Everything You Wanted To Know About Usufruct Agreements In Thailand

[Razr]

> Does this work if you work overseas?

I do in fact work for an overseas employer (I telecommute), but have my salary transferred directly into my Thai bank account (have been doing so for >3 years now), which the bank was really happy to see. See below..

> What if I have a collateral piece of property (overseas)?

They are not at all interested in my assets abroad, nor my money abroad - all they care about is what I can show here in Thailand. Note that they're also not at all interested in anything other than Thai property as collatoral (i.e. cars etc mean nothing).

> What do you think of the Bangkok Bank terms I posted?

Definitely different to the story I was given, but that's not surprising either.. TiT afterall Sounds a lot more reasonable than it used to be.. It's all about what works for you in the end I guess.

[rethaired]

> Does this work if you work overseas?

I do in fact work for an overseas employer (I telecommute), but have my salary transferred directly into my Thai bank account (have been doing so for >3 years now), which the bank was really happy to see. See below..

> What if I have a collateral piece of property (overseas)?

They are not at all interested in my assets abroad, nor my money abroad - all they care about is what I can show here in Thailand. Note that they're also not at all interested in anything other than Thai property as collatoral (i.e. cars etc mean nothing).

> What do you think of the Bangkok Bank terms I posted?

Definitely different to the story I was given, but that's not surprising either.. TiT afterall Sounds a lot more reasonable than it used to be.. It's all about what works for you in the end I guess.

Thanks for the comprehensive explanation!

It makes sense that the bank would only be interested in what they can grab should anything happen, but I am surprised that a car would not be very useful, given how much of a good investment it seems to be in LOS whereas in North America, a car depreciates in an irrational manner the moment you sign the contract. I guess this leaves me with not too many choises should I want/need some collateral, a condo being an obvious item.

As far as ensuring that the information given is legitimate, I agree that can be a problem in LOS. After a few issues of the s/he-says-s/he-says type, I quickly realized that I had to change my strategy. I print everything now or ask for a print out and I look for info on the net that can be printed. Email correspondance was useful whenever there were discrepancies. I have also used my camera to take pictures of the rooms I was staying in to foil any attempt to make me pay for damages that I did not make in the first place.

I would be happy to receive the maximum terms that the Bangkok Bank offers as they seem reasonable and as I do not like to use subterfuges to protect myself, especially in a foreign country. I agree that they are trying to make things a bit more palatable now, although not being able to own any land is still strange. On the other hand, if they did not have this provision, wouldn't the prices of houses go through the roof, gobbled up by foreign investing outfits (like it seems to be the case for condos)? And how would the average Thai fair?

Could I please know what are the fees that your Thai bank charges for the salary being deposited in your bank account?

Edited March 21, 2008 by rethaired

[george25]

Hi,

thanks for the plenty of useful information about the usufruct. Something that I haven't heard of before.

I am also in the process of buying land for the Thai wife and building a house on it. I do not worry too much about divorce in the future but more looking for a suitable solution for the land/house ownership in the case she dies before me.

Here are my questions (sorry to be repeatative if they have been answered before):

1. What is the normal law of succession for her land and our house in case my Thai wife passes away (no will, no children)?

2. How do things change in 1. if there are children?

3. How do things change in 1. if I am an usufructary of the land?

Thanks.

[Razr]

Could I please know what are the fees that your Thai bank charges for the salary being deposited in your bank account?

My bank (Siam Commercial) charge 0.25% of the converted amount, with a ceiling of 500 Baht per SWIFT transfer. Sending the money from OS costs me $20 a transaction at the originating end, so for each transfer I'm looking at ~1100 Baht in fees. Then again, you do get the absolute best possible rate when transferring funds using SWIFT, so the sending & receiving costs still work out less than the costs of say doing ATM withdrawals or CC purchases.

e.g. right now the TT/SWIFT rate for the USD is 31.2 Baht, so SWIFT'ing $5000 = $4980 x 31.2 x 0.9975 = 154,987 Baht. Conversely, the ATM rate is 30.6 Baht, so $5000 = 153,000 Baht LESS your ATM fees on top of that. By SWIFT'ing your salary over here you'll not only receive more Baht, you'll also gain a big advantage with the banks when talking finance, as there's no need to investigate/question your supposed income.

The downside of course is that you can't juggle your transfers around the exchange rates, but then again, what you lose, you win - by dribbling your money across like this it all balances out in the long run IMHO.

[selftaopath]

Sorry that I can't answer all questions. But here are few comments:

Mobi: Are you in Hua Hin? This land department asks a lot for tea money… J Everywhere else, we didn't have so much problems. It can be done, register, and for almost nothing.

Khun Jean: Nothing is 100% guaranteed in Thailand (as you say!)… but usufructs is my favorite with a loan agreement and a mortgage on the loan to guarantee it….OOOOOOUPS ! I will have to write an article on that! J

But a usufruct is smoother for girlfriends.

The perfect solution for you (Khun Jean) looks like the wife is the owner (that's easy), she grants you a usufruct (also easy) and your wife gives the land to your child (will have to talk to the land department officers for that). You will pay more taxes (I believe duty stamp, .5 %) but it is possible. If a child is involved in a usufruct, giving and receiving, you normally need the approval of the Court. If a child receives land WITH a usufruct, we believe there is no problem. We already made a search on that but never applied it to a client.

Malcolminthemiddle: Yes, it happens. Officers do not know all the options and foreigners too. Some of my clients were refused a usufruct before using our services. We had problems only for 2 clients, one involving a company in Hua Hin and one involving a gay couple. The problem was resolved by giving some taxes for these 2 clients. All the others, a usufruct for free was accepted (Even today in Khon Kaen, and we are doing one in Surin tomorrow)

LivingLOS: Welcome to Thailand! Ownership is impossible for land, unless you have a Thai limited company and are willing to take this risk, or you have some special exemptions like BOI, 40 million baht investment for one rai, etc. You can have also ownership by inheritance by you have ONE YEAR to sell your property should someone gave it to you after their death. Or course, some people will tell you about freehold, even for houses. We don't do it. In your case, get some Thai partners. Be will you trust them? J

Jazzbo: this is why I don't write often on forums. Answering questions like WHY DO PEOPLE GIVE A USUFRUCT? Why do I have the right to give or receive? Why? Because it is THE LAW. Everything can be challenge but you must have arguments. You don't. Do you know that GIFTS are part on the law too? Sorry to be rude.

Hi and thanks. Your information has been extremely useful. My g/f has been communicating with the current land owner who has been communicating with the land department in Koen Kaan or Kan Koor (not sure which). He was told usufruct is not possible. Is there a particular form to fill out or is the only way to do this by hiring you as my lawyer for registration of deed and land lease? Is this a question of the land department “not knowing” or could it be something else? I remain confused, but steadfast that if no usufruct not purchase of said land – which will go into my Thai girlfriend’s name. And after? 30 years it won’t matter to much to me J

Respectfully,

Keoki and Nok

[klikster]

Wow! What a great thread. Thank you, IssanLawyers!

I'm hoping you can clarify a couple of issues. If you prefer, we can communicate by PM.

1 - Can an ufstruct be sold if the land owner agrees to it in the original contract?

2 - It appears that the usufuctry can grant a 30 year lease to a 3rd party .. but does that could result in extending the usufruct to a period of time beyong the life of the usufructry? One example might be a person age 60 who built a house, then after 15 years, decides to lease his house to the 3rd party.

3 - Can the usufuctry be a company? A foreign company? One example might be for a resort/guest-house.

Thank you very much for the time and energy you have devoted to this thread.

[Khun Jean]

i can give a go at it

1) If he still feels the same at the moment of sale yes, otherwise he will get out of that personal promise.

2) You need, actually the party who leases needs to have a signature placed on the chanot to make sure the lease is registered and thus valid. If the owner of the land is goodhearted (means stupid) he will do it otherwise (when he is smart) he will do not.

3) I would think the company owning the land freehold would be a better strategy.

[klikster]

i can give a go at it

1) If he still feels the same at the moment of sale yes, otherwise he will get out of that personal promise.

2) You need, actually the party who leases needs to have a signature placed on the chanot to make sure the lease is registered and thus valid. If the owner of the land is goodhearted (means stupid) he will do it otherwise (when he is smart) he will do not.

3) I would think the company owning the land freehold would be a better strategy.

Hello Khun Jean,

Thanks for your help.

Re # 2. Maybe Im not understanding what IssanLawyer meant in this paragraph. (my emphasis)

"A usufructuary has the right to enjoy, use and possess the land. He is acting like the real owner but can not sell or destroy the property as he is NOT the full owner. However, he can transfer his rights on the land/house to a third party. Even if the usufruct will end at the death of the usufructuary the usufructuary can lease out the land to a third party and this second agreement will NOT end when the usufructuary will die as per the Supreme Court ruling 2297/1998: "the lessor does not have to be the owner of the property"."

Re item 3. The company would not be a Thai company, but registered offshore .. possibly Hong Kong.

[jazzbo]

A few weeks back, I requested and received the following response from a Real Estate Partner at a (the most?) prominent Bangkok Law firm:

Please be informed that the Interior Ministry set up the guidelines to be followed by the land competent authorities:

If a Thai, with a lawful alien spouse, wishes to make land purchases or transfers in a like manner during marriage, and if the official inquiry reveals that the applicant, with their alien spouse, have jointly affirmed in writing that the money that is used to buy the land derives wholly from the separate property owned by the applicant, and not from the community property, the competent authorities shall proceed with the registration of legal rights in land for the applicant.

If a Thai, with a unlawful alien spouse, wishes to make land purchases or transfers in a like manner while living with their spouse, and if the official inquiry reveals that the applicant, with their alien spouse, have jointly affirmed in writing that the money that is used to buy the land

derives wholly from the personal property owned by the applicant, and not from the property jointly earned by the parties,

the competent authorities shall proceed with the registration of legal rights in land for the applicant.

When the land transfer registration to a Thai is completed, alien spouse may register lease or usufruct or superficies on the said land.

We hope the above information will be useful to you.

BTW my italics... and I add that the 'competent authority' also has discretion under Section 74 of the Land Code:

Section 74: In recording rights and legal acts by the competent authority under Section 71 , the competent authority shall have the power to interrogate the parties and summon persons concerned to give oral testimony or send relevant written evidence as may be necessary and then proceed as may be appropriate under the circumstances.

If there is reason to believe the recording of such rights and legal acts is in evasion of or

there is reason to believe the purchaser is purchasing on behalf of an alien,

instructions shall be asked of the Minister whose word shall be final.

[Khun Jean]

Accept that in Thailand there is always some 'fine print' which gives the right to kick you out.

Just hope the ones you deal with are not reading it to closely.

[MaiChai]

Issanlawyers, here is my question: I have lived in Thailand a long time and will eventually divorce my Thai wife. Lets just say we have had alot of problems over the years, mostly due to her doing things without telling me, and then me having to deal with the legal consequences (gambling, etc). Thus I don't want to put my 'Thai future' legally in the hands of another Thai, and thus want my own independence to buy some land and build a small house and do this under my own control. I have children with my wife and I am on good terms with my wife. We currently have several court cases complete and a new case by myself regarding a third party (the gambling den) trying to strip my wife of her assets (which are really mine since I provided the money). My new court case is to prove that I provided the funds for our house/car and I was not aware of my wifes actions; if we can prove this then the third party don't have the right to 100% of the assets (currently seized by the court).

I asked my lawyer if I could buy land under my childrens name (daughter is 8) and then do a usufruct to give me control of the land until I die. Then my daughter would get back control (its my intention to leave my estate to my children anyway). I would buy some land in an area where my wife's family dont reside and there are a number of farangs for friends and there are reasonable facilities (good transport, 7/11, ADSL, Big C, a national park, but still in the country; also I already have some Thai friends in this area). My lawyer called the land dept and they said that the money for buying the land would have to come from my wife and not from me. But in theory I could give the money for the land as a gift to my daughter and then it would be her money to buy the land? My concerns would be if my wife could interfere, and thus get control of the land (even if a usufruct is in place?). The concept of this is to provide an alternative family home for my children without interference or control from my wife or another Thai, which I can enjoy into my retirement. I am sure my wife would respect my wishes regarding this usufruct, but anyone can change their mind and get nasty? My lawyer advises that selling of land owned by children under legal age has to be approved by the court.

The intention is to divorce my wife once the current court cases are settled (this is my lawyers advice). My lawyers usufruct knowledge seems a little weak, hence why I am asking you.

Your advice would be much appreciated. Many thanks in advance.

[mako]

Hi All

Does anyone know where I can find info on "Usufructs" in Thai language so my wife can read and understand exactly what they are.

Thanks Barry

[Harbour]

Need a Lawyer.

Who needs one, and why?

I need a lawyer and here is the why - (I may just need a beer and a bottle of whiskey instead) Ok found some land online did the checking and confirmed everything made an agreement with the guy my wife called his everything is set for us to go look at the land and then a few days before I can get back into country he sends an email and says he is going to have to double the price. Can he do that after we had an agreement and the price is double what he advertized it at. Is thaere not a law against false advertments here. I have several emails where the price was confirmed.

[donx]

Need a Lawyer.

Who needs one, and why?

I need a lawyer and here is the why - (I may just need a beer and a bottle of whiskey instead) Ok found some land online did the checking and confirmed everything made an agreement with the guy my wife called his everything is set for us to go look at the land and then a few days before I can get back into country he sends an email and says he is going to have to double the price. Can he do that after we had an agreement and the price is double what he advertized it at. Is thaere not a law against false advertments here. I have several emails where the price was confirmed.

If no agreement was signed and no deposit provided with the agreement, then I don't think there is much to be done. I have heard this often happens. Either he believes you want the land enough to pay double or he doesn't want to sell it. Either way, without a signed agreement in place, you either agree to the new price or walk away.

My wife was fortunate that we had her brother sign an agreement and make a down payment on some land we wanted to buy. The agreement was made in April (2007) and we had until the end of June to come up with the balance and meet the seller at the land office. The day of the transfer, the seller told us he hoped we didn't show up because he had someone willing to pay 25% more for the land. Fortunately for us we had made the down payment and the sale was finalized near the end of June.

[surayu]

Hello everyones! i got a few questions that i would be very gratefull if someone can answer them, i am about to register a usufruct on a piece of land the relative of my wife are willing to give to me(free), i included a scan of the land title as i have no idea if this is a chanote or whatever else....

1) How can i make sure is registered for "life" and not just 30 years?

2) Do i have to keep this little piece of document or a new one(the yellow book?) will be produced by the Land Office just in my name? and will the relative been holding any sort of documents at all? (maybe this one)

3) If i build anything on it will i be able to rent/sell it as i wish, without any required necessary action by the owner of the land (my wifes relatives) ?

any suggestions, good or bad are appreciated, thanks in advance!

Reason for Edit: i forgot to add the scan here it is now.

Edited June 19, 2009 by surayu

[Lannatyne]

I wrote the following text in the last 24 hours after reading a thread about lease agreements.

Sorry about the grammar if it isn't perfect English and if I forgot to mention few things.

===========================================================================

Everything you wanted to know about

usufructs in Thailand.

By Sebastian H. Brousseau, LLB, B.Sc.

Attorney-at-Law (Quebec, Canada)

Managing director of Isaan Lawyers.

==========================

Isaan Lawyers has recently registered usufruct agreements in more than 15 provinces of Thailand. The following text is aimed to give you objective and accurate information about this right included in the Civil and Commercial Code of Thailand (hereafter CCCT). Don't hesitate to communicate with us by email should you have any questions or inquiries.

==========================

As you probably know, foreigners are forbidden to own land in Thailand by the Land Code. There are few rare exceptions to this rule (investment of 40 million baht, BOI approval, etc.). This is why many foreigners are looking into ways to secure a real estate investment or at least, give them the right to enjoy a property even if they are not the "full" owner. A usufruct agreement can give you this right: to possess and enjoy a property without being the full owner. And it is perfectly legal.

HISTORY

A usufruct is a real right (real means in civil law = attached to a thing) that originates from Roman law. In Roman law, the wife wasn't entering legally in the family of her husband. At the death of her husband, the wife had no rights of inheritance in the estate. To bypass this injustice, Roman law created the right of "usufruct". This usufruct was giving the widow the possibility to enjoy the asset of her husband after his death even if she wasn't an heir. The asset was normally devolved to the children at that time.

By essence, the right of usufruct is temporary and has roots in family relationships.

WHAT IS A USUFRUCT AGREEMENT

Usufruct contracts are governed by sections 1417 to 1428 of the CCCT. A usufruct is a right granted by the owner(s) of the land/house in favor of a usufructuary whereby this person has the right to possess, use and enjoy the benefits of an immovable property (section 1417 CCCT). The usufructuary has the right to manage the property (sect 1414 CCCT). It can be on a piece of land, on a house or on both of them.

The holder of a usufruct, known as "usufructury", has the right to use, possess and enjoy the property, as well as the right to receive profits from the fruits of the property. The usufructuary could be a person or an entity (ex: a company).

In civil law, property is divided in three parts. They are called in latin "usus" (use), "fructus" (fruits) and "abusus" (abuse). The word usufruct is normally unknown in Commonwealth countries. It combines the two first parts of the property in civil law, the usus (use, or possession) and fructus (fruits, or as we will see, more or less the "profits"). In French, it is called "usufruit" and in Thai "See-tee-kep-kin". It is interesting and useful to know that Thai Civil Law was largely inspired by French Civil law. (see "the work of codification in Siam" by Rene Guyon, 1919.)

The owner who gives the usufruct is called in French "nu-propriétaire" or by literal translation in English "naked-owner". It means that the owner has nothing else than the ownership: He can't use his possession, even if he is the owner. Beside possession and enjoyment of the property, the usufructurary has also the legal right to use and derive benefits from the property that belongs to another person, as long as the property is not damaged. "Fruits" should be understood as its natural (fruits, livestock, etc) and/or its legal definition (rent, etc.).

If you would like to use this right for industrial purposes, be aware that some taxes might be required.

Let's see some examples of usufruct agreements.

EXAMPLES

Imagine that you have a usufruct on a piece of land, an orchard. The apples (natural fruits) will be your asset and do not belong to the 'real" owner of the land. But in our days, fruits are more or less the legal fruits, like a rent from a lease. Section 148 of CCCT defines what can be the legal fruits in Thailand: "legal fruits denote a thing or interest obtained periodically by the owner from another person for the use of the thing; It is calculated and may be acquired day by day or according to a period of time fixed."

Now imagine that you have a Thai girlfriend. She buys the land and gives you a usufruct on this land for free. It means that you can enjoy this property, even ask her to leave the property, can sublease and get the money from the rents, and this, until the end of your life. It is NOT restricted to 30 years maximum. On top of that, if you decide to build on this land, it is possible for you be the full owner of the buildings and constructions. It is really a strong right.

THE END OF A USUFRUCT CONTRACT

In Thailand, a usufruct can be created for a limited time (5 years, 10 years, etc.) or the LIFE of the usufructuary. (sect. 1418 CCCT). If no time has been fixed, it is presumed that the usufruct is for the life of the usufructuary. In any case, the usufruct ends at the death of the usufructuary.

THE USUFRUCTUARY CAN LEASE THE LAND/HOUSE

A usufructuary has the right to enjoy, use and possess the land. He is acting like the real owner but can not sell or destroy the property as he is NOT the full owner. However, he can transfer his rights on the land/house to a third party. Even if the usufruct will end at the death of the usufructuary the usufructuary can lease out the land to a third party and this second agreement will NOT end when the usufructuary will die as per the Supreme Court ruling 2297/1998: "the lessor does not have to be the owner of the property".

So the usufructuary can grant a thirty years lease to a third party. By this way, you could pass on your rights to your children or other relatives even after death if the lease was done before the demise. Do not forget that all leases over 3 years must be registered at the land department and taxes have to be paid.

REGISTRATION

By a decision of the Supreme Court of Thailand, all usufruct agreements must be registered to be valid (Supreme Court decision 6872/2539). Once you register a usufruct at the land department where the title deed is located, your name will be registered (written in Thai) on the title deed. After this registration, the land/house can only be sold provided the buyer respects this usufruct. This is why it will be difficult for the owner to sell the land/house after a usufruct is register: nobody wants to buy a property where they can't live. Be aware land departments in Thailand have different rules and requirements. Some will ask to see your visa, some will ask for the father and mother's name of the usufructuary, etc.

You can also get a yellow book which is a House Registration Certificate (Thor. Ror 13) with a usufruct but many other documents will be required.

MYTHS AND FACTS ABOUT USUFRUCT AGREEMENTS

1) Usufruct can be done for maximum 1 rai

False. We registered usufruct agreements for more than 100 rai with one contract and multiple title deeds. Hovewer, the usufruct must be registered on EACH title deed separately.

2) Usufruct have never been tested by the Court

False, there are Court decisions IN THAILAND about usufructs (examples: Supreme Court of Thailand 2783/2516, 6872/2539, 2297/2541, 2380/2542, etc.). The land department has also published a small guideline about usufruct agreements.

Usufructs originate from Roman Law and they have been known in civil law countries for centuries. It has nothing to do with some old agricultural laws or customs. Remember that leases where mostly used in the 18^th and 19^th centuries by farmers as they were not rich enough to fully buy land.

3) Usufructs are NOT as safe as lease agreements:

False. There is no legal, historical or factual grounds for this affirmation. If a lease is safe in Thailand (section 537 and following), a usufruct is safe. Both of them are in the CCCT, just as a gift agreement (section 453 and following) or a loan contract (section 640 and following).

Unless the Thai law changes, foreigners are fully allowed to make usufruct agreements, just as they are allowed to purchase condominiums or to make a lease agreement. Some law firms prefer to register lease agreements as leases agreements are normally more expensive. If you can understand civil law, there is even some legal basis to say that a usufruct is stronger than a lease agreement.

4) You must pay taxes to register a usufruct agreement

True. If the usufruct agreement is done for an amount of money, taxes of about 1.5 % on the value of the contract will have to be paid. Some land departments don't like to register usufruct agreements for free as they see that their government is not making as much money as a lease agreement. On a lease agreement, you will also have to pay taxes on the value of the rents for the total agreement. Rents must be based on the assessed value of the property. Most of the time, it is cheaper to register a usufruct agreement than a lease agreement. If you register a usufruct agreement involving a company, the land department might ask for some value on the contract. They won't like to see it done for free. It is the discretion of the land officers to accept an agreement even if by law, it is clear and usufruct agreements for free CAN be done.

5) The owner can't borrow money or sell its property if a usufruct is registered

False. Even if you register a usufruct agreement on a title deed, the owner can sell his property to anyone. But in reality, nobody is interested to buy a property where they will have to maintain your right and won't be able to use this property until you die. This is why a usufruct is a good protection for you as it allows you to live there for the rest of your life, whatever happens. If you want this right to be passed to your heirs, it can also be done by a lease agreement might be a better option depending on your case.

6) It is possible to cancel or void a usufruct agreement

If you are NOT married to the owner granting you the usufruct, we believe it is not possible to cancel a usufruct and you are legally protected.

If you are legally married to the owner, Thai lawyers disagree on the application of article 1469 CCCT. This article mentions that all agreements made between spouses can be cancelled by the Court at the request of one party, unless agreements affect third parties. According to one interpretation, "publicity" or registration affect third parties and a usufruct can't be cancelled. According to the other interpretation, we have to search for the spirit of the law and it looks like Thai law wanted to end all relations between spouses in case of divorce, even usufruct agreements. A way to avoid the application of 1469 CCCT would be to have a second agreement (like a lease) affecting a third party before the Court could cancel your usufruct agreement.

7) I will be fully protected with a usufruct

False. Imagine that you bought a big house in a small village near the family of your girlfriend. Now, imagine that things go wrong with her and you decide to expulse her from this house. You have the legal right to do it. But do you really think your life will be nice and quiet near her family, in a big house, in the middle of nowhere? Usufruct will legally protect you but there are situations where even a legal protection won't have any authority in face of the reality.

8) Usufruct agreements can be done anywhere in Thailand

False. Usufruct agreements must be registered and you can register a lease or a usufruct only on title deeds equals or superior to Nor Sor Sam. It means that usufruct can be registered for Chanotte or Nor Sor Sam, but can NOT be registered in some rural areas without proper title deeds.

9) A usufruct agreement is a simple form.

False. It is a contract, like a loan or a lease. All contracts can be adapted or constructed around the situations of the parties. For example, some clients prefer limitations to their usufruct right for their own and personal use. However, others want to be able to transfer their rights without any prior notice or notifications (see section 1422 CCCT). Some usufructs are done for free, some for an amount of money. All clauses are possible if they are not against public order.

===========================

Usufruct agreements are a strong protection as they let you possess, use and manage a property in Thailand. We believe they will give you some piece of mind while you enjoy all the other aspects of Thailand. They can be a very good alternative to lease agreements, as they can be for your lifetime, with lesser taxes. Don't hesitate to consult a lawyer if you want to know your best options according to your needs and your personal situation.

===========================

DISPOSITIONS OF THE CIVIL AND COMMERCIAL

CODE OF THAILAND

TITLE VII: USUFRUCT

Section 1417

An immovable property may be subjected to a usufruct by virtue of which the usufructuary is entitled to the possession, use and enjoyment of the property.

He has the right of management of the property.

The usufruct of a forest, mine or quarry entitles the usufructuary to the exploitation of the forest, mine or quary.

Section 1418

A usufruct may be created either for a period of time or for the life of the usufructary.

If no time has been fixed, it is presumed that the usufruct is for the life of the usfructuary.

If it is created for a period of time, the provisions of Section 1403 paragraph 3 shall apply mutatis mutandis.

In any case the usufuct comes to an end on the death of the usufructuary.

Section 1419

If property is destroyed without compensation being paid, the owner is not bound to restore it; but, if he does so to any extent, the usufruct revives to that extent.

If any compensation is paid, the owner or the usufructary must restore the property so far as it is possible to do so, having regard to the amount of the compensation received, and the usufruct revives to that extent; but, if restoration is impossible, the usufruct comes to an end and the compensation must be divided between the owner and the usufructary in proportion to the damages suffered by the respectively.

The same rules apply mutatis mutandis in the case of expropriation as well as in the case of partial destruction of the property or of partial impossibility to restore the property.

Section 1420

When the usufruct comes to an end, the usufructuary must return the property to the owner.

The usufructuary is liable for the destruction or depreciation in value of the property, unless he proves that the damage was not the cause of his own fault.

He must replace anything which he has wrongfully consumed.

He is not bound to give compensation for depreciation in value caused by reasonable use.

Section 1421

The usufructary must, in the exercise of his rights, take as much care of the property as a person of ordinary prudence would take of his own property.

Section 1422

Unless otherwise provided in the act creating the usufruct, the usufructary may transfer the exercise of his right to a third person. In such case, the owner of the property may sue the transferee directly.

Section 1423

The owner may object to any unlawful or unreasonable use of the property.

If the owner proves that his rights are in peril, he may demand security from the usufructary; except in the case of a donor who has reserved to himself the usufruct of the property given.

If the usufructary fails to give security within a reasonable time fixed for the purpose, or if, in spite of the owner's objection, he continues to make use of the property unlawfully or unreasonably, the Court may appoint a Receiver to manage the property in his stead. Upon security being given, the Court may release the Receiver so appointed.

Section 1424

The usufructary is bound to keep the substance of the property unaltered, and is responsible for ordinary maintenance and petty repairs.

If important repairs or measures are necessary for the preservation of the property, the usufructuary must forthwith inform the owner thereof and permit them to be carried out. In case of default by the owner, the usufructuary may have the work carried out at the owner's expense.

Section 1425

All extraordinary expenses must be borne by the owner, but in order to meet these or expenses coming under the foregoing section he may realize part of the property unless the usufructuary is willing to advance the necessary funds without charging interest.

Section 1426

The usufructary shall, for the duration of the usufruct, bear expenses for the management of the property, pay taxes and duties, and be responsible for interest payable on debts charged upon it.

Section 1427

If required by the owner, the usufructuary is bound to insure the property against loss for the benefit of the owner; and if the property is already insured, he is bound to renew such insurance when due.

He must pay the premiums of the insurance for the duration of his usufruct.

Section 1428

No action by the owner against the usufructuary or his transferee in connection with the usufruct or vice versa may be entered later than 1 year after the usufruct comes to an end; but in any action by the owner who could not have known of the end of the usufruct, the prescription of 1 year shall run from the time when he knew or ought to have know of it.

Hello,

Great article!

Our own lawyer is away in Europe on holiday at the moment, and I have a question. Can someone help?

My wife is Thai, and our land / house was originally bought in my mother-in-laws name. Mum-in-law gave me a lifetime usufruct, and after that was registered, a transfer by way of gift was made to my wife.

So, title is in my wife's name, but the usufruct was given prior to her getting title.

Quite simply, we want to sell the property. Or, if needed, 30-yr lease it to a 'purchaser'.

Can I, as usufructuary, simply renounce / cancel my usufruct, so that title is unencumbered for the prospective purchaser? How do I do this?

[Gary A]

So you have a relationship that has gone bad. Since a divorce would upset some legal contracts you have set up to protect yourself, you refuse to give your wife a divorce. Keep in mind that if you are dead, she needs no divorce. Likewise contracts that terminate upon your death. Your usufruct certainly does you no good if you are dead. Drastic? Think about it. People have died for a lot less than possession of a house.

Long ago I decided that it is easier and safer to simply put everything in my wife's name. I pay no taxes, no lawyer fees and other than signing a paper that says I have no financial interest in my WIFE'S property no other legal crap. If worse comes to worse, I put my things in the back of MY pickup truck and drive off into the sunset.

[Lannatyne]

So you have a relationship that has gone bad. Since a divorce would upset some legal contracts you have set up to protect yourself, you refuse to give your wife a divorce. Keep in mind that if you are dead, she needs no divorce. Likewise contracts that terminate upon your death. Your usufruct certainly does you no good if you are dead. Drastic? Think about it. People have died for a lot less than possession of a house.

Long ago I decided that it is easier and safer to simply put everything in my wife's name. I pay no taxes, no lawyer fees and other than signing a paper that says I have no financial interest in my WIFE'S property no other legal crap. If worse comes to worse, I put my things in the back of MY pickup truck and drive off into the sunset.

Sorry, but are you replying to my previous query, or someone elses?

In my case, nothing whatsoever has gone bad, and I never suggested that in my posting. We just want to sell the property and move somewhere bigger.

[choppychugger]

Great post - Have read through everything and need some advice as my case doesnt seem to be in amongst all the posts.

* Am not married been with partner for 5 years - Me 29 yrs Her 27 years 3 yr old son together

* Recently borrowed money from SCB me as garuntor for partner to purchase a house - House/land is in wifes name

Is it easy enough to get the usufruct now even though we have done the deal with the bank and registered the house in her name?

Where do I stand legelly in my present situation if :

1. The death of my partner ?

2. We split up?

3. We arent planning on getting married, is that better or not with regards to the usufruct?

I guess my main worry is protecting the house in the event that something happens to my partner.

Thanks in advance,

Choppy

[stgrhe]

Great post - Have read through everything and need some advice as my case doesnt seem to be in amongst all the posts.

* Am not married been with partner for 5 years - Me 29 yrs Her 27 years 3 yr old son together

* Recently borrowed money from SCB me as garuntor for partner to purchase a house - House/land is in wifes name

Is it easy enough to get the usufruct now even though we have done the deal with the bank and registered the house in her name?

Where do I stand legelly in my present situation if :

1. The death of my partner ?

2. We split up?

3. We arent planning on getting married, is that better or not with regards to the usufruct?

I guess my main worry is protecting the house in the event that something happens to my partner.

Thanks in advance,

Choppy

Whether it is easy or not depends entirely on the location. There are some land offices, Ban Chang for instance, that is reportedly refusing to register any usufructs while in many areas it goes very smoothly. Then again in some areas you would expected to pass on a fairly hefty sum of tea money to get it through. In paid 75 baht for mine in Pranburi whereas the 'going rate' in Hua Hin is said to be 15,000 baht.

Once the usufruct is registered on the land title you have possession rights over the land until you pass; this whether or not your partner dies before you or you split up. In the event of the latter your partner will have no rights what so ever to enter the property, and you could even lease the property to someone else if you wish.

The other side to the coin is, and here is a bit of a warning, if the land is in you girlfriend's village there might be other serious complications if you understand what I mean.

[Gary A]

So you have a relationship that has gone bad. Since a divorce would upset some legal contracts you have set up to protect yourself, you refuse to give your wife a divorce. Keep in mind that if you are dead, she needs no divorce. Likewise contracts that terminate upon your death. Your usufruct certainly does you no good if you are dead. Drastic? Think about it. People have died for a lot less than possession of a house.

Long ago I decided that it is easier and safer to simply put everything in my wife's name. I pay no taxes, no lawyer fees and other than signing a paper that says I have no financial interest in my WIFE'S property no other legal crap. If worse comes to worse, I put my things in the back of MY pickup truck and drive off into the sunset.

Sorry, but are you replying to my previous query, or someone elses?

In my case, nothing whatsoever has gone bad, and I never suggested that in my posting. We just want to sell the property and move somewhere bigger.

My comments are simply my opinion regarding all the ways farangs try to protect their financial interests. My post does not refer to any previous post. My main point is that either you trust your wife or you don't.

[bangkokrick]

Please can anyone clarify whether the usufruct has to be done at the time of the transfer at the land office or can it be done at any time later.

Thanks,

Rick

[jfchandler]

There have been a variety of posts on TV lately with various farangs reporting that Thai banks are refusing to make home loans to Thai GFs with their farang BF as guarantors...

There was a link posted above to an FAQ document on the Bangkok Bank web site about their requirements for home loans. The link previously posted is no longer valid.

But here is a new/valid one.... It appears to say BKK Bank will only accept family members of the applicant (in this case the Thai GF) as guarantors....

So Choppy, what office location of SCB did you deal with for your loan? And what kind of requirements did they have for your to serve as guarantor for your Thai GF partner (non-married)?

I assume you mean the house/land is in your partner's name (not wife), since you're not married.

* Am not married been with partner for 5 years - Me 29 yrs Her 27 years 3 yr old son together

* Recently borrowed money from SCB me as garuntor for partner to purchase a house - House/land is in wifes name

[scotsman]

Great post - Have read through everything and need some advice as my case doesnt seem to be in amongst all the posts.

* Am not married been with partner for 5 years - Me 29 yrs Her 27 years 3 yr old son together

* Recently borrowed money from SCB me as garuntor for partner to purchase a house - House/land is in wifes name

Is it easy enough to get the usufruct now even though we have done the deal with the bank and registered the house in her name?

Where do I stand legelly in my present situation if :

1. The death of my partner ?

2. We split up?

3. We arent planning on getting married, is that better or not with regards to the usufruct?

I guess my main worry is protecting the house in the event that something happens to my partner.

Thanks in advance,

Choppy

The problem you may have to setting up a usufruct is that the bank may not let you as they will hold the deeds of the property unless you have given them something else as guarantee for the loan. It is a lot better for you to setup a usufruct before you marry as the contract may be revoked in the case of Divorce if you set it up when married.

1. You will be able to legally live & use the property & land for as long as the usufruct is in force.

2. your partner can sell the property & Land & you can still live & use that property & land so its not easy to sell that is up to you.

3. It does not matter what you do after the usufruct is setup before marriage.

Trusting your wife has nothing to do with setting up a usufruct it is in most cases to protect you from her family in the event of your wife's death but a good written will is also a good thing to have to protect you & Your wife in case of death.

regards

Scotsman

[surayu]

....setup a usufruct before you marry as the contract may be revoked in the case of Divorce if you set it up when married.

Are you totally sure about this? even if the usufruct is registered on the husband name only?

[Lannatyne]

....setup a usufruct before you marry as the contract may be revoked in the case of Divorce if you set it up when married.

Are you totally sure about this? even if the usufruct is registered on the husband name only?

Absolutely. See Section 1469 of the Thailand Civil and Commercial Code (extracted below): 'Any agreement concluded between husband and wife during marriage may be avoided by either of them at any time during marriage or within one year from the day of dissolution of marriage; provided that the right of third persons acting in good faith are not affected thereby'.

[surayu]

Absolutely. See Section 1469 of the Thailand Civil and Commercial Code (extracted below): 'Any agreement concluded between husband and wife during marriage may be avoided by either of them at any time during marriage or within one year from the day of dissolution of marriage; provided that the right of third persons acting in good faith are not affected thereby'.

Thanks for the quick reply, that's a very worrisome point, how would an individual protect himself from this?

[choppychugger]

There have been a variety of posts on TV lately with various farangs reporting that Thai banks are refusing to make home loans to Thai GFs with their farang BF as guarantors...

There was a link posted above to an FAQ document on the Bangkok Bank web site about their requirements for home loans. The link previously posted is no longer valid.

But here is a new/valid one.... It appears to say BKK Bank will only accept family members of the applicant (in this case the Thai GF) as guarantors....

So Choppy, what office location of SCB did you deal with for your loan? And what kind of requirements did they have for your to serve as guarantor for your Thai GF partner (non-married)?

I assume you mean the house/land is in your partner's name (not wife), since you're not married.

* Am not married been with partner for 5 years - Me 29 yrs Her 27 years 3 yr old son together

* Recently borrowed money from SCB me as garuntor for partner to purchase a house - House/land is in wifes name

Hi,

Yes the house & land is in my partners name ( not wife yet ), we have been together for about 5 years and have a 3 year old son, I am 29 and she is 27. She hasnt worked for the last 4 years, and has no property or debts in her name previously. I'm on a multiple entry tourist visa, and work overseas. We borrowed 5.5 million towards our house from SCB in Phuket town chaofa road, with me acting as garantor. Setup the monthly payments @ 50,000 thb. We also borrowed 1.5million form TMB bank in Phuket town, this time the owner of the house acted as garuntor for my partner, I had nothing to do with this one with regards to providing paperwork. Setup monthly payments @ 50,000 thb also. The difference we payed cash to the seller.

Provided from myslef to SCB:

Passport

Birth Cert

6 mths statements from my thai bank account

Employment contract from head office in Singapore

Our sons birth certs,both passports

Proof of our joint bank accounts.

Provided from my partner to SCB

Passport

Tabian baan

Birth Cert

Bank details

Proof of our joint bank account.

I must add that we have known the seller all our time together, and we timed it just before all the banks started tightening there belts with the uncertain global situation.

We were accepted then rubber stamped after we had a full medical at the Bangkok Phuket Hospitol and our international credit check was cleared.

Choppy

[Lannatyne]

Absolutely. See Section 1469 of the Thailand Civil and Commercial Code (extracted below): 'Any agreement concluded between husband and wife during marriage may be avoided by either of them at any time during marriage or within one year from the day of dissolution of marriage; provided that the right of third persons acting in good faith are not affected thereby'.

Thanks for the quick reply, that's a very worrisome point, how would an individual protect himself from this?

As far as I know, with the situation as described, you can't protect yourself. Be a good husband, I suppose!

Seriously, unless you can transfer the freehold title to someone else, you're a bit stuck. Do you have offspring who you could 'gift' the title to? Not an deal situation for any future transactions in the property, but giving it to your 'minor' would help greatly in your long-term occupation of the property. Use the current Farang nominee threat and Inheritance Tax risks as a lever for your wife, if need.

[jfchandler]

Choppy, thanks very much for the clear and detailed reply... I'm looking at the prospect of wanting to do something similar soon (in BKK, not Phuket), so your experience was of great interest.... Congrats on getting your deal through....

Two followups....

1. Do you have any idea, if you went to do the same SCB deal today, whether it would be similarly approved? Meaning, do you think they've changed the rules/closed the door since the time of your application?

2. What kind of income to debt ratios were they looking for for you as the guarantor.... In other words, for an SCB loan with a 50,000 baht per month payment, how much monthly income did they want you to show as a minimum for approval???

Thanks again... very much!!!