The Use Of Ususfruct

[xm911e3]

Hi, first off thanks alot guys for your help regarding my previous post on HOME LOAN QUESTION

I've wiki-ed about the use of USUFRUCT. Please correct me if I'm wrong. The use of usufruct allows me the below clauses.

1) I've the right to stay in the condomium for as long as I'm still kicking

2) I've the right to rent it out and keep the profits

3) I've the right to sell it anytime I want

In short, the use of usufruct is to have total control on the property which is in a Thai's name (My Thai Girlfriend). After my girlfriend signed the usufruct, she will not have any control over the property.

Since the bank will not budge when it comes to lending money to a foreigner. I'll have to use my Thai girlfriend's name to take a loan from the bank to purchase a condominum. I'll pay for the monthly mortgage, deposit, closing cost, transfer fees, etc.. and she will sign the ususfruct.

One Question: Can I sign usufruct for life? Do I've an option to choose between 1 month, 3 months, 5 years, 10 years, 20 years, lifetime, etc....?

Please note that the above example is based on (Farang) boyfriend and (Thai) girlfriend relationship to take a loan from the Thai bank to buy a condomium in Thailand and (Farang) boyfriend have total control of the condominum instead of the girlfriend.

Edited April 6, 2010 by xm911e3

[LennyW]

Read this, might help you clarify your points.

Usufruct.pdf

[CDNinKS]

1) I've the right to stay in the condomium for as long as I'm still kicking Yes, if the usfruct is for "life", they can be for specified periods of time or life.

2) I've the right to rent it out and keep the profits Yes

3) I've the right to sell it anytime I want No, it is not yours to sell, it belongs to the Thai.

[InterestedObserver]

Has the bank agreed to the mortgage (loan) while the Chanote is encumbered with a Usufruct? Until the bank mortgage is paid off, it's questionable whether or not your girlfriend will have authority to grant a Usufruct on the property.

Edited April 6, 2010 by InterestedObserver

[katabeachbum]

Has the bank agreed to the mortgage (loan) while the Chanote is encumbered with a Usufruct? Until the bank mortgage is paid off, it's questionable whether or not your girlfriend has authority to grant a Usufruct.

thai banks will not lend money on usufructed property, and when bank lends money they register the loan on the land deed and keep the land deed until loan has been repayed making it impossible to register usufruct/leasing/other loans.

the owner of the property does not have the right to usufruct the property when having a loan on it, neither leasing it for more than 3 years

If you want to continue, I would let her buy the property with the loan, issue a sales agreement to you or anyone to replace you, stating how much you have payed already, with hefty penalties for here if agreement broken, and allowing you to reside in the property now before your purchase is completed. This agreement can be made valid for 3 years. Another one can be valid for 3 next years. Better than nothing. Agreement can only be valid as long as here thai id card is valid

Edited April 6, 2010 by katabeachbum

[richardt1808]

Actually, I told you to search for 'usufruct' in this forum last night. Just read the usufruct pdf.

Usufruct is not possible if the property is mortgaged. It must be fully paid off.

There are no easy shortcuts to owning property in Thailand. If you are relying on your Thai gf to take out a bank loan and support your purchase of property, you are going to end up with problems. That is a 100% certainty.

[CDNinKS]

Of course these posters are correct and I missed that part.

The only one who can grant a usfruct is the legal owner of the property. Which in your case will be the bank.......and they will definitely not consent to a usfruct.

[xm911e3]

Ok I see so this is how things roll in Thailand. I guess the best bet would be in future, when my girlfriend and I get married, we'll take a home loan from the bank and I'll be the guarantor. Both our names will be in the mortgage.

[jfchandler]

The farang OP is talking about wanting to purchase a condo with his Thai GF...

Apparently he needs a Thai bank loan to fund the purchase.

However, if he didn't need the bank loan and could pay his portion of the purchase from cash, then -- correct me if I'm wrong -- things could go a lot smoother.

Assuming the condo itself was eligible for farang ownership (meaning the majority of units in the project owned by Thais), could they not complete the purchase as follows:

Joint 50-50% ownership of the condo between the OP and his GF... his portion funded thru cash and her portion funded thru a Thai bank loan in her name???

I don't know if they could do that as two unmarried individuals, or if they'd need to form a company/legal partnership in order to do it???

[InterestedObserver]

Ok I see so this is how things roll in Thailand. I guess the best bet would be in future, when my girlfriend and I get married, we'll take a home loan from the bank and I'll be the guarantor. Both our names will be in the mortgage.

Yes, but you still won't own the condominium. Your wife will and she can kick you out at anytime. Your name needs to be on the Chanote, the property title document, before you would have any security.

Edited April 6, 2010 by InterestedObserver

[scorecard]

Here's my situation.

My Thai son has small (5 yrs old) daughter, my granddaughter, and I want to ensure she has security.

Through a company I own a house and land (all paid) near Jomtien beach, It's upper end value. I live in a condo.

I'm wanting to do two things in one move, if possible:

- Transfer the house out of the company name and then I can close the company.

- Ensure my granddaughter has security (no problems whatever with my Thai son, he's well taken care of and is delighted at the idea of his young daughter having security).

But at the same time I'd like to have some personal security in terms of a roof over my head and the right to rent the property and keep the rent until I die.

My understanding is that a chanut can be recorded in a childs name, but what about usufunct?

Appreciate any experiences you can share on this please.

[xm911e3]

Ok I see so this is how things roll in Thailand. I guess the best bet would be in future, when my girlfriend and I get married, we'll take a home loan from the bank and I'll be the guarantor. Both our names will be in the mortgage.

Yes, but you still won't own the condominium. Your wife will and she can kick you out at anytime. Your name needs to be on the Chanote, the property title document, before you would have any security.

Ok I'll definately do the below to prevent her from kicking me outta the house if shit happens.

1) Put my name in the Chanote (Property Title)

2) Me as a guarantor and loan is in her name

3) Receipt of deposit (if any) must be in my name

4) Make sure all monthly mortgage payments receipts are in my name

Is there anything else I've overlooked?

Thank you very much in advance.

[thaiwanderer]

Is there anything else I've overlooked?

......renting instead?

[tutsiwarrior]

you will not have yer name on the chanote until you have an usufruct with the owner...

yer girlfriend will not be the owner until the mortgage is paid...until then the bank will be the owner and, as others have advised banks don't do usufructs...

your usufruct/chanote plan won't go anywhere until the property is paid for...

then, even when everything is paid for there are land office characters that consider themselves to be protectors of thai sovereignty and will refuse to allow an usufruct with a foreigner in contradiction of the law...

I'd say get some legal advice...there are law office sponsors on ThaiVisa that are reliable...

[xm911e3]

you will not have yer name on the chanote until you have an usufruct with the owner...

yer girlfriend will not be the owner until the mortgage is paid...until then the bank will be the owner and, as others have advised banks don't do usufructs...

your usufruct/chanote plan won't go anywhere until the property is paid for...

then, even when everything is paid for there are land office characters that consider themselves to be protectors of thai sovereignty and will refuse to allow an usufruct with a foreigner in contradiction of the law...

I'd say get some legal advice...there are law office sponsors on ThaiVisa that are reliable...

Grrrr..... Putting the condo under usufruct because the house is under mortgage is not possible... Putting my name in the charnote is not possible as well.... Gezzz....

Can any farang out here show me some ways I can protect myself?

I'll be the one paying for everything in the condominum including the deposit, monthly mortage, all miscellaneous stuffs, etc.... and the end of the day, my girlfriend still has the right to kick me outta the house... What a world....

Edited April 7, 2010 by xm911e3

[InterestedObserver]

Grrrr..... Putting the condo under usufruct because the house is under mortgage is not possible... Putting my name in the charnote is not possible as well.... Gezzz....

Can any farang out here show me some ways I can protect myself?

I'll be the one paying for everything in the condominum including the deposit, monthly mortage, all miscellaneous stuffs, etc.... and the end of the day, my girlfriend still has the right to kick me outta the house... What a world....

Find a condominium available for foreign ownership, pay cash for the condo with funds originating in foreign currency, and get Chanote title document in your name as 100% owner. Do before you get married to your Thai girlfriend. Easy!

Edited April 7, 2010 by InterestedObserver

[ballbreaker]

OP I think you finally have a full understanding.

Even if you were on the loan docs as guarantor and the GF takes a walk you are stuck with the loan and condo would belong to bank not you.

As someone else mentioned the only way to protect yourself is pay cash for condo and put in your name.

Edited April 7, 2010 by ballbreaker

[richardt1808]

quote]

Grrrr..... Putting the condo under usufruct because the house is under mortgage is not possible... Putting my name in the charnote is not possible as well.... Gezzz....

Can any farang out here show me some ways I can protect myself?

That's the point. In your situation, THERE IS NO PROTECTION !!

If you searched as recommended right at the beginning of this thread you would know that already. There is legislation in effect in this country geared to prevent foreign ownership of land and to limit foreign ownership of condos. People who want to own houses have all tried various ways to zig zag around the law and they all run the risk of losing their investments. People who try circumvent the law on the foreign ownership percentage in condos also risk losing their investment.

If you want to be protected, two options: 1. Buy the condo for cash. 2. Rent a place.

Final word: Putting property in the name of someone else is a sure bet for losing your money. History has already repeated itself ad nauseum in this regard.

[clinique]

Of course these posters are correct and I missed that part.

The only one who can grant a usfruct is the legal owner of the property. Which in your case will be the bank.......and they will definitely not consent to a usfruct.

dont mean to be nitpicky, but mortgagees (people who lend money, like banks) are NOT the legal owners of the property,, the owner is the owner the bank just registers its mortgage and becomes mortgagee to cover the loan..

However they can impose conditions on their documentation which includes not having any other encumbrance on the title deed, such as a ususfruct..

I am rechecking this point about banks and usufructs with our lawyers because we did several years ago register usufructs on property with mortgages as well

....keep you posted

just for clarity..

[CDNinKS]

dont mean to be nitpicky, but mortgagees (people who lend money, like banks) are NOT the legal owners of the property,, the owner is the owner the bank just registers its mortgage and becomes mortgagee to cover the loan..

Technically of course you are right.......I was just generalizing.

But just as in a car or anything that is financed, the lender has first rights to the property, such as insurance claims etc. So, although technically the bank does not "own" the property, they are first in line in any and all disputes. I would be VERY surprised if banks in this country would consent to having a usfruct registered on a property they have mortgaged. But, if they would, I can also bet it would very costly and time consuming.

I think that the best advise the OP has gotten is that if he really wants to protect himself, figure out a way to come up with the cash and have the Chanote entirely in his name. And one other thing, be sure to check on the community property laws, I believe that the law in LOS is that any assets you had prior to marriage are NOT included in community property.........I hope that is the case.

[xm911e3]

Ok it seems like the best bet here would be buy the whole condo and pay everything in cash (Transfer From My Home Bank) before I get married.

In that case, all assets, properties, etc... before married are all considered mine if shit happens....

No offences to the Thais, I feel like I'm not being welcome here like I was during my tourist times in Thailand and all laws or whatever shit seems to be in favour to the Thais.

[xm911e3]

Pardon me but what is the meaning of "OP"???

[jfchandler]

Original Poster... ie... the person who started the particular thread in question.

[xm911e3]

Original Poster... ie... the person who started the particular thread in question.

Right... Thanks man

[clinique]

dont mean to be nitpicky, but mortgagees (people who lend money, like banks) are NOT the legal owners of the property,, the owner is the owner the bank just registers its mortgage and becomes mortgagee to cover the loan..

Technically of course you are right.......I was just generalizing.

But just as in a car or anything that is financed, the lender has first rights to the property, such as insurance claims etc. So, although technically the bank does not "own" the property, they are first in line in any and all disputes. I would be VERY surprised if banks in this country would consent to having a usfruct registered on a property they have mortgaged. But, if they would, I can also bet it would very costly and time consuming.

I think that the best advise the OP has gotten is that if he really wants to protect himself, figure out a way to come up with the cash and have the Chanote entirely in his name. And one other thing, be sure to check on the community property laws, I believe that the law in LOS is that any assets you had prior to marriage are NOT included in community property.........I hope that is the case.

no problem, as i said not try to be nitpicky..

the pointi was making about banks and ususfructs was that

actualy when we did it a few years a go it was the bank who suggested it and it wasnt that expensive..

as i said im checking with lawyers that was actually coreect recolection..

[xm911e3]

Please allow me to summarize the best way to protect myself when buying a property in Thailand.

This is Thailand so gotta to do whatever it takes to protect my best interest.

In this case, no bank loan or whatsoever will be involve in the purchase of the condominum.

1) Check particular condo regarding the 51% Thai and 49% Farang thingy.

2) Do a transfer from my home bank. (Remark: For Purchase Of XXX Condominum, Unit #XX-XXX)

3) Pay the whole condo in 1 payment and make sure the payment receipt has my name on it.

4) Make sure my name must be in the Chanote. (Property Title)

5) Get married after condo has been acquired.

Am I missing anything out here?

OR

The easiest way out without any risk and hassles: RENT (Besides rental here in Thailand is even cheaper than monthly mortgage payments)

Thanks in advance.

Edited April 8, 2010 by xm911e3

[InterestedObserver]

Ideally you combine steps 3 and 4 at the Land Office. Simultaneously you hand previous owner or contractor the bank draft/cashiers check and the Land Office hands you the completed Chanote with your name as owner. You will need a Foreign Exchange Transaction Form (FETF) from the bank for the Land Office records.

Edited April 8, 2010 by InterestedObserver

[xm911e3]

Ideally you combine steps 3 and 4 at the Land Office. Simultaneously you hand previous owner or contractor the bank draft/cashiers check and the Land Office hands you the completed Chanote with your name as owner. You will need a Foreign Exchange Transaction Form (FETF) from the bank for the Land Office records.

Noted with thanks and also thank you guys for sharing your experience with me. I appreciate it very much.

Edited April 8, 2010 by xm911e3

[clinique]

just an update,

went to the Land dept, this morning.. spoke to the big guy..

according tto him there isno reason a usufruct cannot be registered at the same time or before or after a mortgage,, in fact he has allowed such registrations,,

it depends on the agreement between the parties involved..

as with my case several yearsa ago thebank suggested the usufruct to further protect myself and them as thye knew it was my money that was the (significant) deposit.

[CDNinKS]

it depends on the agreement between the parties involved..

Yes, and one of the parties would be the bank. I believe that is where you will find it sticky.....