Usufruct questions

[passedout]

Hi all,

I’m looking at buying a house in my gf’s name and subsequently ask her to sign a usufruct in my name. That would be in Udon and I’m not sure yet whether in Udon Land Office it’s a straightforward procedure or not in regard to time and tea money etc…any first hand experience from anyone?

After reading through several threads in this forum, the usufruct route seemed to be the best way I could find so far that suits my circumstances. That’s until I came across a 7 years old thread where a forum member posted the following challenging the legality of how most foreigners are using the usufruct based on the Thai Land Code:

Following the government's move to put an end to the practice of foreigners using shell companies to own land an alternative structure suggested is a Thai national as the nominee land owner acting on behalf of the foreigner, combined with a 30-year 'renewable' lease (or usufruct for the life of) in the foreigner's name. Also in this construction Thai law is not on the foreigner's side. The Land Code prohibits the use of Thai nationals to acquire land as a nominee owner/ agent in place of the foreigner (section 96 Land Code). In this construction both parties risk being fined and jailed... In practice this structure is sometimes put in place, but the foreigners legal position is not strong and even though the lease or usufruct is registered in the foreigner's name this could lead to potential problems in the future.

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 the law 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.

Section 96 Land Code; 'When it appears that any person (including a juristic person) has acquired land as the owner in place of an alien or juristic person under the provisions of Section 97 and 98, the Director-General shall have the authority to dispose of such land and the provisions of Section 94 shall apply mutatis mutandis'.

Section 113 Land Code; 'Any person who acquires land as an agent of an alien or juristic person under the provisions of Section 97 or 98 shall be punished with a fine not exceeding twenty thousand baht or an imprisonment not exceeding two years, or both'.

Has anyone got any idea if a court ruling based on the above Thai Land Code has ever been made and implemented against a foreigner? Paying a fine is one thing but going to jail up to two years is a different kettle of fish altogether!

Somebody mentioned that a cash gift from a foreigner to his Thai gf should suffice to explain where the money for the purchase of the house comes from but…will it really?

Does anyone have any personal experience or any thought on the subject?

Thanks in advance

[swissie]

Well passedout, You already know more about the subject, than 99 % of "Farang Investors.

Old laws, that have been dormant, (nobody really cared), are being resurrected these days

--------------------------------------------------------------------------------------------------------------.

A Usufruct, while connected to "Family-Land" and "Family" in general, is problematic to start with. If a marriage or relationship turns sour, the Thai-Family will find ways to get the "Usufruct-Holder" off the land in no time at all, with or without Usufruct.

Usually, Farangs tend to abandon their "Usufruct-Rights" gladly, after their car tires get slit on a weekly basis, their dog has been poisoned and somebody throws rocks thru the windows regularly, etc etc.....

I am sure, you get my drift. Cheers.

[passedout]

Hi swissie thanks for your comments.

What I know is what I learned from other people’s experiences by reading this forum and never had a first hand involvement.

Yeah I’ve read about the horror stories in connection with building a house on family land or purchased land/house in the same village of the wife/gf’s family. Better avoid that as much as possible I agree. The house I’m looking at buying it would be at least an hour away from my gf’s family which should give me a greater level of protection should thing get sour down the line.

If what I quoted in my previous post is dormant law that nobody cares about it’s good news and hopefully it’ll stay that way. Just enquiring whether anyone knew of this law being ever enforced by any land officer. Maybe to play safe it would be a good idea to let some time go past between the purchase of the house and the registration of the usufruct. Let’s say 6 to 12 months hoping that the relationship stays healthy in the mean time. That’s in order to raise less suspicious in the land office on where the money for the purchase came from in the first place.

Any views on that or any other ideas on ways to increase my odds?

Cheers

[swissie]

Hi swissie thanks for your comments.

What I know is what I learned from other people’s experiences by reading this forum and never had a first hand involvement.

Yeah I’ve read about the horror stories in connection with building a house on family land or purchased land/house in the same village of the wife/gf’s family. Better avoid that as much as possible I agree. The house I’m looking at buying it would be at least an hour away from my gf’s family which should give me a greater level of protection should thing get sour down the line.

If what I quoted in my previous post is dormant law that nobody cares about it’s good news and hopefully it’ll stay that way. Just enquiring whether anyone knew of this law being ever enforced by any land officer. Maybe to play safe it would be a good idea to let some time go past between the purchase of the house and the registration of the usufruct. Let’s say 6 to 12 months hoping that the relationship stays healthy in the mean time. That’s in order to raise less suspicious in the land office on where the money for the purchase came from in the first place.

Any views on that or any other ideas on ways to increase my odds?

Cheers

Just some food for thought. Depending on your age, how about a "Land-Lease" (allowed is a 30 year maximum.) on NON-FAMILY land of course, otherwise we are back to square 1.

Advantages:

- Can be in your name

- If land title is "Chanote", nothing much can happen to you as far as the legal side of it is concerned. No worries for 30 years.

Disadvantages:

- After 30 years, it's "Game Over". Let's face it: Just like a car, it's a "wasting asset". You and your kids will not benefit from increasing land prices.

- If land is valued at 1 million, the 30 year lease will cost between 600.000 and 800.000 Bht. Depending on location etc...

- Not easy to find land owners (sellers), willing to issue 30 year leases these days.

- Last but not least: Your girlfriend may not like the idea at all. Just like girlfriends that don't like it, if a Farang intends to buy a condominium in his name.

But in case your girlfriend's comment should be: "Do whatever you think is right and whatever makes you happy", you may have found the much searched for "Diamond among the rough".

As said, just food for thought. Cheers.

[passedout]

Just some food for thought. Depending on your age, how about a "Land-Lease" (allowed is a 30 year maximum.) on NON-FAMILY land of course, otherwise we are back to square 1.

Advantages:

- Can be in your name

- If land title is "Chanote", nothing much can happen to you as far as the legal side of it is concerned. No worries for 30 years.

Disadvantages:

- After 30 years, it's "Game Over". Let's face it: Just like a car, it's a "wasting asset". You and your kids will not benefit from increasing land prices.

- If land is valued at 1 million, the 30 year lease will cost between 600.000 and 800.000 Bht. Depending on location etc...

- Not easy to find land owners (sellers), willing to issue 30 year leases these days.

- Last but not least: Your girlfriend may not like the idea at all. Just like girlfriends that don't like it, if a Farang intends to buy a condominium in his name.

But in case your girlfriend's comment should be: "Do whatever you think is right and whatever makes you happy", you may have found the much searched for "Diamond among the rough".

As said, just food for thought. Cheers.

I’ve looked into the 30yrs lease and I would only consider it if I was over 60’s and I’m not quite there yet. Interesting suggestion nevertheless.

Cheers

[kbb]

Went to the Land Office in Pattaya to register a recent house purchase in my wife's name for a UFSTRUCT this morning.

Have done this previously in Pattaya and up in Nakhon Sawan. Both about 5 years ago.

This morning, the woman told my wife that "The laws have changed already. Cannot do again".

Naturally, we have no other details.

Was this some sort of miss understanding?

Just another one of those ways to get my cardiovascular exercise ...

- k

[swissie]

Went to the Land Office in Pattaya to register a recent house purchase in my wife's name for a UFSTRUCT this morning.

Have done this previously in Pattaya and up in Nakhon Sawan. Both about 5 years ago.

This morning, the woman told my wife that "The laws have changed already. Cannot do again".

Naturally, we have no other details.

Was this some sort of miss understanding?

Just another one of those ways to get my cardiovascular exercise ...

- k

Does not come as a surprise to me. "Laws are changing" or old laws are being implemented all of a sudden. Whatever "changes" or "up-diggings" of old laws are concerned : They are not in favor of Farang-Investors. Period!

Currently, Thailand is at a crossroad: Join the rest of the world, or remain on the xenophobic trip, convinced that "Thainess" will cure Thailand and the rest of the world.

At this crucial time, any potential Farang Investor should be aware of the fact, that (at this time), an investment in Thailand is the equivalent of sitting down at a roulette-table in Las Vegas.

"Sometimes, no investment is the best investment" . No, this quote is not by William Shakespeare but by my grandfather.

Cheers.

[passedout]

Went to the Land Office in Pattaya to register a recent house purchase in my wife's name for a UFSTRUCT this morning.

Have done this previously in Pattaya and up in Nakhon Sawan. Both about 5 years ago.

This morning, the woman told my wife that "The laws have changed already. Cannot do again".

Naturally, we have no other details.

Was this some sort of miss understanding?

Just another one of those ways to get my cardiovascular exercise ...

- k

Probably not unless the law has changed very recently.

As other forum members have pointed out in other threads, some land officers don’t seem to like registering usufructs to foreigners for one reason or another and they just say, “cannot” or whatever. Who’s there to challenge their power? You may bring along a clued up lawyer with you to make them see the light but that could make them lose face and that may bring problems for you later on.

If you care about the usufruct though that seems to be the only way forward that I can think of.

[blackcab]

The law hasn't changed. Usufructs are still governed by Thailand Civil and Commercial Code (Part III), Book IV, Title VII, Sections 1417 to 1428.

[chiang mai]

+1

As long as the ufustruct holder declares full value to the Land Office and doesn't try to be seen to be getting the property for free and, the holder is in an enduring relationship with the channotte holder, (but preferably not married to the channote holder since that could potentially make the usufruct joint property to be divided at divorce), there is very very little risk, despite the many bar stool stories about the family and threats etc.

[passedout]

+1

As long as the ufustruct holder declares full value to the Land Office and doesn't try to be seen to be getting the property for free and, the holder is in an enduring relationship with the channotte holder, (but preferably not married to the channote holder since that could potentially make the usufruct joint property to be divided at divorce), there is very very little risk, despite the many bar stool stories about the family and threats etc.

If the going price for the house is 7M baht for instant and the nominal value given by the land office to pay tax on is let’s say 4M baht, how much do you think the usufructee should be seen to pay the usufructer call it a “fair” amount to keep everyone sweet? The whole 4M baht maybe?

That would mean, if I'm not wrong, paying a 1.5% tax on 4M baht.

Cheers

[chiang mai]

+1

As long as the ufustruct holder declares full value to the Land Office and doesn't try to be seen to be getting the property for free and, the holder is in an enduring relationship with the channotte holder, (but preferably not married to the channote holder since that could potentially make the usufruct joint property to be divided at divorce), there is very very little risk, despite the many bar stool stories about the family and threats etc.

If the going price for the house is 7M baht for instant and the nominal value given by the land office to pay tax on is let’s say 4M baht, how much do you think the usufructee should be seen to pay the usufructer call it a “fair” amount to keep everyone sweet? The whole 4M baht maybe?

That would mean, if I'm not wrong, paying a 1.5% tax on 4M baht.

Cheers

Declare the actual sale price, whatever that might be.

I bought a house last year and a condition of sale was that the full sale price be declared, the seller agreed without a problem.The reason I wanted the full price declared is so that when I go to sell at some point in the future the value of my purchase can be seen, this upon the advice of my solicitor - I tend to ignore the Land Office valuations, in my area they are meaningless..

[passedout]

+1

As long as the ufustruct holder declares full value to the Land Office and doesn't try to be seen to be getting the property for free and, the holder is in an enduring relationship with the channotte holder, (but preferably not married to the channote holder since that could potentially make the usufruct joint property to be divided at divorce), there is very very little risk, despite the many bar stool stories about the family and threats etc.

If the going price for the house is 7M baht for instant and the nominal value given by the land office to pay tax on is let’s say 4M baht, how much do you think the usufructee should be seen to pay the usufructer call it a “fair” amount to keep everyone sweet? The whole 4M baht maybe?

That would mean, if I'm not wrong, paying a 1.5% tax on 4M baht.

Cheers

Declare the actual sale price, whatever that might be.

I bought a house last year and a condition of sale was that the full sale price be declared, the seller agreed without a problem.The reason I wanted the full price declared is so that when I go to sell at some point in the future the value of my purchase can be seen, this upon the advice of my solicitor - I tend to ignore the Land Office valuations, in my area they are meaningless..

I take it the stamp duty was then paid on the full real value of the house.

I personally don’t mind going with the flow I.E. the Thai way of paying tax on the land office valuation rather than on the real value of the asset.

Less tax being paid when buying and less tax being paid when selling if I understand correctly.

Regarding the registration of the usufruct, in my specific case, again I don’t see the need to pay all that tax by declaring the full value. I don’t mind paying a certain amount of it though to keep things smooth. Cheers

[CarlBkk]

Sorry to hijack, but I can't find any information on the cost of setting up a Usufruct. Is this something that can be done easily at the Land Office or should a lawyer draw one up? Someone mentioned having a clause whereby the land owner (gf) will need to pay the cost of the house on expiration of the lease or on the sale of the land...or similar to that, for extra reassurance.

Lawywer quoted 34,000 for Usufruct and pre-meeting with land office.

[chiang mai]

78 baht at the Land Office, unless you are fluent in Thai however, best to let an Attorney do it for you. An all in price (buy, transfer, usufruct) in this neck of the woods is circa 25 k baht, using one of the best lawyers in town, also includes two wills and attendance at the LO, there is no such thing as a pre-meeting!.

[CarlBkk]

Hmm ok, the pre-meeting was for the lawyers to visit the land office to enquire how easily they would let a usufruct be set up. Apparently each office has different opinions on this, some don't like doing it at the same time as the house transfer. This is just me repeating what they said.

[chiang mai]

Hmm ok, the pre-meeting was for the lawyers to visit the land office to enquire how easily they would let a usufruct be set up. Apparently each office has different opinions on this, some don't like doing it at the same time as the house transfer. This is just me repeating what they said.

All the lawyer has to do is call the Land Office and ask if they will allow usufructs, mine did it whilst I was sat in her office, fact is, you could do it.

EDIT I suppose your first risk is that you pay the total fee in advance, the lawyer has his "pre-meeting" with the LO, then comes back and says no, sorry, you can't do an usufruct here.

Edited September 24, 2015 by chiang mai

[huawei]

+1

As long as the ufustruct holder declares full value to the Land Office and doesn't try to be seen to be getting the property for free and, the holder is in an enduring relationship with the channotte holder, (but preferably not married to the channote holder since that could potentially make the usufruct joint property to be divided at divorce), there is very very little risk, despite the many bar stool stories about the family and threats etc.

If the going price for the house is 7M baht for instant and the nominal value given by the land office to pay tax on is let’s say 4M baht, how much do you think the usufructee should be seen to pay the usufructer call it a “fair” amount to keep everyone sweet? The whole 4M baht maybe?

That would mean, if I'm not wrong, paying a 1.5% tax on 4M baht.

Cheers

Declare the actual sale price, whatever that might be.

I bought a house last year and a condition of sale was that the full sale price be declared, the seller agreed without a problem.The reason I wanted the full price declared is so that when I go to sell at some point in the future the value of my purchase can be seen, this upon the advice of my solicitor - I tend to ignore the Land Office valuations, in my area they are meaningless..

Was that through a company, otherwise I am not sure what the advantage is?

[chiang mai]

+1

As long as the ufustruct holder declares full value to the Land Office and doesn't try to be seen to be getting the property for free and, the holder is in an enduring relationship with the channotte holder, (but preferably not married to the channote holder since that could potentially make the usufruct joint property to be divided at divorce), there is very very little risk, despite the many bar stool stories about the family and threats etc.

If the going price for the house is 7M baht for instant and the nominal value given by the land office to pay tax on is let’s say 4M baht, how much do you think the usufructee should be seen to pay the usufructer call it a “fair” amount to keep everyone sweet? The whole 4M baht maybe?

That would mean, if I'm not wrong, paying a 1.5% tax on 4M baht.

Cheers

Declare the actual sale price, whatever that might be.

I bought a house last year and a condition of sale was that the full sale price be declared, the seller agreed without a problem.The reason I wanted the full price declared is so that when I go to sell at some point in the future the value of my purchase can be seen, this upon the advice of my solicitor - I tend to ignore the Land Office valuations, in my area they are meaningless..

Was that through a company, otherwise I am not sure what the advantage is?

It helps prove that the purchase is not a nominee purchase since most nominees try to cut corners and save on taxes. It also helps when you eventually go to sell, Land Office valuations are notoriously low compared to real world values and buyers will typically try to use the LO numbers to get the price down, it helps if you can show what you actually paid for the property and goes some way towards justifying your asking price.

[passedout]

78 baht at the Land Office, unless you are fluent in Thai however, best to let an Attorney do it for you. An all in price (buy, transfer, usufruct) in this neck of the woods is circa 25 k baht, using one of the best lawyers in town, also includes two wills and attendance at the LO, there is no such thing as a pre-meeting!.

I take it the lawyer you're talking about has an office in Udon.

Would you recommend him?

Cheers

[chiang mai]

78 baht at the Land Office, unless you are fluent in Thai however, best to let an Attorney do it for you. An all in price (buy, transfer, usufruct) in this neck of the woods is circa 25 k baht, using one of the best lawyers in town, also includes two wills and attendance at the LO, there is no such thing as a pre-meeting!.

I take it the lawyer you're talking about has an office in Udon.

Would you recommend him?

Cheers

.Not correct, the lawyer I refer to is "in this neck of the woods", Chiang Mai! I gave the price details for comparison purposes only/