Is it legal?

[JayBeeee]

Is it legal? (Banking practices)
Scenario:
When applying to a bank for a loan of ฿1.5 million, giving the chanote/deeds for land and property with a value of approximately five times the loan amount as collateral, the bank insists that the borrower also takes out life insurance to cover the amount of the loan, again.

 

The first step was to sign the land rights over to the bank, a process which included payment of ฿8,250 to the land registry office.
Next, the borrower was asked to submit a proposal, detailing what the money was to be used for.
Then came the surprise of the life insurance premium of almost ฿28,000 and more fees of around ฿4,000.

 

How can the insurance policy be justified when such high value collateral has already been accepted, guaranteeing the loan five times over? Or is this just another example of banks conning more money from vulnerable customers?

[cornishcarlos]

Did the bank value the land at 5x the loan value ? Or is that just your estimate ??

[theguyfromanotherforum]

Don't wanna sound like a douche, but banks have a free pass at printing currency and they can certainly set their own loan terms. That being said I would never deal with a Thai bank. Sorry for a useless reply and I'll be watching this thread for better answers from wiser forum members.

[JayBeeee]

"Did the bank value the land at 5x the loan value ? Or is that just your estimate ??"

That's what I was told. 12 rai + ฿5.5m house.

Edited September 5, 2016 by JayBeeee

[pgrahmm]

So they can get both the property & life insurance benefits.....

 

Also - it could be a way of sheltering your wife in the event of your passing.....They get the payback & the estate goes to your next of kin.... 

 

Unknown what would happen if your wife passes first;  as her name is on the land & might be claimable by her family - leaving you high and dry but still owing.....

[trogers]

Banks prefer return of cash, rather than foreclosure...

 

Thus, the life insurance.

[Swiss1960]

Simple:

Life insurance in case you die before the loan is paid back, thus the bank does not have to deal with selling land / house off a grieving widow

Land rights in case you fail to pay back the loan, so the bank does not have to kill you... ?

 

[JayBeeee]

I tnink the stress has been compounded by the usual lack of information in advance.

The insurance requirement wasn't mentioned till the last day when they were signing the final paperwork, as with the other extra costs.

Surprises are the one thing you're guaranteed to get in Thailand!

 

[MissAndry]

4 hours ago, pgrahmm said:

Also - it could be a way of sheltering your wife in the event of your passing.....They get the payback & the estate goes to your next of kin.... 

 

 

The life insurance is on the Thai wife, not the foreigner. This is a normal, if sneaky, Thai banking practice. Thai wife dies, foreigner husband gets free property (if she put his name in the box).

 

Cost of insurance is usually 20x the yearly insurance fee on a 30 year term loan, paid upfront (they actually take the premium from the loan). They don't tell you upfront, because everyone knows they are going to charge it.

Edited September 5, 2016 by MissAndry

[JayBeeee]

17 minutes ago, MissAndry said:

 

 Thai wife dies, foreigner husband gets free property (if she put his name in the box).

 

 

How is that possible if foreigners can't own land? I thought the property would automatically go to the wife's children.

Good reason for the foreign husband to officially lease the land from his Thai wife, even though he paid for it in the first place, as the contract would have to be honoured by her heirs.

[MissAndry]

8 minutes ago, JayBeeee said:

 

How is that possible if foreigners can't own land? I thought the property would automatically go to the wife's children.

Good reason for the foreign husband to officially lease the land from his Thai wife, even though he paid for it in the first place, as the contract would have to be honoured by her heirs.

 

Inheriting land is the only legal way a foreigner can own land in Thailand.

(although it may be required that the foreigner sell the land in a reasonable period of time, but there is no set period for probate, one could theoretically delay probate indefinitely, so that time can't be specific)

The spouse of a Thai owns 50% of the value of any property bought after marriage.

On death the spouse of a Thai inherits another 50% of the Thai spouse assets.

 

In all, a foreign husband would own at least 50% (but probably 75%) of his wife's assets on her death, and her children would share the remaining 25%. If anyone tells you different, they are either being, 1 dishonest, or 2 ignorant. Thai law is entirely clear on the disposition of marital assets and inheritance. The nationality of the spouse in not a consideration in the disbursement.

 

Edited September 5, 2016 by MissAndry

[blackcab]

Yes it is legal.

 

Your post is a reminder to everyone to ask about fees and charges in advance, several times, and from several branches. 

[JayBeeee]

1 hour ago, MissAndry said:

 

Inheriting land is the only legal way a foreigner can own land in Thailand.

(although it may be required that the foreigner sell the land in a reasonable period of time, but there is no set period for probate, one could theoretically delay probate indefinitely, so that time can't be specific)

The spouse of a Thai owns 50% of the value of any property bought after marriage.

On death the spouse of a Thai inherits another 50% of the Thai spouse assets.

 

In all, a foreign husband would own at least 50% (but probably 75%) of his wife's assets on her death, and her children would share the remaining 25%. If anyone tells you different, they are either being, 1 dishonest, or 2 ignorant. Thai law is entirely clear on the disposition of marital assets and inheritance. The nationality of the spouse in not a consideration in the disbursement.

 

 

All interesting stuff! I thought farrang weren't meant to know such things!

Have you got a Thai partner who passes you state secrets?

Any links to such information would be most appreciated!

[JayBeeee]

6 hours ago, cornishcarlos said:

Did the bank value the land at 5x the loan value ? Or is that just your estimate ??

Side-note:

Your avatar is making me hungry.

I came here from Redruth, 30 mins from St. Ives... pasty paradise!

[cornishcarlos]

8 minutes ago, JayBeeee said:

Side-note:

Your avatar is making me hungry.

I came here from Redruth, 30 mins from St. Ives... pasty paradise!

 

St Ives isn't pasty paradise... Hayle or the Lizard

[NickJ]

The life insurance policy is normal.My Thai friend just bought a house and had to do it. No farang involved.

[sirineou]

5 hours ago, Swiss1960 said:

Simple:

Life insurance in case you die before the loan is paid back, thus the bank does not have to deal with selling land / house off a grieving widow

Land rights in case you fail to pay back the loan, so the bank does not have to kill you... ?

 

^^^Best answer with a pinch of humor

Op , listen to swiss1960,

the bank is actually doing you a favor, in the event of your death you would not want you wife being foreclosed or saddled with a huge mortgage any way. 

[Suradit69]

The last time I had a mortgage in the US, along with monthly loan payments the bank collected payments for insurance on the property, local real estate taxes and life insurance in monthly installemts, held in reserve to pay the taxes and insurance premiums when they were due.

 

Had I died, the mortgage would have been paid off by the insurance and the title to the property would have been transferred to my heir. Seems like a reasonable thing for the bank to do for their protection and the protection of your surviving family.

[MissAndry]

10 hours ago, sirineou said:

^^^Best answer with a pinch of humor

Op , listen to swiss1960,

the bank is actually doing you a favor, in the event of your death you would not want you wife being foreclosed or saddled with a huge mortgage any way. 

 

But it isn't a life insurance for him, if he dies she gets no pay out.

[dotpoom]

Back home the insurance is optional.

[sometimewoodworker]

13 hours ago, MissAndry said:

 

Inheriting land is the only legal way a foreigner can own land in Thailand.

(although it may be required that the foreigner sell the land in a reasonable period of time, but there is no set period for probate, one could theoretically delay probate indefinitely, so that time can't be specific)

The spouse of a Thai owns 50% of the value of any property bought after marriage.

On death the spouse of a Thai inherits another 50% of the Thai spouse assets.

 

In all, a foreign husband would own at least 50% (but probably 75%) of his wife's assets on her death, and her children would share the remaining 25%. If anyone tells you different, they are either being, 1 dishonest, or 2 ignorant. Thai law is entirely clear on the disposition of marital assets and inheritance. The nationality of the spouse in not a consideration in the disbursement.

 

AFIK.There is a time limit for the foreigner to sell/pass ownership of land and that is 1 year.

 

This would mean that delaying probate would not be a way to keep ownership of any land for more Than a year after the spouse dies.

 

if any one with Thai legal training would like to comment on this point I would be very interested. 

[MissAndry]

3 minutes ago, sometimewoodworker said:

 

This would mean that delaying probate would not be a way to keep ownership of any land for more Than a year after the spouse dies.

 

During probate the dead Thai person retains ownership of the land. After probate there is no time limit set on the foreigner selling the land, the foreigner is only required to 'try' to sell. Lots of people keep writing about 'a year', but they're wrong, and just repeating the same old misinformation.

Edited September 6, 2016 by MissAndry

[sirineou]

29 minutes ago, MissAndry said:

 

But it isn't a life insurance for him, if he dies she gets no pay out.

He does , she het's a property with out a mortgage 

[Robert24]

Standard procedure here. All banks do that


Sent from my iPad using Thaivisa Connect

[timewilltell]

20 hours ago, JayBeeee said:

 

How is that possible if foreigners can't own land? I thought the property would automatically go to the wife's children.

Good reason for the foreign husband to officially lease the land from his Thai wife, even though he paid for it in the first place, as the contract would have to be honoured by her heirs.

Forget leasing from the wife. My case in Phuket where the lease was cancelled was adjudged to be of no effect as we were living together and therefore it was not a lease at all and the cancellation and erasing of the lease at the land office was thus OK. We were not even legally married. No compensation!

[Thaidream]

Miss Andry thanks for the clarification- I also thought  a foreign spouse had to sell inherited land/house within a year and if they couldn't the land office purchased it at the  appraised value. Good to know there is no set limit.

[how241]

Common, to make a  borrower to buy insurance.

[blackcab]

18 hours ago, MissAndry said:

After probate there is no time limit set on the foreigner selling the land, the foreigner is only required to 'try' to sell. Lots of people keep writing about 'a year', but they're wrong, and just repeating the same old misinformation.

 

It's not misinformation; it's actually true. Here's what the law says:

 

Land Code Act B.E. 2497 (1954) As Amended 2008

 

Section 94: All the land which an alien has acquired unlawfully or without permission shall be disposed of by such alien within the time limit prescribed by the Director-General which shall not be less than one hundred eighty days nor more than one year. If the land is not disposed of within the time prescribed the Director-General shall have the power to dispose of it. The provisions on the forced sale of land in CHAPTER 3 shall apply mutatis mutandis.

 

When Section 94 mentions "without permission", it means without permission granted under Section 86 by the Minister of the Interior, derived from the terms of a treaty with a foreign country.

 

You won't get that permission because the last existing treaty was denunciated on February 27th, 1970. Up until that point nationals of Belgium, Burma, Denmark, England, France, Germany, India, Italy, Japan, Netherlands, Norway, Pakistan, Portugal, Sweden, Switzerland and USA were eligible. Not any more though, so the one year rule can always be enforced if necessary. 

 

So what can happen if the foreign spouse does not sell? Well, after one year the Land Office could force the sale under Section 50.

 

Section 50: In disposing of land under the provisions of this Code, the Director-General shall have the power to dispose of it by sale or hire-purchase according to the rules and procedures specified in Ministerial Regulations and shall have the power to levy a fee of not more than five per cent of the sale price. If unable to dispose of the land within two years the Director-General with the approval of the Minister shall have the power to sell on installments within ten years.

 

Does the Land Office actually do this? No - however this post was about what is correct and what is misinformation, not how the law is or is not applied.

[sometimewoodworker]

6 hours ago, blackcab said:

 

It's not misinformation; it's actually true. Here's what the law says:

 

Land Code Act B.E. 2497 (1954) As Amended 2008

 

Section 94: All the land which an alien has acquired unlawfully or without permission shall be disposed of by such alien within the time limit prescribed by the Director-General which shall not be less than one hundred eighty days nor more than one year. If the land is not disposed of within the time prescribed the Director-General shall have the power to dispose of it. The provisions on the forced sale of land in CHAPTER 3 shall apply mutatis mutandis.

 

When Section 94 mentions "without permission", it means without permission granted under Section 86 by the Minister of the Interior, derived from the terms of a treaty with a foreign country.

 

You won't get that permission because the last existing treaty was denunciated on February 27th, 1970. Up until that point nationals of Belgium, Burma, Denmark, England, France, Germany, India, Italy, Japan, Netherlands, Norway, Pakistan, Portugal, Sweden, Switzerland and USA were eligible. Not any more though, so the one year rule can always be enforced if necessary. 

 

So what can happen if the foreign spouse does not sell? Well, after one year the Land Office could force the sale under Section 50.

 

Section 50: In disposing of land under the provisions of this Code, the Director-General shall have the power to dispose of it by sale or hire-purchase according to the rules and procedures specified in Ministerial Regulations and shall have the power to levy a fee of not more than five per cent of the sale price. If unable to dispose of the land within two years the Director-General with the approval of the Minister shall have the power to sell on installments within ten years.

 

Does the Land Office actually do this? No - however this post was about what is correct and what is misinformation, not how the law is or is not applied.

Thank you for the clarification and correction of misinformation.

 

Thus: as a spouse (without the dead Thai partner leaving a will) automatically has at least a 50% ownership of any land bought by their partner during marriage. It would be foolish to assume that they can blithely ignore the  6 months to 1 year "maximum to sell" time limit "  by relying on probate delay, while the time limit may not be strictly enforced, it is the law and certainly can be applied.

 

Would you want to be the one to find out about strict enforcement? I know I would not.

Edited September 7, 2016 by sometimewoodworker

[blackcab]

1 hour ago, sometimewoodworker said:

Thank you for the clarification and correction of misinformation.

 

Thus: as a spouse (without the dead Thai partner leaving a will) automatically has at least a 50% ownership of any land bought by their partner during marriage. It would be foolish to assume that they can blithely ignore the  6 months to 1 year "maximum to sell" time limit "  by relying on probate delay, while the time limit may not be strictly enforced, it is the law and certainly can be applied.

 

Would you want to be the one to find out about strict enforcement? I know I would not.

 

Well that's the thing. A delay in settling probate, as noted by MissAndry, can be acceptable in some (but not all) circumstances. The most obvious case where this would happen would be where the spouse was the sole beneficiary and also the Administrator of the testament.

 

If they did not administer the estate in a timely manner then the only person likely to complain would be themselves, which obviously wouldn't happen so the Court wouldn't get involved.

 

With more than one heir; a minor; an incompetent person; a undischarged bankrupt; a corporate body; a separate administrator or with the Court's involvement things could get more complicated.

 

You can see how this can work with a single heir who is also the Administrator by reading:

 

Book VI of the Civil and Commercial Code

Section 1732: The administrator of an estate shall perform his duties and complete the account of management and distribution within 1 year from the dates specified in the Sections 1728, unless the period of time is otherwise fixed by the testator, by a majority of the heirs or by the Court.

 

However, this is not an argument that is set in stone. Read:

 

Section 1727: Any interested person may, prior to the completion of the distribution of the estate, apply to the Court for the discharge of an administrator for reason of neglect of his duties or any other reasonable cause...

 

For the purpose of this discussion the Director-General of the Land Office can apply to Court under Section  1727 as an interested person in the matter of an estate that contains real estate. In such a case the administrator would be discharged by Order of Court and a professional  administrator would then execute the will. This process would be expensive. 

 

Again, is it likely to happen? No. But it could.