Thailand Usufruct

The laws regarding Usufructs in Thailand are found in section 1417 of the Thailand Civil and Commercial Code. Usufruct is a right which allows an original owner to retain ownership of the real estate. The usufruct holder is then allowed to enter and occupy the property

Usufructs have both pros and cons.

The main advantage is that there is no requirement under the Thailand law for a payment for the transfer of the usufruct right. A Usufruct is available for the life term of the holder. A holder of the Usufruct right is allowed to lease or rent out the land and receive a payment pursuant to a rental agreement. The usufruct can be registered for the life term of the usufruct holder. This is in contrast to a normal lease agreement which has a maximum term of 30 years. A longer time period may be important for foreign persons seeking to reside in Thailand.

However the holder of the usufruct is not the lawful owner of the real estate. Additionally, a usufruct is not transferable in the usufruct holder's estate if they die. The owner of the land is able to grant more than one usufruct on the same land. Therefore, the usufruct is not necessarily exclusive to a single usufruct holder.

The specific law prohibiting the owner from granting an additional usufruct after the first, and the granting of such a second usufruct, is up to the discretion of the Land Department official to whom the application is made.

Although the Thai law does not necessarily prohibit usufructs for foreigners, the final decision to grant a usufruct is up to the discretion of the Land Department official.

An important consideration for a foreigner to remember is the Land Department official will check whether the usufruct is being used to circumvent the law i.e. as a means of transferring real estate ownership for non-Thai citizens. Usufructs are primarily intended for various commercial enterprises, such as agriculture, mining, and stone collection.

Although the Thai law does not necessarily prohibit usufruct for foreigners, the final decision to grant a usufruct is up to the discretion of the Land Department official.

An important consideration for a foreigner involved as well as the Land Department official is whether the usufruct is being used to circumvent the law forbidding the transfer of real estate ownership for non-Thai citizens. Usufruct, pursuant to the language of the Thai law, is primarily intended for various commercial enterprises, such as agriculture, mining, and stone collection.

Under Thai law, the right to reside on property pursuant to a usufruct is not expressly stated. However, this right is generally assumed to be included within the right to a usufruct within the right to occupy.

The types of activities that are expressly referred to in the Thai law include obtaining the fruits of the land, mining, forestry and masonry. What is important to note is that all of these occupations are already expressly prohibited to foreigners pursuant to the Foreign Business Act B.E. 2542 (A.D. 1999)

Accordingly, since a foreigner would not be allowed to participate in these business activities, the only remaining activity would be the right to occupy. The right to occupy would include the right to reside on the property. Nevertheless, if a foreigner intends to use a usufruct for solely the right to occupy or reside on the property, and not for the expressed commercial activities as stated by the Thai law, it is possible that the Land Department official may decide that the usufruct is being used to circumvent the law and advise that the foreigner should register a right of habitation, which is a separate and different right, than a usufruct.