What is a usufruct in Thailand?

Before delving into the legal implications of usufruct rights, it's important to understand the precise meaning of the term "usufruct" in Thailand. Usufruct, also known as "sidhi-kep-kin" in Thai, refers to the transfer of ownership rights from the owner to a specific person (the usufructuary) for the temporary use, management, or enjoyment of the property. The usufructuary can also derive income from the property, provided it is not altered or damaged. However, it's crucial to note that this only applies to real estate and can only be established for properties with a valid land registry entry.

Advantages of a usufruct

Now that you know what usufruct means in Thailand, you're probably wondering what its advantages are. A usufruct agreement allows the owner to transfer ownership of a property to another person for a specific period. Once this period expires, the usufruct agreement automatically terminates, and ownership rights revert from the usufructuary to the original owner.

Registration of a usufruct

Thai law does not explicitly prohibit foreigners from registering a usufruct right to real estate. However, it should be noted that granting a usufruct right to a foreigner is at the discretion of the competent land registry official. According to Section 1418 of the Thai Civil and Commercial Code, a usufruct right can be established for the entire lifetime of the usufructuary. Furthermore, a usufruct right can be registered for up to thirty years.

Once the usufruct right is registered, the owner may neither sell nor transfer the property until the usufruct agreement expires. The usufructuary is obligated to maintain the property in the condition it was in when the usufruct was granted. Furthermore, they bear the costs of managing the property, as well as any applicable taxes and interest.

Transfer of a usufruct right to a third party

Many people wonder whether a usufruct can be transferred to a third party in any way. According to Section 1422 of the Thai Civil and Commercial Code, a usufructuary can transfer their usufruct rights to a third party. If the transferee violates the provisions of the usufruct agreement, the usufructuary is directly liable. The usufructuary can enter into a lease agreement with the third party for a period of thirty years, which only ends upon their death.

Transfer of usufruct rights through inheritance

It is important to note that a usufructuary cannot transfer their right to use a property to a third party through inheritance. The right of usufruct expires upon the death of the usufructuary; therefore, these rights cannot be transferred to third parties through inheritance.

Usufruct concept in Thailand

Similar to a lease, a usufruct agreement can last up to thirty years or until the usufructuary's death. For legal entities, the duration of the usufruct is limited to a maximum of thirty years. If the usufructuary dies, the agreement and the associated rights expire. However, if the owner dies, the usufruct remains in effect.

Payment for usufruct

According to general legal principles, a contract is only legally valid if it includes consideration. However, a usufruct right can be established with or without consideration. Therefore, consideration is not a necessary condition for concluding a usufruct agreement.

Characteristics of usage rights in Thailand

The following are some important features of user agreements in Thailand that you should be aware of:

  • Ownership of the property is not transferred to the usufructuary.
  • The usufructuary cannot sell the property.
  • The usufructuary is responsible for the management of the property.
  • The usufructuary cannot transfer the right of usufruct to another person.
  • The right of usufruct cannot be transferred to a third party through inheritance.

    • Usufruct in Thai marriages

    Foreigners often register a usufruct right in the name of the spouse of a Thai citizen. This serves to secure their own ownership of the property. However, problems can arise in the event of a divorce. Although usufruct rights for foreigners on their Thai spouse's property are legally permissible, legal experts advise against it due to various risks. In such cases, it is advisable to register a building right on the spouse's property if one wishes to construct a building there.

    Diploma

    An analysis of the laws and customs surrounding usufruct in Thailand reveals that it has both advantages and disadvantages. One of the greatest advantages is that no formal usufruct agreement is required. Furthermore, usufruct can be exercised for life. While a lease agreement is limited to a maximum of thirty years, usufruct in Thailand can be registered indefinitely without the need for renewal. This unlimited duration proves particularly advantageous for foreigners in Thailand. However, there are also limitations. For example, the transfer of usufruct rights is not possible without the approval of the Land Registry. The Land Registry also verifies the purpose and legality of the registration. Finally, there are no explicit regulations in Thailand regarding residence on the usufruct property.

    Thai real estate lawyer

    Siam Legal is a law firm offering a range of services to protect the rights and interests of foreigners wishing to purchase real estate in Thailand. Our firm provides a comprehensive suite of real estate-related services to best meet the needs of both our foreign and Thai clients. Should you have any questions or concerns regarding real estate, our team of Thai real estate lawyers invites you to contact us via the link below:

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