Usufruct – A Feasible Option for Foreigners in Thailand?

Foreigners in Thailand have the possibility to register a usufruct related to a land plot or other real property.

1. Characteristics

A usufruct provides limited property rights and is a legal right to the use and enjoyment of immovable property, including commercial benefits of property belonging to another person, according to the CCC section 1417. A usufruct is registered on the title document. It may be created either for a specified period (not exceeding 30 years) or for the life of the beneficiary of the usufruct (the “usufructuary”).

A usufruct always expires upon the demise of the holder of the usufruct and, therefore, may not be inherited.

The property may not be damaged or altered in any way by the usufructuary. He must keep the property intact and returned as in the initial state. The usufructuary is responsible for the costs of maintenance of the property, for paying taxes and duties and for interests payable on debts charged to it. If required by the owner, the usufructuary shall insure the property against loss for the benefit of the owner. He must pay the insurance premiums for the duration of the usufruct.

2. Flexibility of the Usufruct

The usufructuary may lease or rent out the land and receive payment under a rental agreement. He may also transfer his rights to the usufruct to a third party (Section 1422 of the Civil and Commercial Code). The owner of the property, however, will still claim for damages caused by the third party directly against the usufructuary.

The usufructuary has no power to prohibit the owner to sell the property without damaging the usufruct. Therefore, no consent is required from the usufructuary if the owner wants to sell the property. However, the usufruct is a real right that remains valid for any third party, including a new owner. In the case of any transaction which damages the usufruct, the usufructuary can file an objection or force the receiver to register the usufruct.

3. Discretion of the Land Office

Foreigners are not restricted with regards to the registration of a usufruct, however, as for all rights over property, it should be noted that the registration of such a right is at the discretion of the officer in charge at the Land Department and may vary depending on the location.