Can a non-Thai hold a mortgage over Thai property?

[Badger18]

Does the rule against owning land also prevent you from holding a mortgage (e.g. I lend money to a Thai so she can buy a house, and take a mortgage over the house much like a bank would).

[Kenny202]

A lawyer here told me you could and thought a better option than a Usefruct lease arrangement. He said it works very simply. Should you split up with the woman you simply call in the debt...she wont be able to pay of course, has to vacate and the property has to be sold. Obviously a lot more fine print than that. Only issue is if the property is in a village or somewhere may be difficult if not impossible to sell. I wanted a mortgage and Usefruct but was told it is not possible.

[Onerak]

You can negotiate with a builder for new condo on mortgage for 0%. But basically it is a payment plan over three years. I was offered  a few in Pattaya before covid. Three years payment plan and you move in after paying the first payment. No interest. 

[jvs]

Let the Thai person get a mortgage but you promise to pay for it.

If things go wrong,you just go.

 

[Regyai]

2 hours ago, Onerak said:

You can negotiate with a builder for new condo on mortgage for 0%. But basically it is a payment plan over three years. I was offered  a few in Pattaya before covid. Three years payment plan and you move in after paying the first payment. No interest. 

 

1 hour ago, jvs said:

Let the Thai person get a mortgage but you promise to pay for it.

If things go wrong,you just go.

 

Hes askng about becoming a mortgagee not the mortgagor

[timendres]

Thai law does not prevent you from lending money to a Thai national. Said loan could be "secured" by the property being purchased by the Thai national. That said, you are not allowed to own the property as a result of a "default". There are examples of foreigners acquiring a property, typically through the death of a spouse, in which case they are allowed one year to sell the property. So, possibly, the same rule would apply to a property you acquired through a default. Ergo, the contract would need to very clearly define the process under which a default would be secured by the property. For example, a default would require the sale of the property, and the proceeds of the sale would be used to fulfill the outstanding balance. I would not even consider attempting this without an experienced lawyer drafting the contract.

 

There is some interesting reading on this topic (not precisely your case, but covering a lot of overlapping ground) here:

https://resourcehub.bakermckenzie.com/en/resources/asia-pacific-guide-to-lending-and-taking-security/asia-pacific/thailand/topics/when-considering-whether-to-lend

 

Honestly, unless you are exceptionally wealthy, and consider this money "pocket change" you are willing to toss on the ground, or you are a masochist who loves pain and drama, you would be a fool to enter into any such agreement.

[Kenny202]

7 hours ago, timendres said:

Honestly, unless you are exceptionally wealthy, and consider this money "pocket change" you are willing to toss on the ground, or you are a masochist who loves pain and drama, you would be a fool to enter into any such agreement.

Yes...after living here nearly 10 years tend to agree.... hopefully without sounding too negative. Not sure on how long you have known the woman for but if it's under a year or two much better renting. Rent here is ridiculously cheap, nearly to the point of making it a better proposition for an older person living here. And another word to the wise avoid living in her local area or to close to the family if you can. Too many skeletons, old boyfriends, access to gambling and other issues. Try and be guided by common sense and what you would do back home in a relationship. These women will try to bamboozle you into buying a house after knowing them for a few months, and it all sounds great and we pass it off as culture etc but for many a major mistake they made early on coming here to live and one they regret financially for the rest of their lives. If you are reasonably new here, rent....in your name, at least at first and get the lay of the land. See how she is going to go long term. Some can keep up the "honeymoon period" doting wife thing for a good while. Also bare in mind just having a mortgage doesn't cover everything. For example you are living together and all your possessions are in "her" home. You might have 500k-1 mill baht just in your general stuff, furniture etc. And as I said previously having a clause where you can sell the home is all well and good, and an incentive to her to behave herself....but actually selling it if it hits the fan could be another matter. These women will make all sorts of requests / demands. In the end it's all a try on. they will sulk...pout etc but if you are not sure rent. In your name. Then your home is YOUR kingdom.  

[soisanuk]

Notwithstanding the posts about you shouldn't do it, as said you can loan the money for the land/house and hold the mortgage which will be registered at the land office and shown on the title (Chanote). 

But, another factor to consider if by chance you are a USA citizen/resident, the mortgage may need to be declared on a form to be submitted with your USA income tax return. This is required by the Foreign Account Tax Compliance Act (FATCA).  Whether it is depends on whether your circumstances meet certain thresholds, I.e. filing as married or single & length of stay in Thailand.  A mortgage would be considered a foreign financial asset.

 

Quote

The Foreign Account Tax Compliance Act (FATCA), which was passed as part of the HIRE Act, generally requires that foreign financial Institutions and certain other non-financial foreign entities report on the foreign assets held by their U.S. account holders . . .. The HIRE Act also contained legislation requiring U.S. persons to report, depending on the value, their foreign financial accounts and foreign assets.

Source:  https://www.irs.gov/businesses/corporations/foreign-account-tax-compliance-act-fatca

 

 

[jvs]

10 hours ago, Regyai said:

 

Hes askng about becoming a mortgagee not the mortgagor

Yes i know,imo the best idea still.

[JBChiangRai]

You do need legal help to avoid later being accused of providing a mortgage without the necessary licence.

 

Some form of loan, secured on the property without the word mortgage comes to mind, don’t forget the interest rate must not exceed 1.25% per month (15% per year) or you’re breaking the law and can lose the principal (cautionary note to all wannabe loan sharks).

[khunPer]

19 hours ago, Badger18 said:

Does the rule against owning land also prevent you from holding a mortgage (e.g. I lend money to a Thai so she can buy a house, and take a mortgage over the house much like a bank would).

No, some lawyers actually advise to do that when foreigners "invest" in property in Land of Smiles, you can declare a loan as a servitude ...????

[LarrySR]

Loan a Thai the money and hold the chanote.

The agreement will be registered at the land office and you should be paid off when property is sold.

You can stipulate the interest rate in the contract example 5% and if you expect to be paid back, say, 3 years, you can escalate the interest to the maximum (detailed in the contract) at a certain date to encourage the lender to pay off the loan or sell the property.

[KhaoYai]

I was told by a Thai lawyer who had also passed their bar exams that it is perfectly legal for a foreigner to hold a mortgage/charge over a plot of land but it depends on whether the local land office will accept such a mortgage.  Clearly the only redress you could take in a default situation would be to force the sale of the property - you couldn't take possession.  So, in the event of a forced sale, your lawyer would probably have to come up with a method of preventing the registered owner from disappearing with the money once a sale was made.  Otherwise, on the face of it you could end up losing both your money and your security.

 

There may be some way that payment from the buyer could be requested to be made to you - not sure but yes, you can hold a mortgage/legal charge.

[LarrySR]

17 hours ago, KhaoYai said:

I was told by a Thai lawyer who had also passed their bar exams that it is perfectly legal for a foreigner to hold a mortgage/charge over a plot of land but it depends on whether the local land office will accept such a mortgage.  Clearly the only redress you could take in a default situation would be to force the sale of the property - you couldn't take possession.  So, in the event of a forced sale, your lawyer would probably have to come up with a method of preventing the registered owner from disappearing with the money once a sale was made.  Otherwise, on the face of it you could end up losing both your money and your security.

 

There may be some way that payment from the buyer could be requested to be made to you - not sure but yes, you can hold a mortgage/legal charge.

The lenders loan is registered at the Land Dept and the lender holds the Chanote. Loan should be settled at the Land Dept the day of sale.

Of course this is Thailand and anything is possible when it comes to the mafia/government.