Can A Non Thai Have A Legitimate Charge On A House

[torrenova]

If I buy a house for the mother of my child, can I place a charge on the chanote which will stand up if challenged ?

If so, can this charge be for more than the value of the house ?

Can this charge, be increasing, based upon a formula which is fixed, say at X amount plus 10% per annum compounded.

[stgrhe]

You have three possibilities:

- register a 30 year lease;

- register a usufruct; or

- register a superficies

I suggest you consult a lawyer.

[torrenova]

You have three possibilities:

- register a 30 year lease;

- register a usufruct; or

- register a superficies

I suggest you consult a lawyer.

Not referring to any of those, specifically to a charge / lien.

[aussiedoug]

Interesting to me too... why cannot have a mortgage(or whatever the thais call it) with an interest rate of 10% pa? If the interest is unpaid(and what thai will pay a farang) it accumulates, why cannot , every where else in the world can do.

[sbkk]

You have three possibilities:

- register a 30 year lease;

- register a usufruct; or

- register a superficies

I suggest you consult a lawyer.

Not referring to any of those, specifically to a charge / lien.

Hi - security over land in a Chanote will not automatically give you security over building on that land - a registered security over the house itself would be a separate process and query whether the local Ampur would be receptive to this. If the house is to be built on land owned by the recipient, you could obtain a mortgage over the land to secure amounts loaned to acquire/build the house. Agree with previous post that it's time to consult a lawyer - preferably one in the area of the house who will be familiar with what the local land office/Ampur is used to seeing. Good luck.

[emsfeld]

Not of any help here, but what I always wondered: can't one simply draw up a contract (similar to a prenup or will) signed and witnessed by a solicitor with the provisions that in case of

a) a separation of the parties involved (doesn't necessarily have to be marital partners),

\ or, say, unforeseen mental impairment of a party, or...

it is agreed that land, any buildings, or other improvements will be sold at market value (whatever that will be) within a reasonable time period (6 months, say). X% of the market value will go to part 1, Y% to party 2,...

Isn't that a legitimate, legally enforcable option?

Edited December 29, 2009 by emsfeld

[stgrhe]

Not of any help here, but what I always wondered: can't one simply draw up a contract (similar to a prenup or will) signed and witnessed by a solicitor with the provisions that in case of

a) a separation of the parties involved (doesn't necessarily have to be marital partners),

\ or, say, unforeseen mental impairment of a party, or...

it is agreed that land, any buildings, or other improvements will be sold at market value (whatever that will be) within a reasonable time period (6 months, say). X% of the market value will go to part 1, Y% to party 2,...

Isn't that a legitimate, legally enforcable option?

Nothing stops you from drawing up such an agreement but I doubt it would hold in a court of law here in Thailand as its wording would contradict the wording of the Civil and Commercial Code that defines "Property of Husband and Wife".

The law will always take precedence over any contractual agreement if in conflict with one another.

This is the wording of the applicable law.

THE CIVIL AND COMMERCIAL CODE – CHAPTER IV

PROPERTY OF HUSBAND AND WIFE

Section 1465 – Where the husband and wife have not, previous to their marriage, concluded a special agreement concerning their properties, the relations between them as regards to their properties shall be governed by the provisions of this Chapter.

Any clause in the ante-nuptial agreement (example) contrary to public order or goods morals, or provided that the relations between them as regards such properties are to be governed by foreign law, shall be void.

Section 1466 – The ante-nuptial agreement is void if not entered in the Marriage Register at the time of marriage registration terms of the ante-nuptial; or if not made in writing and signed by both spouses and by at least two witnesses and entered in the Marriage Register at the time of marriage registration stating that the ante-nuptial is thereto annexed.

Section 1467 – After marriage the ante-nuptial agreement cannot be altered except by authorisation of the Court.

Section 1468 – Clauses in the ante-nuptial agreement shall have no effect as regards to the rights of third persons acting in good faith irrespectively of whether they be altered or cancelled by the order of the Court.

Section 1469 – 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.

Section 1470 – Properties of husband and wife except in so far as they are set aside as Sin Suan Tua, are Sin Somros.

Section 1471 – Sin Suan Tua consists of:

(1) property belonging to either spouse before marriage;

(2) property for personal use, dress or ornament suitable for situation in life, or tools necessary for carrying on the profession of either spouse;

(3) property acquired by either spouse during marriage through a will or gift; and

(4) Khongman.

Section 1472 – As regards to Sin Suan Tua, if it has been exchanged to other property, other property has been bought or money has been acquired from selling it, such other property or money acquired shall be Sin Suan Tua.

Section 1473 – Each spouse is manager of his or her Sin Suan Tua.

Section 1474 – Sin Somros consists of:

(1) property acquired during marriage;

(2) property acquired by either spouse during marriage through a will or gift made in writing if it is declared by such will or document of gift to be Sin Somros; and

(3) fruits of Sin Suan Tua.

In case of doubt as to whether a property is Sin Somros or not it shall be presumed to be Sin Somros.

Section 1475 – Where any Sin Somros is property of the kind mentioned in Section 456*) of this Code or has documentary title, either husband or wife may apply for having his or her name entered in the documents as co-owners.

*) Section 456 – A sale of immovable property is void unless it is made in writing and registered by the competent official. The same rule applies to ships and vessels of six tonnes and over, to steam launches or motor boats of five tonnes and over, to floating houses and beasts of burden.

An agreement to sell or to buy any of the aforesaid property, or a promise of sale of such property is not enforceable by action unless there is some written evidence signed by the party liable or unless unrest is given, or there is part performance.

The provisions of the foregoing paragraph shall apply to a contract of sale of movable property where the agreed price is five hundred baht or upwards.

Section 1476 – In managing the Sin Somros in the following cases, the husband and wife have to be joint manager, or one spouse has to obtain consent from the other:

(1) selling, exchanging, sale of the right of redemption, letting out property on hire-purchase, mortgaging, releasing mortgage to mortgagor or transferring the right of mortgage on immovable property or on mortgageable movable property;

(2) creating or distinguishing the whole or part of the servitude, right of inhabitation, right of superficies, usufruct or change on immovable property;

(3) letting immovable property for more than three years;

(4) lending money;

(5) making a gift unless it is a gift for charitable, social or moral purposes and is auditable to the family condition;

(6) making a compromise;

(7) submitting a dispute to arbitration; and

(8) putting up the property as guarantee or security with a competent official or Court.

The management of the Sin Somros in any case other than those provided in paragraph one can be made only by one spouse without having to obtain consent from the other.

Section 1476/1 – The husband and wife can manage the Sin Somros differently, in whole or in part, from provisions of Section 1476, provided that the ante-nuptial agreement under Section 1465 and Section 1466 has been made. In such case, the management of the Sin Somros shall be made in accordance with the ante-nuptial agreement.

In case the specifications of the management of the Sin Somros in the ante-nuptial agreement are only part in difference to the provisions of Section 1476, the management of the Sin Somros other than those specified in the ante-nuptial contract shall be made in accordance with Section 1476.

Section 1477 – Either spouse is entitled to litigate, defend, and take legal proceedings concerning maintenance of the Sin Somros for the benefit of the Sin Somros. Debts incurred by the said litigation, defence and legal proceedings shall be regarded as the obligation to be performed jointly by the spouses.

Section 1478 – Where one spouse has to give consent or to affix a signature together with the other in the management of the property, but unreasonable refuses to give such consent or to affix such signature, or is not in a position to give such consent, the latter may apply to the Court for an order granting the necessary permission.

Section 1479 – Where the act by either spouse requires the consent of the other spouse, and if such act is required by law to be made in writing or registered by the competent official, such consent must be written in writing.

Section 1480 – In the management of the Sin Somros, which has to be made jointly or has to obtain the consent from the other spouse under Section 1476, if either spouse has entered into any juristic act alone or without consent of the other, the latter may apply to the Court for revoking such juristic act, unless it has been ratified by the other spouse, or a third person was, at the time of entering into such juristic act, acting in good faith and made the counter-payment.

The litigation for revoking of the juristic act by the Court under paragraph one cannot be made later than one year from the day when such cause as being ground for the revocation is known or later than ten years since the juristic act was done.

Section 1481 – Neither spouse is entitled to dispose of the Sin Somros by will in favour of the other persons to an extent exceeding his or her own portion thereof.

Section 1482 – In case either spouse is the sole manager of the Sin Somros, the other spouse is nevertheless entitled to manage household affairs or provide for the necessaries of the family. And the expenses therefore would bind the Sin Somros and Sin Suan Tua of both parties.

If such management of household affairs or provision for the necessaries of the family by the husband or wife results in the undue loss, the other spouse may apply to the Court to forbid or limit his or her power.

Section 1483 – In case either spouse is the sole manager of the Sin Somros, if the manager is going to commit or is committing any act in the management of the Sin Somros, which would appear to result in undue loss, the other spouse may apply to the Court for an order forbidding commission of such act.

Section 1484 – If either spouse, who is the manager of the Sin Somros,:

(1) causes undue loss to it;

(2) fails to support the other spouse;

(3) becomes insolvent or incurs debts to an amount exceeding one half of the Sin Somros;

(4) hinders the management of Sin Somros by the other spouse without reasonable ground; or

(5) is found to have circumstances that will ruin the Sin Somros

the other spouse may apply to the Court for an order authorising him or her to be the sole manager or dividing the Sin Somros.

In case there is an application made under paragraph one, the Court may determine temporary protective measures in the management of the Sin Somros. If that is the case of emergency, the provisions of the request in case of emergency under the Civil Procedure Code shall apply.

Section 1484/1 – In case where it has been an order of the Court forbidding or limiting the power of either spouse to manage the Sin Somros, if the cause which was the ground for the Court order or the circumstances have later changed, either spouse may apply to the Court for revocation or change of the order forbidding or limiting the power to manage the Sin Somros. The Court is this effect may give any order which is deemed suitable.

Section 1485 – The husband and wife may apply to the Court for authorising him or her to be the manager of any particular Sin Somros, or participate in the management, if such management or participation will bring about more benefit.

Section 1486 – When the Court has pronounced a final judgement, or given an order under Section 1482 paragraph two, Section 1483, Section 1484, Section 1484/1 or Section 1485 in favour of the applicant, or Section 1491, Section 1492/2 or Section 1598/17, or the husband and wife has been relieved of becoming bankrupt, the Court shall notify the Marriage Registrar of the matter in order to have it entered into the Marriage Registrar.

Section 1487 – No spouse can seize attach any property of the other during marriage, except the seizure of attachment made in the case which has entered for the purpose of exercising his or her duty or for maintaining rights between husband and wife specially provided in this Code or as specially provided by this Code allowing one spouse to sue the other, or for allowance due for maintenance and cost under the judgment of the Court.

Section 1488 – Where either spouse is personally liable to perform an obligation incurred before or during marriage, such performance shall be first made out of his or her Sin Suan Tua; if the obligation is not performed in full, it shall be satisfied out of his or her portion of the Sin Somros.

Section 1489 – Where both spouses are common debtors, the performance shall be made out of the Sin Somros and the Sin Suan Tua of both spouses.

Section 1490 – Debts that both spouses are jointly liable to perform, shall include the following debts incurred by either spouse during marriage:

(1) debts incurred in connection with management of household affairs and providing for the necessaries of the family, or maintenance, medical expenses of the household and for proper education of the children;

(2) debts incurred in connection with the Sin Somros;

(3) debts incurred in connection with a business carried on by the spouses in common; and

(4) debts incurred by either spouse only for his or her own benefit but ratified by the other.

Section 1491 – If either spouse is adjudged bankrupt, the Sin Somros is divided by operation of law as from the date of adjudication.

Section 1492 – After the Sin Somros has been divided under Section 1484 paragraph two, Section 1491, or Section 1598/17 paragraph two, the portion so divided becomes Sin Suan Tua of each spouse. Any property obtained after the division by either spouse shall be Sin Sua Tua of that spouse and not be regarded as Sin Somros. And the property acquired thereafter by the spouse through a will, or gift made in writing under Section 1474 (2), shall become Sin Sua Tua of the husband and wife equally.

Fruits of the Sin Suan Tua accrued after the division of the Sin Somros shall be Sin Sua Tua.

Section 1492/1 – In case the division of the Sin Somros is made by the order of the Court, the revocation of the division shall be made upon the request of either spouse and the Court has given the order to that affect. If either spouse raises an objection to such request, the Court cannot give an order for the revocation of the division of the Sin Somros unless the cause for the division of the Sin Somros has ceased to exist.

After the division of the Sin Somros under paragraph one having been revoked, or suspended due to the husband or wife having been relieved from being bankrupt, the property which is Sin San Tua on the date of the order of the Court, or on the date of his or her relieving from being bankrupt, shall remain the same as Sin Suan Tua.

Section 1493 – In case where the Sin Somros has been disposed of, both spouses are liable to pay for the household expenses in proportion to the amount of their respective Sin Sua Tua.

[katabeachbum]

A buyer of a property can borrow money from farang if she is not your girlfriend or wife. 10 % interest will be accepted. The agreement costs 1,1% of the borrowed amount to register in Chanote or NS3G.

[emsfeld]

Thanks for the info, stgrhe.

I was wondering about the case though when the parties involved are not husband and wife - eg. friends, business partners, etc.

Also, in the husband and wife case where no prenup exists, I wonder whether a contract of such nature would still hold up in court when both parties agree to equally split the proceeds of a sale under the contract. I guess my main point is that the contract makes a sale of the property legally binding in the case of a separation.

I think the main concern would be for anyone to purchase a house, the couple separates and the farang has no legal claim on anything. In the case of such a contract, the parties would be forced to sell and both parties would at least walk away with some value (as opposed to one party walking away with nothing).

Edited December 30, 2009 by emsfeld

[chiangmaibruce]

Hi. Just clarifying that in Torrenova's OP he stated "the mother of my child", so it was not clear whether they were married or not. It does make a difference. It also makes a difference whether people were married before or after the property was bought (and mortgage registered). I understand that some Land Dept staff will accept a mortgage between husband and wife and others won't. Some take the view that husband and wife are the same legal entitity hence they cannot enter into agreement with one another.

Even if such an arrangement makes it through the Land Dept, it doesn't mean that it can't be later challenged in court. Further Thai law contains a provision that any agreement between husband and wife can be later set aside anyway.

Emsfeld's later post cuts across a number of these issues and highlights the need to read widely across many of the pre-existing Thaivisa threads (& elsewhere) to get any kind of a handle on this issue... just a few points below & with the proviso that competent legal advice is a must before actually committing to anything along these lines:-

I was wondering about the case though when the parties involved are not husband and wife - eg. friends, business partners, etc.

Also, in the husband and wife case where no prenup exists, I wonder whether a contract of such nature would still hold up in court when both parties agree to equally split the proceeds of a sale under the contract. I guess my main point is that the contract makes a sale of the property legally binding in the case of a separation.

Not sure exactly what you mean by the last sentence... legally binding on who and in what way? Do you mean that the contract would require that the property must be sold upon separation? or other? And do you mean land or building upon the land?

In the case of husband and wife - with or without pre-nup - then the (farang) husband must sign a statement that he has no interest in the land (see other threads on this issue), hence he is snookered ... Unless a building on the land is legally held by the farang in which case he might be entitled to half under normal Thai divorce laws... assuming he became the owner of the building after marriage took place. If before, then he probably is entitled to all of the value of the building - in theory anyway.

Again, condos in the name of the farang are a different kettle of fish... this discussion being about land (or land + house)

I think the main concern would be for anyone to purchase a house, the couple separates and the farang has no legal claim on anything. In the case of such a contract, the parties would be forced to sell and both parties would at least walk away with some value (as opposed to one party walking away with nothing).

Yes, that is surely the main concern - and what usually happens. There are exceptions and you read about them in other Thaivisa threads & elsewhere ... but these only occur when particular circumstances apply. I think the one factor here is that the matter ends up before a judge who decides that the Thai divorce laws outweigh the 'farang can't own land laws', AND (for eg.) the farang partner can prove that he paid for everything, etc etc.

The Thai law provisions for pre-nups can be found and read about in web sites like thailawonline.com. Such agreements must be registered at the same time that the marriage is registered, and like pre-nups anywhere, they do have their limitations.

Edited December 30, 2009 by chiangmaibruce

[emsfeld]

Hi chiangmaibruce,

what I meant is the following:

Firstly, put the issue of marriage aside and let's assume there are two people who are NOT married. One is Thai the other one farang. Farang provides funding to purchase land and building(s) on land through the Thai person. The Thai person legally owns everything, for argument's sake.

The Thai person and the farang then enter into a contract signed and witnessed by a solicitor (or whoever else needs to be around for this to be legal). The contract simply states, if any of the parties involved (farang or Thai) want to sell land and building(s), they may do so at any time. Proceeds of the sale will be split in accordance with proportions specified in the contract. The farang wouldn't own anything, but would have a claim on the value of land and property.

As I mentioned, this may be totally naive on my part and is an issue that has never concerned me much, as I dont intend to buy land or a detached house for that matter. This question just came to mind when skimming through posts on this forum on related topics.

[chiangmaibruce]

<snip>The Thai person legally owns everything, for argument's sake.

The Thai person and the farang then enter into a contract signed and witnessed by a solicitor (or whoever else needs to be around for this to be legal). The contract simply states, if any of the parties involved (farang or Thai) want to sell land and building(s), they may do so at any time. Proceeds of the sale will be split in accordance with proportions specified in the contract. The farang wouldn't own anything, but would have a claim on the value of land and property.

<snip>

Ok, i'm not a lawyer but my guess would be that an agreement that allowed the farang to sell the land at any time (presumably for any reason) and take a portion of the proceeds ... might be running close to a situation of having a Thai as illegal nominee owner for the farang. The more normal situation would be where the farang lends money to the Thai in the context of any agreed repayment plan. Should the Thai subsequently default then the farang could petition the court to sell the asset to recoup funds. I think this would be legal and reasonably straightforward (albeit slow) provided the correct steps were followed.

[aussiebebe]

what would happen to a condo purchased after marriage, in the foreigner's name? would anyone be kind enough to provide links to where this has been discussed already in the forum? Thanks

[stgrhe]

Further Thai law contains a provision that any agreement between husband and wife can be later set aside anyway.

True, this is the famous Section 1469 of the Civil and Commercial Code and it reads:

"Section 1469 of the Thailand Civil and Commercial Code

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 is not affected thereby."

[emsfeld]

<snip>The Thai person legally owns everything, for argument's sake.

The Thai person and the farang then enter into a contract signed and witnessed by a solicitor (or whoever else needs to be around for this to be legal). The contract simply states, if any of the parties involved (farang or Thai) want to sell land and building(s), they may do so at any time. Proceeds of the sale will be split in accordance with proportions specified in the contract. The farang wouldn't own anything, but would have a claim on the value of land and property.

<snip>

Ok, i'm not a lawyer but my guess would be that an agreement that allowed the farang to sell the land at any time (presumably for any reason) and take a portion of the proceeds ... might be running close to a situation of having a Thai as illegal nominee owner for the farang. The more normal situation would be where the farang lends money to the Thai in the context of any agreed repayment plan. Should the Thai subsequently default then the farang could petition the court to sell the asset to recoup funds. I think this would be legal and reasonably straightforward (albeit slow) provided the correct steps were followed.

So you can basically set the mortgage up with 0% interest and no repayments, but stipulate final value to be paid = principal + capital gains/losses on sale? The arrangement would be very similar to what I had suggested initially with the exception that the optionality would be removed (eg term to maturity would probably have to be fixed rather than indefinite until called - unless the latter would be within legal limits. That's probably something one would have to check with the Code governing financial services/ arrangements). Interesting option though

[torrenova]

A buyer of a property can borrow money from farang if she is not your girlfriend or wife. 10 % interest will be accepted. The agreement costs 1,1% of the borrowed amount to register in Chanote or NS3G.

Forget marriage as that clouds the issue. Why could it not be a GF ? As far as I know, a GF/BF relationship has no legal standing.

Why is 10% acceptable ? The only regulated percentage I know is around 18% I think

Hi. Just clarifying that in Torrenova's OP he stated "the mother of my child", so it was not clear whether they were married or not. It does make a difference. It also makes a difference whether people were married before or after the property was bought (and mortgage registered). I understand that some Land Dept staff will accept a mortgage between husband and wife and others won't. Some take the view that husband and wife are the same legal entitity hence they cannot enter into agreement with one another.

No marriage exists but I would welcome comments on the effect of a later marriage between the parties.

One problem I have is the issue of non Thais owning the land. Allowing a charge, which presumably confers the right to repossess the property if the conditions set out in the mortgage are not adhered to, would seem to then give a non Thai, who could not own the land, the right to take ownership. That would appear at odds with Thai law. The only similar instance I can recall from Thai law is a dispensation for a non Thai, acquiring land from an inheritance, to deal with that land and sell it within 12 months. However, that rule comes about from an event outside the control of the non Thai.

In the end, the protection I am investigating is not really for me but my child with the Thai partner. I would not give her Bt10m for instance because I do not believe she would be able to manage it. I believe she would give out loans that would never be repaid. I believe she would waste money, thinking that this pot of gold would never run dry. This set up might have to be set up by an overseas trust but the trust cannot own land so there has to be a work around in Thailand to stop there ever being a time when everything could be cashed in, certainly not until my daughter is 25 or so and even then, I would want her to have the majority.

If a property was bought for 3m, but increased to 10m over time, then I want to make sure that she cannot raise money from the property. I could just as easily place a charge on it for Bt100m but obviously not if there was a charge of 1% to register the charge.

[chiangmaibruce]

In the end, the protection I am investigating is not really for me but my child with the Thai partner. <snip>so there has to be a work around in Thailand to stop there ever being a time when everything could be cashed in, certainly not until my daughter is 25 or so and even then, I would want her to have the majority.<snip>

Torrenova ... I imagine the answer to his is yes but ... in that case have you considered putting the land into the name of your child now? There are some potential down-sides but these may not be an issue for you, e.g. if you want to get a building permit, if you subsequently decide to sell the land, etc. There are several pre-existing threads on this option which I can probably find for you fairly quickly.

[torrenova]

Torrenova ... I imagine the answer to his is yes but ... in that case have you considered putting the land into the name of your child now? There are some potential down-sides but these may not be an issue for you, e.g. if you want to get a building permit, if you subsequently decide to sell the land, etc. There are several pre-existing threads on this option which I can probably find for you fairly quickly.

I've just asked about child property ownership as a part of another thread I started today. You just hear horror stories of people doing anything to get their hands on money and if I wasn't around, I couldn't do anything to stop it. I also have to deal with the fact that if I died when my child was still relatively young, everyone would know she was rich and they would have her brainwashed more than most Thais are brainwashed into believing that they should sacrifice everything to their parents and elders. Add in corrupt officials and the fact that they would sell a Bt10m asset for Bt100,000 cash now, and you have an impossible scenario. This might be a worst case scenario but I can see it and I have to protect against it.

I want my child to be able to go to university in 15 years time and want the money to be available to do so. Not in some crap Thai university to get a worthless qualification but to Cambridge or Harvard where fees might be $100,000 a year. Whatever housing is provided must be protected and there must be no ability to borrow against it.