Usufruct in Thailand
Real Estate Laws: real property rights for individuals

Foreigners cannot own land in Thailand but they can obtain a right of usufruct by agreement with the Thai owner of the land or land an house. The essence of a right of usufruct is that it transfers the rights of possession, use, enjoyment and management of an immovable property from the owner to the usufructuary.

Usufruct gives the person granted the right of usufruct certain strong rights that are normally associated with ownership of the property, but the usufructuary is not allowed to sell the property nor usufruct nor can he 'consume' the property and he must take as much care of the property as a person of ordinary prudence would take of his own property and upon termination the property must be returned to the owner in the same state. Usufruct is governed by sections 1417 to 1428 civil and commercial code.

Usufruct is terminated upon death

The right of usufruct may be created for a period of time or for the life of a person or persons. The right of usufruct can't be established for a period exceeding the life of a natural person or persons (it can also not be created for the life of an unborn child). When the right of usufruct is granted to a juristic person the period can't exceed a period of 30 years. When the right of usufruct is created for a period of time the usufruct will also depend on the life of the person granted the right of usufruct as the law states that in any case the usufuct comes to an end on the death of the usufructuary. The right of usufruct distinguishes itself in this matter from for example the right of superficies .

Right of management of the property

The usufructuary is allowed to manage the property and has rights similar to those of an owner in relation to the possession, use and enjoyment of the property. This includes the right to rent out the property without the consent of the bare owner. The bare owner is the Thai national who owns the property but does not have the right to use and derive profit from it during the existence of the usufruct. These rights belong to the person holding the usufruct.

Under Thai law a contract for hire of immovable property exceeding three years must be registered with the Land Department in order to be enforceable for the full term. In principle a usufructuary may grant such a lease. In practice, however, many local land offices will refuse the registration of a lease exceeding three years when the lessor is a foreign usufructuary. Land offices generally require the Thai land owner to be the registered landlord for lease registration on the title deed.

Because leases not exceeding three years do not require registration, foreign usufructuaries can in practice rent out the property for periods not exceeding three years at a time. Longer lease periods may only be enforceable if accepted and registered by the local land office.

When a property under usufruct is rented out by the usufructuary, the lease is not automatically terminated together with the end of the usufruct. According to Supreme Court judgment 2297/2541 the rental agreement granted by the usufructuary may continue to exist independently of the usufruct.

Registration of the right of usufruct

Usufruct can only be created for an immovable property with a full title deed. The usufruct must be made in writng and is only complete (created and enforceable) upon registration of the right of usufruct by the land office (section 1299 civil and commercial code). A usufruct can be granted with or without consideration (as a gift or moral obligation). Usufruct must be registered with the local land office and registration fees are 1% and 0,1% stamp duty over the total consideration, or if the usufruct is granted without the exchange of value (money) the registration will cost less than 100 THB per plot.

Practical use of usufruct

A right of usufruct always depends on the life of the person granted the right of usufruct. Usufruct can’t be sold or transferred (also not by inheritance), and because usufruct can't be sold, and is always terminated upon death, usufruct is for investment purposes not suitable. Usufruct in Thailand is often used by foreigners married in Thailand to a Thai national. It protects the foreign souse's interest in a property in Thailand that is registered on a Thai spouse's name as a personal property. The drawback is that usufruct between husband and wife granted during marriage over the property of the Thai spouse does not offer a full protection in case of a divorce (section 1469 Civil and Commercial Code), but in case of a marriage it is the only suitable right under Thai law that offers the foreign spouse some protection. It could for example be registered to protect the foreign spouse in the event the Thai spouse (owner of the property in Thailand) predeceases the foreigner.

Land office usufruct

Even though our usufruct contracts are in compliance with Thai law and are regularly modified and registered with local authorities, we do not guarantee acceptance and registration by all local land offices in Thailand. Some land office will only accept and register their own standard (short form) usufruct contract.

Key Legal Points on Usufruct in Thailand

Usufruct may apply to all or part of a property
A usufruct may be granted over the entire property or only over a specified part of the property owned by the owner. In cases where the usufruct applies only to a portion of the land or to a specific building on the land, the relevant part must be clearly identified and described. This is typically done by reference to the title deed, a map or plan, or another description acceptable to the Land Department.

A usufruct may be granted to more than one person
Thai law allows a usufruct to be granted to two or more persons jointly. For example, a usufruct may be granted to a father and son, or to a married couple. Each usufructuary holds the right personally. If one of the usufructuaries dies, the usufruct in respect of that person terminates, while the remaining usufructuary or usufructuaries continue to hold the right for the remainder of their lifetime.

Lifetime usufruct is not limited to 30 years
Under Thai law a usufruct may be granted either for a fixed period or for the lifetime of the usufructuary. A fixed term usufruct may not exceed 30 years. However, when the usufruct is granted for the lifetime of a natural person it is not limited to 30 years and will remain valid for the entire lifetime of that person. If the usufructuary is a juristic person, the maximum duration of the usufruct is 30 years.

Sale of the property does not terminate the usufruct
If the owner sells or transfers the property during the existence of the usufruct, the usufruct remains attached to the property. The new owner will acquire the property subject to the existing usufruct right and cannot terminate the usufruct before it expires according to law.

A usufruct is a personal right
The right of usufruct is a personal right of the usufructuary. It cannot be sold, transferred or inherited. When the usufructuary dies, the usufruct automatically terminates and the full rights of the property return to the owner.