REGISTERING A USUFRUCT IN THAILAND


WHAT IS A USUFRUCT ?


A usufruct, in Thai language, called "Sidhi-kep-kin", provides temporary ownership rights for use and enjoyment of the property along with an advantage of being able to reap the profits from property belonging to another as long as the property is not damaged or altered in any way.

THE USE OF USUFRUCT


Although the law does not prevent Foreigners from being able to apply to register a usufruct on a land, however, this is still subject to the discretion of the Land Officer.

 

The person who enters into a contractual agreement with the owner for this right is called the "usufructuary". A usufruct will be registered in a similar manner to a lease of up to 30 years or for the life of the usufructuary.

 

 

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Once registered, it will have effects as a servitude on the title. The owner of the land cannot sell or transfer the land until the servitude has been terminated.

 

The usufructuary must also keep the property intact and returned in the same position that it was when the usufruct was granted.

The usufructuary is responsible for the expenses for the management of the property, paying taxes and duties, and being responsible for interests payable on debts charged to it.

 

If required by the owner, the usufructuary is bound to insure the property against loss for the benefit of the owner. They must pay the insurance premiums for the duration of their usufruct and your right is also registered on the title deed.

 

A usufruct interest expires upon the death of the holder of the usufruct and therefore cannot be inherited.

THE TRANSFER OF USUFRUCT


Transfer to a Third Party

 

The beneficiary in a usufruct scenario may also transfer his rights to the usufruct to a third party according to the Civil and Commercial Code of section 1422.

 

The grantor of the usufruct however will still claim for damages caused by the third party directly against the usufructuary.

 

An interesting feature of usufruct is that the usufructuary can enter into a 30-year lease with a third party. So if the usufructuary signed a 30-year lease contract before his death, the lessee (tenant) will maintain the rights of the lease until its expiration.

 

Case Study: The Supreme Court ruling 2297/1998 states that the lessor (landlord) does not have to be the owner of the property. Therefore the usufructuary can rent out the land. Although in the event of death of the usufructuary within the lease term, only the usufruct will be terminated but not the lease.

 

Transfer Through Inheritance

 

The usufructuary could transfer the right of using the land through inheritance.

 

However, it remains to be seen if the Land Department officials would allow a transfer of the rights to the land. There is no annual tax levied on the property compared with the 12.5 percent of the assessed or market rate rental value in the case of a registered lease.

REGISTERING A USUFRUCT


A Thai usufruct is a document of right whereby one party grants to another the right of full enjoyment of Thai property to another in Thailand. A usufruct can be very beneficial for the foreigner in Thailand who is seeking to buy a house or enjoy the use of land.

 

In a way, depending upon how it is structured, a usufruct in Thailand acts much like a life-estate future interest or 99 year lease in American Property Law. Only here, we are dealing with Thai property law and the rules are slightly different, as are most things in Thailand. A Thai usufruct can be drafted so that the person retaining the usufruct in another’s Thai property shall have exclusive enjoyment of that land for the duration of their natural life in Thailand. As implied, this means that effectively the person with a lifetime Thai usufruct has all of the same type of responsibilities and privileges as the owner of the Thai property would, with one major exception: the right to pass the land on to heirs.

 

Usufruct Facts:

 

  • The usufructuary does not obtain the title to the property, nor can he sell or consume the property;
  • The usufructuary must take as much care of the property as a person of ordinary prudence would take of his own property;
  • The usufructuary is NOT allowed to transfer the right of usufruct, but he is allowed transfer the exercise of his right under the usufruct to another person.
  • The usufruct is not transferable by inheritance;
  • The usufruct is governed by the sections 1417 to 1428 Civil and Commercial Code

 

Both foreigners and Thais can obtain a Thai usufruct for property in Thailand. A Thai usufruct can be of great advantage to the foreigner seeking to obtain property in Thailand because it will provide a large degree of insurance since under the Thai Civil and Commercial Code a foreigner is ineligible to own land (except in the case of Condos in Thailand ). Since a Thai usufruct is not ownership of land, but merely a right of use, the legal restrictions upon a foreigner in Thailand are greatly diminished.

 

In a general sense, Thai usufructs last for 30 years. However, a natural person, either foreign or Thai, has the right to a lifetime Thai usufruct as long as the Thai usufruct agreement stipulates as such. This is a great benefit to foreigners in Thailand because it means a person with a home in Thailand could live and enjoy the home and any land surrounding it for the whole of their natural lives. However, one downside to this is that, under provisions of Thai law, the Thai usufruct extinguishes at the end of the original Thai usufruct holder’s natural life.

 

Although a Thai usufruct extinguishes upon a person’s death in Thailand, there is an odd quirk to this rule: a lease of a usufruct can be obtained in Thailand and this Thai lease will remain valid even if the owner of the Thai usufruct who granted the Thai lease should die. This means that one can enact a lease on a lifetime usufruct (duly registered with the Thai land office), and that lease shall be binding upon the underlying property owner in Thailand regardless of the fact that the Thai usufruct has been extinguished upon the death of the lifetime Thai usufruct holder.

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