MBMG
L AW O F F I C E
Legal Update
Dec 2011
USUFRUCT The right of full enjoyment of Thai property What is a usufruct? It is clear from the Land Code that foreigners are not allowed to own title to land in Thailand. But if you are a foreigner in Thailand who wishes to secure rights to a house or other property a usufruct provides a strong and legally valid alternative to ownership of title. A usufruct agreement allows full enjoyment of Thai property. And it is perfectly legal. The legal basis for usufruct contracts is found in the Thai civil and commercial law code, sections 1417 to 1428. Derived from the civil law legal system, a usufruct is the temporary right to the use and enjoyment of the property of another provided that the character of the property is not changed during the term of the right of usufruct. Section 1417 of the CCC provides that “An immovable property may be subjected to a usufruct by virtue of which the usufructuary is entitled to the possession, use and enjoyment of the property A usufructuary has the right of management of the property. The usufruct of forest, mine or quarry entitles the usufructuary to exploit the forest, mine or quarry�. Once you have a right of usufruct over a piece of land you have full rights to enjoy the property during the term of the usufruct. You can require the titleholder to leave the property, you can sublease and receive the rents and take any other action that an owner is entitled to take in respect of property. The right is very strong.
How long does a right of usufruct last? Unless specified otherwise in the right of usufruct a right of usufruct lasts for the life of the usufructuary. Importantly, the right of usufruct cannot be passed on to an heir so the right extinguishes on the death of the usufructuary. A strange quirk of Thai law is that a lease granted by the usufructuary will survive the death of the usufructuary provided that the lease is registered. A 30 year lease granted by the usufructuary will be enforceable against the title holder of land even after the death of the usufructuary.
Is it reserved for Thai nationals? No, foreigners also can obtain a right of usufruct in Thailand. A right of usufruct can be a great advantage to foreigners seeking to obtain property rights in Thailand. Because it is a real right, a usufructuary has the right to enjoy, possess and use the land. A usufructuary has all the rights of the title holder for the term of the usufruct but cannot sell or change the character of the property. A usufructuary has the right to receive rents under a lease agreement granted by the usufructuary. Please note that Thai tax will be assessable on the rents received.
Legal Update
Dec 2011
MBMG Law Office Co., Ltd.
How to Register a Right of Usufruct in Thailand All rights of usufruct must be registered to be valid. The right is registered at the Land Department office where the title deed is located. The name of the holder of the right of usufruct is registered on the title deed. The right of usufruct survives transfer of title so a purchaser of land title is legally obliged to observe the right of usufruct. We have been active in Thailand for 15 years. We are recognized as one of the leading international full service law firms in Bangkok. If you are interested in exploring how a right of usufruct over residential or industrial property can enhance your personal or business position then please contact us. We can assist in preparing all necessary documentation and registering your right of usufruct.
In a foreign country where the language and laws are unfamiliar, unpredictable situations and problems can arise, especially when dealing with cross-border jurisdictions. As well as having its own in-house law firm which can assist in the resolution of legal, contractual or employment disputes, MBMG has developed professional associations and relationships with a number of specialist legal practices in Bangkok, throughout Asia and globally. Through utilization of these partnerships, we can provide a comprehensive range of personal, corporate, local and international legal assistance. These include, but are not limited to, the following: • Draft and Review Legal Arrangements • Company Registrations • BOI & FBA Applications • Will and Trusts • Contract Law • Thai Visa and Work Permit Applications • Structure of business • Joint Venture and other ownership structures • Merger & Acquisitions • Government concessions and licensing • Property ownership and mortgages • Litigation
Contact:
Mr. Thammarat Sangchan Attorney - at - Law Tel: +66(0)2 665 2534-9 ext. 111 E-mail: thammarat@mbmg-internaitonal.com Ms. Suchada Faharoon Attorney - at - Law Tel: +66(0)2 665 2534-9 ext. 112 E-mail: amp@mbmg-international.com
MBMG
L AW O F F I C E
Disclaimer:
This publication has been prepared for general information only. MBMG Law Office Co., Ltd. make no warranty, representation or undertaking whether expressed or implied, nor does it assume any legal liability, whether direct or indirect, or responsibility for the accuracy, completeness, or usefulness of any information. All right is reserved.