Usufruct Registration in Thailand
One of the least known option when it comes to property acquisition in Thailand is the Usufruct Agreement. A usufruct is an agreement through which one can obtain the rights of possessing, managing, using, and enjoying the benefits of a property similar to the usage and benefits of the owner. You have the same rights to usage as an owner but without buying the land. It also a considerable option as Usufruct is a type of property rights wherein the you will get as much benefit to the property and it is also possible for sub-leases.
A usufruct may vary for the duration of the agreement but it will be registered in a similar manner to a lease of up to 30 years or for the life of the usufructuary. There is no specific law in Thailand that prohibits a foreigner for entering into a Usufruct Agreement, but this is still subjected to the discretion of the Land Officer.
Usufruct is one of the lesser known option for property acquisition in Thailand, but considering the privilege and benefits of this type of agreement, this is one considerable option. According to the Civil and Commercial Code of Thailand;
“Section 1417. 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
He has the right of management of the property……”
This means that the person who will be the usufructuary will be given the right to hold the property similar to the real owner although he or she needs to maintain the property and for some instances register to an insurance company. A usufruct may be, depending on preference of securing it, an ideal method for a foreigner to gain control of the property, although the agreement still needs to be registered to the Land Office and needs a proper documentation, the property needs to have valid and legal title deed, if not, registration is not possible.
The duration of Usufruct will vary on what the Lessee and the Lessor have discussed, it will be included and provisioned under the Agreement, but according to the Civil and Commercial Code of Thailand;
“Section 1418. A usufruct may be created either for a period of time or for the life of the usufructuary. If no time has been fixed, it is presumed that the usufruct is for the life of the usufructuary.”
The obligations and responsibilities of the usufructuary will depend on the agreement that he/she will agree with the owner of the property. There are specific provisions that the usufructuary needs to follow according to the Civil and Commercial Code of Thailand, although the owner can add depending on what specific provisions he or she would like to include on the agreement, the main responsibility of the Usufructuary is as follows:
“Section 1421. The usufructuary must, in the exercise of his rights, take as must care of the property as a person of ordinary prudence would take of his own property.”
“Section 1424. The usufructuary is bound to keep the substance of the property unaltered, and is responsible for ordinary maintenance and pretty repairs.
If important repairs or measures are necessary for the preservation of the property, the usufructuary must forthwith inform the owner thereof and permit them to be carried out. In case of default by the owner, the usufructuary may have the work carried out at the owner’s expense.”
“Section 1426. The usufructuary shall, for the duration of the usufruct, bear expenses for the management of the property, pay taxes and duties, and be responsible for interests payable on debts charged upon it.”
“Section 1427. If required by the owner, the usufructuary is bound to ensure the property against loss for the benefit of the owner; and if the property is already insuring, he is bound to renew such insurance when due He must pay the premiums of the insurance for the duration of his usufruct. “
Our law firm has years of experience when it comes to drafting usufruct agreement between a Foreign Lessee and a prospective Thai Lessor. Our goal is to make sure that the Lessee will get as much benefit as we can and to also prioritize the maximization of his rights on the property.
We have been handling usufruct agreements for the past several years and it has harbored good outcome for our foreign clienteles. Furthermore, we always make sure that our client’s well-being is our top priority especially when drafting the agreement.
For assistance with Usufruct Registration and Agreement Drafting, please do not hesitate to contact us.