Loans On The Back Of Chanots

[Terry Newman]

I have looked in the search function but that has not really answered my questions. It has to do with giving loans using a full chanote as collateral.

I understand that for this to be effective, you must register the loan on the back of the chanote in the land office, like a bank does. And have a written contract regarding repayments etc.

My questions. If the borrower defaults, how to do claim the asset? Can you do it in the land office if you have a clear contract that has been broken or do you have to go to court?

I was told, and I really do not know if it is true that the borrower can pre sign the form to transfer for if they default.

Can a Foreigner give a loan and be the beneficiary for land in this case?

[PattayaPhom]

Money lending is ilegal unless by an authorised company/bank etc.

[Khun Jean]

But, But, But how can lawyers advice and others repeat " and then for a 1% land office mortgage registration fee, open a mortgage for the value of the property plus a percentage".

[ballbreaker]

You will need to file papers with the court if they default.

Perhaps if person that defaults is willing to visit land office and sign over property then court might be avoided.

[LennyW]

You will need to file papers with the court if they default.

Perhaps if person that defaults is willing to visit land office and sign over property then court might be avoided.

Not true.

My wife often acts on behalf of a Bangkok "loan shark" he regularly loans money against houses here in Pattaya, there are two types of loan agreement on standard paperwork at the land office but i forget the names. Anyway, one of them is automatic - default and the title immedeately passes to the lender, no court appereance, and no visit to the land office from the defaulter, this is the type that this guy mostly uses.

There is another type which can be extended for a period of time after the due date has passed and this type can be forced to go through the courts, not favourd by the "loan sharks"!!

Wish i could remeber the names of the two types!

[swissie]

For Thai-Banks it's relatively easy to reposess land in case of default. If you as a Farang intend to lend money toward land to a Thai-National (Chanot or not), you will have a very hard time to get your money back upon default. (= As a Farang you can not just take the land back instead of cash, since you are not allowed to own land in Thailand in the first place.)

As rumor has it: Since slowly but surely, Farangs realize that it is not necessarily such a good idea to buy land for the G/F and are getting hesitant about it, the "only give me loan for land syndrome" seems to be on the upswing.

Of course, the result in case of failure of relationship, for the Farang it basically amounts to the same.

Cheers.

.

[jamescollister]

You will need to file papers with the court if they default.

Perhaps if person that defaults is willing to visit land office and sign over property then court might be avoided.

Not true.

My wife often acts on behalf of a Bangkok "loan shark" he regularly loans money against houses here in Pattaya, there are two types of loan agreement on standard paperwork at the land office but i forget the names. Anyway, one of them is automatic - default and the title immedeately passes to the lender, no court appereance, and no visit to the land office from the defaulter, this is the type that this guy mostly uses.

There is another type which can be extended for a period of time after the due date has passed and this type can be forced to go through the courts, not favourd by the "loan sharks"!!

Wish i could remeber the names of the two types!

That's a new one to me, loan sharks often take the land title as collateral, but you need a court to confiscate the land. That's why banks give loan defaults so much room to make good on payments. jim

[Khun Jean]

You will need to file papers with the court if they default.

Perhaps if person that defaults is willing to visit land office and sign over property then court might be avoided.

Not true.

My wife often acts on behalf of a Bangkok "loan shark" he regularly loans money against houses here in Pattaya, there are two types of loan agreement on standard paperwork at the land office but i forget the names. Anyway, one of them is automatic - default and the title immedeately passes to the lender, no court appereance, and no visit to the land office from the defaulter, this is the type that this guy mostly uses.

There is another type which can be extended for a period of time after the due date has passed and this type can be forced to go through the courts, not favourd by the "loan sharks"!!

Wish i could remeber the names of the two types!

Is that allowed by law, i mean the charging of interest as undoubtedly happens, or is that part kept quiet about?

A visit to the land office is in order to see if i can obtain some of those standard paperwork, or do you have a copy available that can be uploaded?

[Khun Jean]

For Thai-Banks it's relatively easy to reposess land in case of default. If you as a Farang intend to lend money toward land to a Thai-National (Chanot or not), you will have a very hard time to get your money back upon default. (= As a Farang you can not just take the land back instead of cash, since you are not allowed to own land in Thailand in the first place.)

As rumor has it: Since slowly but surely, Farangs realize that it is not necessarily such a good idea to buy land for the G/F and are getting hesitant about it, the "only give me loan for land syndrome" seems to be on the upswing.

Of course, the result in case of failure of relationship, for the Farang it basically amounts to the same.

Cheers.

.

This would not necessarily be so.

Land that gets into foreign ownership, by loan default or inheritance for example needs to be sold within one year.

This would mean there is a chance to recoup part or all of the money.

[LennyW]

You will need to file papers with the court if they default.

Perhaps if person that defaults is willing to visit land office and sign over property then court might be avoided.

Not true.

My wife often acts on behalf of a Bangkok "loan shark" he regularly loans money against houses here in Pattaya, there are two types of loan agreement on standard paperwork at the land office but i forget the names. Anyway, one of them is automatic - default and the title immedeately passes to the lender, no court appereance, and no visit to the land office from the defaulter, this is the type that this guy mostly uses.

There is another type which can be extended for a period of time after the due date has passed and this type can be forced to go through the courts, not favourd by the "loan sharks"!!

Wish i could remeber the names of the two types!

That's a new one to me, loan sharks often take the land title as collateral, but you need a court to confiscate the land. That's why banks give loan defaults so much room to make good on payments. jim

As i understand it the way it works is that the land title is actually transferred to the lender at the start, a seperate contract (the one which i forget the name of) is done which sets out the term of the loan, then if the loan is defaulted on there is no need for any courts etc as it is all already in the lenders name.

I dont know the legality of such practice, but i do know it is common practise with the "loan sharks" and takes place daily at the land office in Pattaya.

These guys charge between 2 and 3% interest a month, now i also thought that was over the maximum annual ammount chargeable by law, but it is a daily practise with the full co-operation of the land office????

Edit to add...... This is basically the same sytem these high street car loan companies work, they will loan money against a car. bike, truck etc. the ownership is transferred to the loan company at the outset then if there is any default they just take the vehicle, no courts and no more paperwork, these guys tend to charge only 1.25% per month which as i understand it falls within the maximum annual legal limit.

Edited January 26, 2013 by LennyW

[jamescollister]

You will need to file papers with the court if they default.

Perhaps if person that defaults is willing to visit land office and sign over property then court might be avoided.

Not true.

My wife often acts on behalf of a Bangkok "loan shark" he regularly loans money against houses here in Pattaya, there are two types of loan agreement on standard paperwork at the land office but i forget the names. Anyway, one of them is automatic - default and the title immedeately passes to the lender, no court appereance, and no visit to the land office from the defaulter, this is the type that this guy mostly uses.

There is another type which can be extended for a period of time after the due date has passed and this type can be forced to go through the courts, not favourd by the "loan sharks"!!

Wish i could remeber the names of the two types!

That's a new one to me, loan sharks often take the land title as collateral, but you need a court to confiscate the land. That's why banks give loan defaults so much room to make good on payments. jim

As i understand it the way it works is that the land title is actually transferred to the lender at the start, a seperate contract (the one which i forget the name of) is done which sets out the term of the loan, then if the loan is defaulted on there is no need for any courts etc as it is all already in the lenders name.

I dont know the legality of such practice, but i do know it is common practise with the "loan sharks" and takes place daily at the land office in Pattaya.

These guys charge between 2 and 3% interest a month, now i also thought that was over the maximum annual ammount chargeable by law, but it is a daily practise with the full co-operation of the land office????

Edit to add...... This is basically the same sytem these high street car loan companies work, they will loan money against a car. bike, truck etc. the ownership is transferred to the loan company at the outset then if there is any default they just take the vehicle, no courts and no more paperwork, these guys tend to charge only 1.25% per month which as i understand it falls within the maximum annual legal limit.

Yep it could well be done that way, not really a loan, you've sold the land and hope to buy it back at a later date. Paying more of course. Jim

[swissie]

For Thai-Banks it's relatively easy to reposess land in case of default. If you as a Farang intend to lend money toward land to a Thai-National (Chanot or not), you will have a very hard time to get your money back upon default. (= As a Farang you can not just take the land back instead of cash, since you are not allowed to own land in Thailand in the first place.)

As rumor has it: Since slowly but surely, Farangs realize that it is not necessarily such a good idea to buy land for the G/F and are getting hesitant about it, the "only give me loan for land syndrome" seems to be on the upswing.

Of course, the result in case of failure of relationship, for the Farang it basically amounts to the same.

Cheers.

.

This would not necessarily be so.

Land that gets into foreign ownership, by loan default or inheritance for example needs to be sold within one year.

This would mean there is a chance to recoup part or all of the money.

I could be wrong, but to my best of knowledge, land that falls into "foreign-ownership" must be sold within 6 months. (Firehouse-sale). During this period of time it may well be, that NO OFFERS AT ALL will be presented to the potential Farang Benficiary. Until about 2 days before the term is up. Then the Farang will receive a firm offer that is about 75 to 80 % below actual value. = Take it or leave it !

- Unless: At least part of "the Family" remains on your side, the Phu Yai Baan is on your side and the local Police-Chief is also on your side. All the three combined: Very unlikely.

It was said here before: Any investements of this sort MUST be considered as a hobby and a writeoff in the first place.

The fact that there is a whole new industriy cropping up in form of legal-firms that cater to the "special-needs" of Farang-Investors, will not change one Iota of existing facts.

BTW: Those firms are not in the habit of giving "Refunds", if something should not work out as planned.

So again: Potential Investors from overseas should restrain their urge to invest anything for the duration of at least 6 months ( this may be in stark opposition to the plans of GF or Wifey).

In retrospect, you may well conclude, that by making no investment at all, was the best investment you ever made.

Cheers.

[Terry Newman]

Swissie, I do believe form a reliable source that in the case of inheritance it is 12 months to liquidate the land from when the farlang gains "ownership". (which may take a couple of month after the death of the Thai "proxy" commonly a Thai wife).

I do not know for default on a loan. The way that LennyW mentions, which I have heard very simulair, so I think he is correct, would mean "pre-transferring" into a farlang which I very much doubt would happen as it would be abused.

"Money lending is ilegal unless by an authorised company/bank etc. I believe is wrong." My understanding is that the highest interest on a private loan is 15% per annum.

[jamescollister]

Bit off topic, but know of a few farangs out this way who's Thai spouse has died. House land has gone to her children or other family member. Not one has been told to leave, this is Issan and any one/family that told a farang to leave or sold the house. land would be looked down upon from that day forth. Just not the way, if you have been a good man to the step kids or the bothers sister etc you are family. No ones throwing you out on the street. Jim