Ownership/Usufruct/Inheritance Mess

[chiang mai]

Somebody I know well, a UK citizen, has bought a house and land in Thailand using an usufruct, the registered chanotte holder is little more than an an obliging, low risk Thai friend - this in itself is a clear case of proxy ownership which is of course illegal but this is not an immediate concern.

 

But his hope and intent is to leave the property to his children in the UK and I don't understand how this can be done either legally or otherwise unless a new usufruct is issued to one of them. Issuing a new ususfruct would require the co-operation and good will of the Thai friend which may or may not exist at that time.

 

To further complicate matters the usufructee has not written a UK OR a Thai will and believes that, at the time of his death, "ownership" of the Thai property will automatically pass from him to his children in the UK, clearly something that wont happen since an ususfruct dies along with the usufructee.

 

A very messy picture at best and to be honest I can't see any way that he can easily or safely pass future rights of use of the house to his family, unless there's something I'm missing here.

 

Any constructive thoughts as to the way forward?

Edited August 7, 2016 by chiang mai
improve readability

[1FinickyOne]

If your friend really wants to give something to his children in UK, then he should find a less complicated, more certain path, like property in UK or assets that are already there and will remain there. At best, by giving someone something that is difficult to cash in, he is giving them a problem, not much of an inheritance. 

 

It sounds to me like your friend did something for himself and maybe a Thai partner, and is hoping to gain a palliative by creating the illusion that he had his children in UK's interest at heart. 

 

Sorry this may not be a constructive thought, but a reality. Know your priorities. 

[chiang mai]

9 minutes ago, kenk24 said:

If your friend really wants to give something to his children in UK, then he should find a less complicated, more certain path, like property in UK or assets that are already there and will remain there. At best, by giving someone something that is difficult to cash in, he is giving them a problem, not much of an inheritance. 

 

It sounds to me like your friend did something for himself and maybe a Thai partner, and is hoping to gain a palliative by creating the illusion that he had his children in UK's interest at heart. 

 

Sorry this may not be a constructive thought, but a reality. Know your priorities. 

 

In fact the man in question is married to and lives in the house with his UK wife and the usufruct is in joint names but that doesn't materially change the picture I presented.

[Oxx]

I'm really not sure what the OP's friend is trying to achieve.  Why would he want to leave the use of a house in Thailand to his children who live in England? They can't sell it, and will have to maintain it if they enter into a usufruct.  It'll be a burden, rather than a boon.

 

Also consider that the Thai friend may die first, so it's the Thai friend's relatives that would have to be dealt with to enter a new usufruct once the current usufructee (if that's a word) dies.  Given the prospect of using or selling the property, they may be less cooperative than the friend has been.

Edited August 7, 2016 by Oxx

[1FinickyOne]

3 hours ago, chiang mai said:

 

In fact the man in question is married to and lives in the house with his UK wife and the usufruct is in joint names but that doesn't materially change the picture I presented.

 

Yes, that was my assumption - that it was something he made for himself.. it really has nothing to do with his children and leaving the interest to them has little or no value other than a "show" of --  I was thinking about you. It is not much of an inheritance though if he was doing it under the basis of it is the thought that counts, well, ok. 

 

Unless it is his children's dream to live in a property in Thailand, I do not see any benefit to them. I do not know if there are liabilities, but it appears from this distance as it might have been done solely to assuage any feelings of guilt that he might have in spending his own money. 

 

If there are liabilities, taxes etc... it might be more a curse than a gift... 

Edited August 7, 2016 by kenk24

[Oxx]

1 minute ago, kenk24 said:

I do not know if there are liabilities

 

Not sure if this addresses your point, but the person taking out the usufruct is required to perform all maintenance on the property, and to return it in the same state as when the usufruct was taken out.  It would also be prudent for that person also to take out insurance on the property should it, for example, be razed by fire.  A rebuild would be expensive, time consuming.  (How would the children cope with non-English speaking contractors?)  However, property insurance here is not very comprehensive.  For example, most policies now no longer cover flooding.  An unoccupied property would also be an attractive target for thieves who might strip the place of its wiring and fittings.

[1FinickyOne]

1 minute ago, Oxx said:

 

Not sure if this addresses your point, but the person taking out the usufruct is required to perform all maintenance on the property, and to return it in the same state as when the usufruct was taken out.  It would also be prudent for that person also to take out insurance on the property should it, for example, be razed by fire.  A rebuild would be expensive, time consuming.  (How would the children cope with non-English speaking contractors?)  However, property insurance here is not very comprehensive.  For example, most policies now no longer cover flooding.  An unoccupied property would also be an attractive target for thieves who might strip the place of its wiring and fittings.

 ok, then it would certainly be a burden. They would be paying for maintenance on a property that might offer them no value at all... Thailand might be as interesting to them as Outer Mongolia... If their dreams is to retire here, then it becomes a different story. 

 

Also, a low risk Thai partner is still a risk. A friend once considered doing the same with a Thai fellow who was a "saint" - and I do not doubt that he was a wonderful fellow, but in Thailand, if a "saints" mother is not well, the "saintly" thing to do would be to do anything, at all costs, to help his mother, which could include cashing out the property. Just sayin. 

[chiang mai]

My question is, how can this couple possibly pass ownership/use of of their property on to their children in the UK, once they have passed on? The issue of insurance and vacancy doesn't really apply in this case because of circumstances and location. Also, the chanotte owner doesn't really want the property back again since that person never owned it in the first place. I do believe the couple are sincere about wanting to pass rights to the property to their children, it's just that they are somewhat naive and have made lots of invalid assumption about hereditary rights plus their lawyer has not, I believe, covered this point at all. The lawyer seems to have taken the view that whilst they're alive all will be well but afterwards, that's somebody else's problem.

 

Note: the couple built the property themselves and the children wish to use it as a holiday home in the future. The current chanotte "owner" was found a few years ago after the couple were forced, by the Land Office, to move the property from Limited Company ownership, into ownership by a Thai national.

 

 

[Oxx]

Set up a new usufruct for life now in the names of the children.  (And hope that the children (i) don't kick their father out, (ii) don't die before their father.)  Of course, this requires the cooperation of the Thai national.

[blackcab]

The first thing is that your friends do not own the property. The Thai person on the chanote owns the property. There is no property to be left to your friend's children. 

 

Secondly, even if it was left to them, they couldn't own it anyway because they are not Thai. 

 

Your friends have a usufruct. I presume for life. One thing they could do is transfer their right of usufruct to one of their children before they die. This would give their child the same rights and obligations as they have until the child dies. This does not require the consent of the owner.

 

Section 1422 CCC: Unless otherwise provided in the act creating the usufruct, the usufructuary may transfer the exercise of his right to the third person...

Edited August 7, 2016 by blackcab

[Oxx]

4 hours ago, blackcab said:

The first thing is that your friends do not own the property. The Thai person on the chanote owns the property. There is no property to be left to your friend's children. 

 

Secondly, even if it was left to them, they couldn't own it anyway because they are not Thai. 

 

Your friends have a usufruct. I presume for life. One thing they could do is transfer their right of usufruct to one of their children before they die. This would give their child the same rights and obligations as they have until the child dies. This does not require the consent of the owner.

 

Section 1422 CCC: Unless otherwise provided in the act creating the usufruct, the usufructuary may transfer the exercise of his right to the third person...

 

(1) It's only the land that can't be owned by foreigners.  The building itself can be.

 

(2) It's only the "exercise of his right" that can be transferred - not the usufruct itself, meaning that the children could live in the property, but only until the person who took out the usufruct dies.

[chiang mai]

4 minutes ago, Oxx said:

 

(1) It's only the land that can't be owned by foreigners.  The building itself can be.

 

(2) It's only the "exercise of his right" that can be transferred - not the usufruct itself, meaning that the children could live in the property, but only until the person who took out the usufruct dies.

I strongly suspect that Blackcab is correct in what he says, especially given his track record of advice on property related issues on TVF. What further convinces me that is the case is that the holder of an usufruct can offer the subject property for lease to a third party that will remain in place after his/her death, the lease would not expire when the usufruct holder dies. It therefore follows that an usufruct that is passed on also does not expire.

 

Note: the land vs house ownership is a red herring in this debate, it's not applicable.

Edited August 7, 2016 by chiang mai

[chiang mai]

5 hours ago, blackcab said:

The first thing is that your friends do not own the property. The Thai person on the chanote owns the property. There is no property to be left to your friend's children. 

 

Secondly, even if it was left to them, they couldn't own it anyway because they are not Thai. 

 

Your friends have a usufruct. I presume for life. One thing they could do is transfer their right of usufruct to one of their children before they die. This would give their child the same rights and obligations as they have until the child dies. This does not require the consent of the owner.

 

Section 1422 CCC: Unless otherwise provided in the act creating the usufruct, the usufructuary may transfer the exercise of his right to the third person...

 

One point I forgot to mention is that the usufruct is not for life but instead is for 30 years, does that impact your solution?

 

http://www.siam-legal.com/realestate/Usufructs.php

Edited August 8, 2016 by chiang mai
to attach a reference

[Boycie]

22 minutes ago, chiang mai said:

 

One point I forgot to mention is that the usufruct is not for life but instead is for 30 years, does that impact your solution?

 

http://www.siam-legal.com/realestate/Usufructs.php

 

 A usufruct will be registered in a similar manner to a lease of up to 30 years or for the life of the usufructuary.

[chiang mai]

11 minutes ago, Boycie said:

 

 A usufruct will be registered in a similar manner to a lease of up to 30 years or for the life of the usufructuary.

 

Yes I am aware. The question I asked is whether the 30 year life of the usufruct (in this case) limits the the number of years for which it can transferred to a third party. For example: if the usufruct holder transfers their rights to a third party in say year ten of the 30 years, does that mean the recipient (or third party) only has those rights for the remaining 20 years? As seen above those rights can be transferred hence the ususfruct is NOT cancelled if transferred first, even if the original usufruct holder dies in say year 11 of the example above.

Edited August 8, 2016 by chiang mai

[KKr]

It is my understanding that in the case of land, thus without a house, a Superficies would be more expedient. This can be changed at the Land-office if both Owner and beneficiary agree.
A Superficies would in case of no structure being present concern the land only, thus the house would remain the property of the person(s) who built it, as long as they can proof their ownership, p.e. by having the building permit in their name and, possibly, proof of buying the materials.
(Ownership of an existing house would have to be transferred.)
Moreover, "a right of Superficies registered for a specified term is a transferable and inheritable interest in land". (According to a respectable Law Firm on the internet, you can google it)

As far as the Owner making a valid Last Will and Testament, be aware that the owner may change his mind, and document,  at any time without giving you notice.

Edited August 8, 2016 by KKr

[KKr]

1 hour ago, chiang mai said:

 

Yes I am aware. The question I asked is whether the 30 year life of the usufruct (in this case) limits the the number of years for which it can transferred to a third party. For example: if the usufruct holder transfers their rights to a third party in say year ten of the 30 years, does that mean the recipient (or third party) only has those rights for the remaining 20 years? As seen above those rights can be transferred hence the ususfruct is NOT cancelled if transferred first, even if the original usufruct holder dies in say year 11 of the example above.

I was told that Usufruct is a right granted to a specific person or persons, and in any case comes to an end at death of the person or last person granted the right of usufruct. 

[moe666]

Just be honest with your friend andtell him what he wants to dowill not happen.

[georgemandm]

How many on TV have done a usefruct I would say not many by reading your replying .

you can will a usefruct on if you wish to .

you can get a 30 years or you can get a 60 years you to you at the time .

you can't own the land but it is yours to do what you want on it . Build a home pull it down and Buid a new home or just pull it down .

one thing man forget in thailand is they think the love thing is for ever but sometimes it is not so you need to make sure you do the usufruct if you want to be sure you can't be thrown out of your home 

if you are married it is not the same .

 

 

[AlQaholic]

Usufruct is completely legal in Thailand even for foreigners and is similar to a 30 year lease contract which can then be extended another 30 years.

It is up to the individual Thai land office to approve the usufruct or not, however since they probably don't know what it is they will not approve.

 

I recommend the usufruct is terminated right now, and then set up a 30 year lease (including option to extend another 30 years) for the children already now, with the understanding that the parents use the property until their demise.

[Old Croc]

4 hours ago, chiang mai said:

I strongly suspect that Blackcab is correct in what he says, especially given his track record of advice on property related issues on TVF. What further convinces me that is the case is that the holder of an usufruct can offer the subject property for lease to a third party that will remain in place after his/her death, the lease would not expire when the usufruct holder dies. It therefore follows that an usufruct that is passed on also does not expire.

 

Note: the land vs house ownership is a red herring in this debate, it's not applicable.

I hold a usufruct for my life on the land owned by my Thai defacto wife.

One of the reasons I went this way was the fact that it allows me to rent or lease the property to a third person. My thinking was that if the wife predeceases me and I decide to move elsewhere I can still get income from the property.  The "fruits" referred to in the name usufruct.

If I were to lease the property for a 30 year term shortly before my death the lease stands for that term.

This would be one way for your friends to pass it on to their heirs

As all are aware the land belongs to the Thai surrogate, and sooner or later he, or his, will want to get their hands on it.   

Edited August 8, 2016 by Old Croc

[Old Croc]

http://www.siam-legal.com/realestate/pdf-file/usufruct.pdf

 

Some good reading on the subject here.

I'm not making recommendations one way or the other for the legal company who provided the paper.

[KKr]

1 hour ago, georgemandm said:

you can will a usefruct on if you wish to .

you can get a 30 years or you can get a 60 years you to you at the time

Section 1418. A usufruct may be created either for a period of time or for the life of the usufructuary. If no time has been fixed, it is presumed that the usufruct is for the life of the usufructuary.

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 1403. A right of habitation may be created either for a period of time or for the life of the grantee.

If no time has been fixed, such right may be terminated at any time by giving reasonable notice to the grantee.

If it is granted for a period of time, the period may not exceed thirty years; if a longer period is stipulated, it shall be reduced to thirty years. The grant may be renewed for a period not exceeding thirty years from the time of renewal.


Siam legal as "old croc" quotes is indeed a good source, also try samuiforsale. all relevant law text available there. 
Alternatively, PM me and I will refer you to a knowledgeable lawyer in CM who indeed delivers contracts on time and correct, unlike what I experienced from some others.
 

[KKr]

By the way, as foreigners cannot own or manage land, you cannot register a 30 years lease at the land office.
Apparently they will limit this to 3 years.
 

[KKr]

1 hour ago, AlQaholic said:

 

It is up to the individual Thai land office to approve the usufruct or not, however since they probably don't know what it is they will not approve.

 

AlQaholic never had a conversation with an official at the Landoffice it seems.

[DLang]

If he wants property in Thailand to leave to his kids, tell him to sell (if he can) and buy a condo.

 

It's what I did.

 

Handy rental income, always my own place to stay in an emergency, both of which will pass to my Thailand born daughter should something happen to me unexpectedly (I'm in my 30's)

[KKr]

5 hours ago, chiang mai said:

 

Note: the land vs house ownership is a red herring in this debate, it's not applicable.

No, it's not a red herring.
Under Usufruct one is liable to the Owner to keep the House in good condition.
Under Superficies, as a registered owner of the house, one can do as one pleases.

[chiang mai]

3 hours ago, KKr said:

I was told that Usufruct is a right granted to a specific person or persons, and in any case comes to an end at death of the person or last person granted the right of usufruct. 

 

2 hours ago, georgemandm said:

How many on TV have done a usefruct I would say not many by reading your replying .

you can will a usefruct on if you wish to .

you can get a 30 years or you can get a 60 years you to you at the time .

you can't own the land but it is yours to do what you want on it . Build a home pull it down and Buid a new home or just pull it down .

one thing man forget in thailand is they think the love thing is for ever but sometimes it is not so you need to make sure you do the usufruct if you want to be sure you can't be thrown out of your home 

if you are married it is not the same .

 

 

 

That is not true, an usufruct cannot be willed.

 

Also not true is that 60 year leases are legal, only 30 years.

 

I have an usufruct on my property.

[chiang mai]

1 hour ago, KKr said:

AlQaholic never had a conversation with an official at the Landoffice it seems.

 

I agree that it is at the discretion of individual land offices whether to grant usufructs or not.

[chiang mai]

3 hours ago, KKr said:

I was told that Usufruct is a right granted to a specific person or persons, and in any case comes to an end at death of the person or last person granted the right of usufruct. 

 

I have a very good lawyer in the form of Kuhn Sumalee and she advised me when I bought my house. But since the issue I posted is not about me I'm reluctant to pay fees to get an answer to somebody else's question, hence I posted here.

 

And Blackcab in his post earlier confirmed an usufruct can be transferred, something I was unaware of, the only question remaining for me in this thread is the length of validity of that transfer and whether it is restricted to the remainder of the 30 year term, as I posted earlier.

Edited August 8, 2016 by chiang mai