Usufruct Contract

[windosill]

Has anyone hard of, or do you have an Usufruct Contract? We've bought a house in my wife's name and I was going to get a 30 year lease on it in my name, but our lawyer has advised against this and said an Usufruct Contract would be better. Details as follows:

"I'm glad that you contacted us and answered the questions I sent you. Why?

Because we believe a lease is NOT the best option for you.

Many law firms in Pattaya are NOT law firms. They are offering services

for a very small fee but it's not professional work. You purchased a house

and it's a major investment for you. So, I would suggest you to hire a

good law firm. On the long term, you probably want something safe and this

is why you are contacting lawyers? Am I right?

If you make a 30 years lease in Thailand, you will be required to pay a

rent to your wife and taxes to the governemnt. We suggest you to make a

USUFRUCT agreement and not a lease with your Thai wife. This can be done

for the rest of your life (not 30 years - you are still very young at

25!), you don't have to pay a rent (contrary to the lease contract) and

you won't have to pay taxes. It's much better.

We can draft you a usufruct contract and register it for 20K. We can't go

lower. Actually, we lowered our fees because your house is only 1 million

and we know that you are a teacher.

A usufruct is better for you and we can help you to do it.

Here's a small description of what is a usufruct:

-------------------------------------------------

The usufruct is a right granted by an owner of land in favor of a

usufructuary whereby the usufructuary has the right to possess, use

and enjoy the benefits of the property. The usufructuary can also have

the right of management of the property.

It is the legal right to use and derive profit or benefit from

property that belongs to another person, as long as the property is

not damaged. In many legal systems of property, buyers of property may

only purchase the usufruct of the property.

Usufruct originates from civil law, where it is a real right of

limited duration on the property of another. The holder of a usufruct,

known as the usufructuary, has the right to use and enjoy the

property, as well as the right to receive profits from the fruits of

the property. The Latin words usus and fructus refer to the rights of

use and fruit, respectively, and the English word usufruct derives

from these Latin roots. The term fruits should be understood to mean

any replenishable commodity on the property, including (among others)

actual fruits, livestock, and even rental payments derived from the

property.

Usufructuary

A usufructuary is a person or an entity who or that holds property by

usufruct.

How Usufruct Works

A usufruct may be created for your natural life or up to 30 years. You

also can lease the land to a third party which would not end when you

die. Example: You can lease out the property to a third party before

your demise as per the Supreme Court ruling 2297/1998; "the lessor

does not have to be the owner of the property". Therefore the

usufructuary can rent out the land. Although in the event of death of

the usufructuary, within the leased term, only the usufruct will be

terminated but not the lease.

This way, a thirty year lease to a third party can be granted. This

could be passed on to your children or other relative even after death

for as long as the lease was done before the demise. The owner of the

land must bring the chanote to the Land dept, to allow the lease or

transfer of the rights, if it is longer than 3 years.

With the usufruct, you are registered on the title deed. The land can

never be sold or transferred by the owner of the land until the

servitude is terminated It can only be sold provided the buyer

respects usufruct. You can also get a yellow book which is a House

Registration Certificate ( Thor. Ror 13). The usufruct would be

registered with a 1.5% tax of the value of the benefit or 50 Thb if it

were given for free."

[jackr]

Many posts on usufructs in the forum.

Sunbelt charge 18k for the drafting and registration... more for the yellow book.

[lannarebirth]

Many posts on usufructs in the forum.

Sunbelt charge 18k for the drafting and registration... more for the yellow book.

Sunbelt does usufructs, and you may also be able to get it here:

http://samuiforsale.com/Example_Contracts.htm

[Irene]

[

I always feel uncomfortable with the idea of an usufruct agreement. It is an agreement generally used for giving rights to others to take the fruits of an orchard for a number of years. I really like to know of the pros and cons on the 30-year lease against an usufruct agreement. The basic advantage of the lease is its simplicity and from my investment book, never go into a complicated contract or a contract that is against common sense.

The explanations given seem to me like an academic exercise just for an investment of 1 million baht.

I stand to be corrected.

[Old Man River]

[

I always feel uncomfortable with the idea of an usufruct agreement. It is an agreement generally used for giving rights to others to take the fruits of an orchard for a number of years. I really like to know of the pros and cons on the 30-year lease against an usufruct agreement. The basic advantage of the lease is its simplicity and from my investment book, never go into a complicated contract or a contract that is against common sense.

The explanations given seem to me like an academic exercise just for an investment of 1 million baht.

I stand to be corrected.

Irene, as mentioned, there is a whole lot of information on leases and usufructs available if you search for it on TV. From personal experience, I have not found anyone who is able to tell me that they have had a problem going the usufruct route, and I have also received high priced legal advice that the usufruct avenue is the way to go. Still, there is that innate fear that, since its use was designed for fruit orchards, some government won't some day say that they are null and void. With leases, you know you are OK, but lease payments and taxes are involved. With usufructs, you think you are OK (and you probably are), but no taxes and payments are involved and it is a lifetime deal. It comes down to what risks you are willing to take.

[lannarebirth]

[

I always feel uncomfortable with the idea of an usufruct agreement. It is an agreement generally used for giving rights to others to take the fruits of an orchard for a number of years. I really like to know of the pros and cons on the 30-year lease against an usufruct agreement. The basic advantage of the lease is its simplicity and from my investment book, never go into a complicated contract or a contract that is against common sense.

The explanations given seem to me like an academic exercise just for an investment of 1 million baht.

I stand to be corrected.

Irene, as mentioned, there is a whole lot of information on leases and usufructs available if you search for it on TV. From personal experience, I have not found anyone who is able to tell me that they have had a problem going the usufruct route, and I have also received high priced legal advice that the usufruct avenue is the way to go. Still, there is that innate fear that, since its use was designed for fruit orchards, some government won't some day say that they are null and void. With leases, you know you are OK, but lease payments and taxes are involved. With usufructs, you think you are OK (and you probably are), but no taxes and payments are involved and it is a lifetime deal. It comes down to what risks you are willing to take.

A usufruct can even exceed the life of it's holder. If you knew you were going to die next week and your usufruct was going to come to an end, you could create a 30 year lease (if that suited your estates interests) and the effective term of the servitude is extended.

[BL4u]

A usufruct is ok in Thailand, but do not expect it will protect you in a divorce or separation.

If you read the website Lannarebirth is referring to it explains in http://www.samuiforsale.com/Sale%20and%20Purchase.htm#Other it will protect you should your wife pass away, however, not in a divorce, as any agreement concluded between husband and wife, and this includes usufruct and lease, during marraige can be avoided by either of them at any time or within one year after divorce.

Section 1469 Civil and Commercial Code. Hello lawyers

[lannarebirth]

A usufruct is ok in Thailand, but do not expect it will protect you in a divorce or separation.

If you read the website Lannarebirth is referring to it explains in http://www.samuiforsale.com/Sale%20and%20Purchase.htm#Other it will protect you should your wife pass away, however, not in a divorce, as any agreement concluded between husband and wife, and this includes usufruct and lease, during marraige can be avoided by either of them at any time or within one year after divorce.

Section 1469 Civil and Commercial Code. Hello lawyers

That's interesting. So, if a husband and wife were to buy a house, the husband should get a ususfruct from the seller, and then the wife can buy the house subject to the existing usufruct. Does that seem a plausible workaround?

[windosill]

Thanks for all your comments, but I am still confused. Is it worth me getting an Usufruct or should I save my 28,000 Baht? If my wife and I were to get divorced, would I be able to keep the house?

[simon43]

Both usufructs and leases worry me! They end when the person who takes out the lease or usufruct (usually the farang husband) dies! Isn't that a great incentive for you to end up dead in a klong?

Simon

[stevejones123]

Usufructs may have referred to apple orchards in Northern Italy 2,500 years ago but they soon moved on to most kinds of goods including livestock and property, and according to Britannica particularly applied to slaves.

Check with the lawyer if the usufruct can be cancelled by divorce. I doubt it.

[donx]

Both usufructs and leases worry me! They end when the person who takes out the lease or usufruct (usually the farang husband) dies! Isn't that a great incentive for you to end up dead in a klong?

Simon

Actually 30 year leases can be willed to your heirs, so knocking you off won't be good enough. Likewise if the leasor dies his/her heirs are bound by the lease.

For my situation, I'm not interested in either a lease or usufruct. If my wife dies all her property will go to our children (that is if we get off our asses and put our wills in place). In the event of a divorce, she can keep the Thai property and I will keep the US property.

[Old Man River]

Usufructs may have referred to apple orchards in Northern Italy 2,500 years ago but they soon moved on to most kinds of goods including livestock and property, and according to Britannica particularly applied to slaves.

Steve, Thai law still refers to fruit orchards.

[windosill]

My lawyer has just told me this:

"There is one exception, for a lease OR

for a usufruct, when a contract is made between spouses while married,

this contract can be void by the court at the demand of a spouse. (section

1469)

Can be void while married or when you divorce.

But I've never seen one case using this clause. People don't know about

this clause and nobody will tell you because they want you to do business

with you. I will show it to you when we will meet."

So what is the point of having an usufruct or a lease?

[dsfbrit]

Thanks for all your comments, but I am still confused. Is it worth me getting an Usufruct or should I save my 28,000 Baht? If my wife and I were to get divorced, would I be able to keep the house?

The trouble is you are looking for an 'answer' that you would be able to get in England (say). You will not get that I am afraid, you will just get a set of options - none of them will really make you feel 100% happy - it is just a compromise. I have a house and land and bought them via the company route. I did this becasue I wanted to 'own' the land - which we farang cannot legally do in Thailand. You can follow this route - which I advise you not to do or you can choose one of the following legal options.

1. Usufruct - its yours for life, but this has NOT been tested in the Supreme Court and on divorce could be contested and you may lose (unlikely scenario in my opinion).

2. 30 year lease registered at the Land Registry - this HAS been tested in the Supreme Court and you would be OK if divorced. You can have another 30 years lease on top of this, but this is an informal arrangement that has NOT been tested in the Supreme Court.

The only ownership I would recommend in Thailand is to buy a condo in your own name - but you have bought a house and land - hey I like the house and land thing as well, so know why you have done this.

I am afraid it is now your decision if you want to spend the 28K baht - in your position I would do this as you are only 25 and the 30 year lease option is only valid until you are 55 -good luck

Edited August 29, 2007 by dsfbrit

[BL4u]

Thanks for all your comments, but I am still confused. Is it worth me getting an Usufruct or should I save my 28,000 Baht? If my wife and I were to get divorced, would I be able to keep the house?

The trouble is you are looking for an 'answer' that you would be able to get in England (say). You will not get that I am afraid, you will just get a set of options - none of them will really make you feel 100% happy - it is just a compromise. I have a house and land and bought them via the company route. I did this becasue I wanted to 'own' the land - which we farang cannot legally do in Thailand. You can follow this route - which I advise you not to do or you can choose one of the following legal options.

1. Usufruct - its yours for life, but this has NOT been tested in the Supreme Court and on divorce could be contested and you may lose (unlikely scenario in my opinion).

2. 30 year lease registered at the Land Registry - this HAS been tested in the Supreme Court and you would be OK if divorced. You can have another 30 years lease on top of this, but this is an informal arrangement that has NOT been tested in the Supreme Court.

The only ownership I would recommend in Thailand is to buy a condo in your own name - but you have bought a house and land - hey I like the house and land thing as well, so know why you have done this.

I am afraid it is now your decision if you want to spend the 28K baht - in your position I would do this as you are only 25 and the 30 year lease option is only valid until you are 55 -good luck

Sorry dsfbrit, it has nothing to do with tested in Court or not. For you I would say be happy with your company ownership as no one has had any problems untill now (take a usufruct or lease from your company if things get worse and dissolve the thing.) For the ones who have dissolved their company on thier lawyers advice and transferred the property to their wife, thinking they are protected for life with a usufruct or lease, I would say go after your lawyer, because his advice was ####.

The advice gdnuttal got from his lawyer is correct and I have 4 other lawyers who told me the same.

Lease or usufruct offers no protection in a divorce, or at any time during marriage when your wife changes her mind. It's hers

Most lawyers are not aware of this section 1469 in the civil and commercial code, but it is there.

Lannarebirth suggestions to take a usufruct prior to the transfer to your wife is good advice.

[dsfbrit]

Sorry dsfbrit, it has nothing to do with tested in Court or not. For you I would say be happy with your company ownership as no one has had any problems untill now (take a usufruct or lease from your company if things get worse and dissolve the thing.) For the ones who have dissolved their company on thier lawyers advice and transferred the property to their wife, thinking they are protected for life with a usufruct or lease, I would say go after your lawyer, because his advice was ####.

I could not agree more. It is what I have decided to do. Its the best of a bad bunch of options - and who knows - one day we wicked farangs who want to own a bit of land in the LOS may even be permitted to do so

[jackr]

Sorry dsfbrit, it has nothing to do with tested in Court or not. For you I would say be happy with your company ownership as no one has had any problems untill now (take a usufruct or lease from your company if things get worse and dissolve the thing.) For the ones who have dissolved their company on thier lawyers advice and transferred the property to their wife, thinking they are protected for life with a usufruct or lease, I would say go after your lawyer, because his advice was ####.

I could not agree more. It is what I have decided to do. Its the best of a bad bunch of options - and who knows - one day we wicked farangs who want to own a bit of land in the LOS may even be permitted to do so

Hope so but fear it'll probably be even tighter for us going by the current regime

[BL4u]

Why do we not get any responses from our legal eagles forum sponser who have been promoting the usufruct in previous posts. Are they afraid to loose face? Get burned, or do they admit they are just good in setting up front companies but do not know much about Thai law

[dsfbrit]

Sorry dsfbrit, it has nothing to do with tested in Court or not. For you I would say be happy with your company ownership as no one has had any problems untill now (take a usufruct or lease from your company if things get worse and dissolve the thing.) For the ones who have dissolved their company on thier lawyers advice and transferred the property to their wife, thinking they are protected for life with a usufruct or lease, I would say go after your lawyer, because his advice was ####.

I could not agree more. It is what I have decided to do. Its the best of a bad bunch of options - and who knows - one day we wicked farangs who want to own a bit of land in the LOS may even be permitted to do so

Hope so but fear it'll probably be even tighter for us going by the current regime

Cheer Up jackr - this regime will be gone soon and there will be a shiny new version in the New Year. Bear in mind, there has not been a single legal case against any farang with a 'dodgy' company. This regime could have come after us at any time without any need for the revised FBA - there is no hard evidence there is any real 'will' to do this now, nor in the future either. There are always people who will say 'but they may in the future'. What do they know ?.

The only thing that is certain is death and taxes...

[dsfbrit]

Why do we not get any responses from our legal eagles forum sponser who have been promoting the usufruct in previous posts. Are they afraid to loose face? Get burned, or do they admit they are just good in setting up front companies but do not know much about Thai law

Are Sunbelt now running down their operation in Thailand? They used to be quite active on this forum and the Visa forum, I dont see much from them now.

Yesterday, I also went to find their office in Pattaya, for future reference should I need them. I happened to be in the area for another reason, so I went upstairs to the 2nd floor of the building next to the Dolphin roundabout. It was all shuttered-up. This was at about 11.30 am - so I would have thought it would have been open. Downstairs there are several law firms - these were all open and quite busy.

[BL4u]

Why do we not get any responses from our legal eagles forum sponser who have been promoting the usufruct in previous posts. Are they afraid to loose face? Get burned, or do they admit they are just good in setting up front companies but do not know much about Thai law

I want this fight

[harrymand]

Thanks for all your comments, but I am still confused. Is it worth me getting an Usufruct or should I save my 28,000 Baht? If my wife and I were to get divorced, would I be able to keep the house?

The trouble is you are looking for an 'answer' that you would be able to get in England (say). You will not get that I am afraid, you will just get a set of options - none of them will really make you feel 100% happy - it is just a compromise. I have a house and land and bought them via the company route. I did this becasue I wanted to 'own' the land - which we farang cannot legally do in Thailand. You can follow this route - which I advise you not to do or you can choose one of the following legal options.

1. Usufruct - its yours for life, but this has NOT been tested in the Supreme Court and on divorce could be contested and you may lose (unlikely scenario in my opinion).

2. 30 year lease registered at the Land Registry - this HAS been tested in the Supreme Court and you would be OK if divorced. You can have another 30 years lease on top of this, but this is an informal arrangement that has NOT been tested in the Supreme Court.

The only ownership I would recommend in Thailand is to buy a condo in your own name - but you have bought a house and land - hey I like the house and land thing as well, so know why you have done this.

I am afraid it is now your decision if you want to spend the 28K baht - in your position I would do this as you are only 25 and the 30 year lease option is only valid until you are 55 -good luck

Sorry dsfbrit, it has nothing to do with tested in Court or not. For you I would say be happy with your company ownership as no one has had any problems untill now (take a usufruct or lease from your company if things get worse and dissolve the thing.) For the ones who have dissolved their company on thier lawyers advice and transferred the property to their wife, thinking they are protected for life with a usufruct or lease, I would say go after your lawyer, because his advice was ####.

The advice gdnuttal got from his lawyer is correct and I have 4 other lawyers who told me the same.

Lease or usufruct offers no protection in a divorce, or at any time during marriage when your wife changes her mind. It's hers

Most lawyers are not aware of this section 1469 in the civil and commercial code, but it is there.

Lannarebirth suggestions to take a usufruct prior to the transfer to your wife is good advice.

I have also problem decide what to go for. The lease or usufruct. Do you need to be married to be more safe? No married, no divorce, Right? Where ever I looks in to the forum regarding this, it never say anything what non- married couple can do. ( The money I save from paying sin-sod, I can put in the house)!

harrymand

[SiamLegalinPattaya]

I'm not from Sunbelt but from Siam Legal. We are fully aware that nothing is safe 100% for land ownership by foreigners in Thailand.

I believe the advice this gentleman received is 100% true. This lawyer was aware of 1469... he must be very good? Who is he?

Maybe he gave this legal advice with other information that was not published and had all the reasons to believe it was the best option in this case, even if not 100% safe.

[BL4u]

Why do we not get any responses from our legal eagles forum sponser who have been promoting the usufruct in previous posts. Are they afraid to loose face? Get burned, or do they admit they are just good in setting up front companies but do not know much about Thai law

I want this fight

I'm just joking in my previous post. I will give some aternatives myself:

'It depends, if the usufruct given out of a moral duty, then it is a gift and therefore section 1469 does not apply. And in practise this won't lead to problems as both the usufruct and the land gift to the Thai spouse are subject to the same rules and could be revoked on the same grounds. Is the Thai spouse able to revoke her gift the foreign spouse has the same rights to revoke his land gift. There are other reasons to void a gift however in practise it depends on several factors'.

If you do not know what you are talking about (most don't) you could always give the standard answers: 'This has not been tested in Court', or 'You are protected to the fullest extent possible under Thai law', or 'Not if set up correctly'

[BL4u]

You're funny. First, you defend yourself by saying you were joking.

Why should I defend myself? Am I attacked, did I break the forum rules, do I need to defend myself?

Yes, I was hoping on a response, but no one took then challenge

[BL4u]

BLfor4, any decisions or arguments to support that a gift doesn't apply to 1469?

I believe the moral obligation has nothing to do with it. I understand that a gratuitous obligations is not binding Courts in most civil law jurisdiction. However, a gift is a unilateral contract. Here, a usufruct is not unilateral but I'm no specialist of Thai law.

Sebastian

It is not my opinion, just an alternative or suggested opinion. That's the nice thing about law, you can look at it from different angles.

My opinion: Section 521 CCC says 'a gift is a contract', thus section 1469 applies.