

We have cracked the perfect set up to protect Farang loans to Thais.

 

Brilliant.

 

I will agree to remove myself from the back of the chanote as the leasee only if she pays it back. She has to trust me.

And if she doesn't pay it back the lease would stifle any sale my trusted Thai planned if they were to become shifty. (Which won't happen, but if it did)

 

Worst case scenario is I live on a personal 80 Rai personal resort for the next 30 years for 182 baht per day, selling the palm oil, durian and birds nest.

[RobMuir]

13 minutes ago, expatjustice said:

@RobMuir What you haven't though of is that if at some point she is unable to pay you back, have no doubt that she has also not paid the banks back. And the banks will come for her hotel and land. 

 

And trust me, it's gonna be the banks first. 

 

 

They have got a bank loan against the larger resort. And they have not been servicing it which she openly admitted. They have made an agreement not to pay for two years but the bank upped their interest charge as a result.

  The family has owned the land since the 1970's and ironically the father acquired it because of unpaid debts. 

They had huts originally, but they took the loan many years ago to turn it into a three storey type resort. 

They own the bank about a third of what the land value is. I have known them since before covid hit and they never had cash flow issues.

 

Good point

 But if she owed the bank on the smaller resort title she would not be able to kaifaag it at the land office.

You can only kaifaag mortgage free land because effectively it is going in my (trusted Thai friends) name.

 

 

Edited April 30, 2021 by RobMuir

[RobMuir]

3 hours ago, connda said:

"Let no good deed go unpunished!"  <laughs>

 

As long is that deed is a......

 

 

Chanote deed. 

I wouldn't deal with anything less.

[kingofthemountain]

4 hours ago, BenDeCosta said:

I've loaned money to Thais three times, never got a single baht back. I won't ever do it again.

you are a slow learner ????

[expatjustice]

1 hour ago, RobMuir said:

Good point

 But if she owed the bank on the smaller resort title she would not be able to kaifaag it at the land office.

You can only kaifaag mortgage free land because effectively it is going in my (trusted Thai friends) name.

Yes, sure, obviously it is mortgage free land. BUT if she owes the mortgage of her larger resort + interest it’s very likely that her larger resort is not enough to cover that debt. And from what I know the bank can seize her assets until they offset that debt, even if one of her assets is in a kaifaag, the bank offsetting their debt should have preference over your kaifaag.

 

Make sure to ask your lawyer.

[jackdd]

6 hours ago, Leaver said:

OP, you seem set on doing it.

 

Why post on this forum seeking some sort of acknowledgment that you have crossed your "t's" and dotted your "i's?"

 

99% of foreigners in Thailand wouldn't consider doing what you are contemplating doing, but that doesn't matter because the only person considering doing it here is you.  

 

It's like the "my girl is different" scenario.  

 

You shoot every post down that warns you against it, so just go and do it and ask the Mods to close the thread.  

Most people here who warn him just don't understand how a "kaifaag" works though.

I don't know if there are any potential pitfalls which nobody here is aware of, but so far nobody did mention any (besides of getting cheated by the Thai in who's name he does the kaifaag).

[Airalee]

1 hour ago, jackdd said:

Most people here who warn him just don't understand how a "kaifaag" works though.

I don't know if there are any potential pitfalls which nobody here is aware of, but so far nobody did mention any (besides of getting cheated by the Thai in who's name he does the kaifaag).

So really, in the end, what he is doing is making an unsecured ฿2,000,000 loan to his “trusted Thai friend”.

 

Even better.

[Pravda]

Me too I would go with kaifaak

 

It just sounds better 

[CharlieH]

My ghast would never be so flabbered if this ends well.

[Leaver]

2 hours ago, jackdd said:

Most people here who warn him just don't understand how a "kaifaag" works though.

I don't know if there are any potential pitfalls which nobody here is aware of, but so far nobody did mention any (besides of getting cheated by the Thai in who's name he does the kaifaag).

 

As another member has said, the OP puts up all the money, yet holds zero securities against the loan in his name.

 

You wouldn't do that in your home country, so why do it in Thailand?  

[AlfHuy]

9 hours ago, RobMuir said:

Banks will only lend for three years minimum,. 

If she pays it back in three months as she is planning she will still have to pay three years interest to pay it out early and the bank fees.

I have an idea.

She needs 2Million.

 

If 1000 Thaivisa members put 2000 Baht towards this venture, problem solved.

 

You guarantee to repay each us let's say 3000baht back, otherwise you will be banned for life from TV.

[AlfHuy]

1 hour ago, Airalee said:

So really, in the end, what he is doing is making an unsecured ฿2,000,000 loan to his “trusted Thai friend”.

 

Even better.

Who... at the end is the husband of the lady, requesting the loan.

[smi11ie]

I lent 10,000 baht to my wife's brother.  I will never get it back.  Any time I give him a gift for christmas or whatever he sells it.  He is pleasant enough to socialise with but I cannot trust him.

 

A problem I have right now is my wife's farm chanot.  It is still in her dead grandfather's name.  This is very common here and results in a lot of land disputes.

 

The land was shared with his 3 daughters, one of whom is still alive.  My wife's mother is dead.  We recently got a new chanot made because my wife's Aunty gave the chanot to my wife's brother in exchange for a backhander of 20,000 baht.  He then took the chanot to an illegal money lender and borrowed as much as he could.

 

Currently my wife's uncle is attempting a land-grab as he is the oldest living decendent of the grandfather.  

 

I could go on, but here is the jist.  

 

DON'T TRUST YOUR WIFE'S THAI FAMILY WITH MONEY OR POWER IN ANY WAY.  GIVE THEM MONEY AS A GIFT IF YOU WANT BUT DON'T EXPECT ANY LOAN TO BE REPAID WITHOUT LEVERAGE.  NEVER TRUST THEM TO BE FAIR WHEN THE ARE PUT IN A LEADERSHIP/GUARDIANSHIP POSITION.

 

My wife's family are fun to socialise with but that where it ends.

Edited May 1, 2021 by smi11ie

[khunPer]

11 hours ago, RobMuir said:

 

I spoke to a lawyer today.

 

The difference is with jumrong she remains the owner and I just have a lien on it. Then can be various problems.

 

Kaifaag means it gets transferred into my trusted Thais name, but the borrower has an option to buy it back until a certain date. If they don't cough up as they promised they lose the option to buy it back.

 

Good system. The lender is protected. Despite seemingly most people here not knowing about it it is very common. 

 

Can you tell me the specifics of the cases you know that didn't work? How didn't it work? Only kaifaag cases please, I know jumrong can be a stuff up as defaults go to court.

 

Really interested to hear how?

 

Thanks

To my knowledge it's depending of the title of the deed, only high level titles, like Nor Sor 3 and Chanote, can easily be transferred, and Nor Sor 3 is not full ownership, and can be disputed within 30 days after transfer.

 

When physically transferring a land you need to pay stamps, transfer fee and tax of the highest value, which is either the land office's appraised value, or the actual sales value. However, some land offices might accept to use only their appraised value, which often is lower than a sales value and actual trading price, whilst others insists on full documentation of the sale and price; I've experienced both.

 

The transfer fee is 2 percent and stamp duty is 0.5 percent of the value of the property, whilst tax is depending of use and length of ownership. If it's business it's 3.3 percent business tax on top, but no stamp duty. You can find a property transfer fee and tax calculator HERE.

 

Doing a transfer and a sale back; fees, and stamps, and taxes will need to be paid twice; and if the ownership is a short time only business tax will apply.

 

When a high title deed with full ownership is transferred, and there are no servitudes declared, then that's it. Any agreement about buying land back within a certain time will to my knowledge be an external document, which need to be takes through the normal legal system, if not fulfilled.

 

But there might of course be things that I don't know, I've just never heard about a legal registered "kaifaag"-method as an option for high title deeds.

 

However, things like that, i.e.  "kaifaag", are often used for lower titles, typically village and farm land with numerous different deed titles. Here a transfer is often just a sales agreement in presence of the head-of-villa (Poo yai ban), who might sign as witness. The blank power of attorney is typically a part of the agreement, and the title deed is held by the lender. Sometimes the interest is paid by the lenders right to use the land for farming, or rent it out, during the agreed period; other times an interest is agreed. Interest can legally not exceed 15 percent a year (pro anno). But the problem is that the land can be difficult to legally transfer at a land office, as much low titles land cannot be sold, but can be indheritage or transferred within family only. Often many families are related in a village, and also neighboring villages, so if lender is within family it's not a problem, or lender can sell to another family related person to borrower. So the power-of-attorney might be worthless in a land office; and it also happens that the copy of the owner's ID-card is outdated, as an ID-card has a validity period, if there a long period between issuing the power-of-attorney and actually using it.

 

The lender can however still use the court to get money back based on a loan document, but lender cannot take the land. I however know a case where the court gave the borrower a new chance to pay the loan, but no interest, and if defaulted the land should be sold, which could only be to someone that it legally could be transferred to, and if nobody wished to buy, then that's it. In another case the borrower claimed the land back after the lender took possession, and if the land is not legally transferred at a land office, the borrower might well succeed, if not squatter rules apply; i.e. the lender is squatter and use the land for a certain length of period.

 

Furthermore, you need to consider if it's wise with a foreigner as lender, as a foreigner cannot claim the land. Using a trusted Thai you legally have no rights at all to the land, but could however have a loan declared as servitude, just like a mortgage. For 2 million baht you should also consider the expenses for the transaction; i.e. fees, and stamps, and taxes, and eventual lawyer fees.

[walt1]

Hope it all works out. What I find odd is that someone would risk an 80 MB unencumbered asset for 2 MB.