The right of usufructs in Thailand

A usufruct in Thailand is a property right that many foreigners are likely to be interested in. It gives them long term rights over property that are more secure than most other types.

Here we take a closer look at what Thailand usufruct agreement, and what right the usufruct gives to the person that holds it.

What is the right of Usufruct?

A usufruct is an agreement that grants temporary ownership of a property to another person. The usufructuary (the person granted the rights), gets to use the property as they please. They also get to rent the property and profit from any rent made. This is all on the condition that the property is not altered or damaged.

In many ways, a usufruct is very much like a leasehold, in that the usufructuary is granted temporary permission to “own” the land. One of the main differences is that a usufruct can be granted until the end of the life of the usufructuary (or for a set period of time).

For real estate investors, it is a secure opportunity to take advantage of the Thai property market. A Thai usufruct contract will last for their lifetime (unless instructed otherwise), so there is no need to be concerned over the duration of the agreement expiring. This can give them more confidence when going ahead with a property investment that they will not lose at some point in the future.

The terms of the right of Usufruct

- Section 1417: The usufructuary has the right to use the property, manage the property and exploit any resources on the property.
- Section 1418: The usufruct will last for the remainder of the usufructuary’s life. This is unless a period of time is stated, which cannot be for more than 30 years.
- Section 1419: If property is destroyed, it is the responsibility of the usufructuary. If the usufructuary cannot restore the property, the usufruct ends and the costs of restoring the property will be shared.
- Section 1420: When the usufruct ends, damage or loss of value to the property must be compensated for by the usufructuary, unless they were not at fault.
- Sections 1421, 1424 and 1426: The usufructuary must take care of, manage, and maintain the property.
- Section 1422: The usufructuary can lease to a 3^rd
- Section 1423: The landowner can object to unlawful or unreasonable use of the property.
- Sections 1424 and 1425: The landowner is responsible for ‘important’ repairs, and extraordinary expenses must be paid by the owner.
- Section 1427: The usufructuary must insure the property.
- Section 1428: Once the usufruct has ended, the owner cannot act against the usufructuary if 1 year has passed since the usufruct ended.

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The Benefits of the Right of Usufruct

A usufruct agreement in Thailand for foreigners has numerous benefits for the usufructuary.

1. One of the key benefits is that unlike with a leasehold agreement, the owner cannot find themselves in a situation where they no longer have access to the land. This is provided that no time limit was set on the usufruct.
2. A usufruct in Thailand also gives the owner more security over the overall property. For example, it is possible to cancel a superficies agreement if it has not been granted for a set period, but the same cannot be said for a usufruct.
3. The usufructuary is also permitted to profit from the property. They are permitted to lease it out, along with buildings on the property, and profit from any other resources on the property.
4. Another benefit is that the usufructuary can lease the property to a 3rd party. It also means that the usufructuary can grant a lease to an heir, so they get to pass on the property before they die. However, such a lease can only last for a maximum of 30 years.

How to register a Usufruct in Thailand

A Thailand usufruct agreement will only become valid once it has been registered on the deed by the land office. Everything will be completed in Thai, so you may need a Thai to accompany you. You could otherwise grant power of attorney to a Thai lawyer to do it for you. Do not be surprised if you are asked for some extra money to move things along faster, which is quite standard practice.

It is best to be sure the usufruct agreement is in a format the specific land office you are using will accept, although this is something your lawyer should already be aware of. Registration fees are usually minimal at 1.1%.

For a usufruct to be granted on a property, the property owner must have full legal rights to it. The property itself will also need to meet certain criteria, such as having road access.

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What happens with a Usufruct in case of a divorce?

A Thai usufruct contract gives you all the right to the land, which cannot be withdrawn unless by a court under certain circumstances.

In short, your spouse will not be able to cancel it, which is a concern many property investors might have. The agreement can only be cancelled with your consent, or by a court of law.

If you do divorce your spouse, then a court may cancel a usufruct as the properties of the husband and wife are divided. Still, you will likely get your fair share rather than losing out altogether.

This is a matter that should always be discussed with a lawyer before investing in property in Thailand.

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