What is a Usufruct?
Before we get into a detailed discussion on the legal implications of usufructs, it is essential to know what the term ‘usufruct’ in Thailand actually means. Usufruct also referred to as ‘Sidhi-kep-kin’ in the Thai language, means the temporary transfer of ownership rights from one person to another for the use and enjoyment of the property. A person can also make a profit from the property through a usufruct, provided that the property is not changed or damaged by the person in any way. The right to enjoyment, use, and possession of the property is transferred from the ‘owner’ to the ‘usufructuary’. It must be noted that it only includes immovable property, and can only be registered over a property that has a title deed.
Benefits of a Usufruct
Now that you know what is meant by a usufruct in Thailand, you must be wondering about the benefits of usufructs. Through a usufruct agreement, the ownership of a property can be transferred from the owner to another person on a temporary basis for a specified period. When the time period is up, the usufructuary agreement would automatically dissolve, and the ownership rights shall be re-transferred to the previous owner from the usufructuary.
Registration of Usufruct
The law of Thailand does not expressly prohibit foreigners from registering a usufruct on immovable property, but it must be kept in mind that it is solely the Land Officer’s discretion to grant a right of usufruct to a foreigner. According to section 1418 of the Civil and Commercial Code of Thailand, a right of usufruct can be created for as long as the life of the usufructuary. Moreover, a usufruct can be registered for up to thirty years.
Once the right of usufruct has been registered, the property’s owner cannot sell or transfer the concerned property until the duration of the usufruct contract has expired. It is the responsibility of the usufructuary to keep the immovable property in the same position as it was when granted to him. Moreover, the usufructuary has to bear the expenses to manage the property, pay the taxes, and interest on the property.
Transfer of Usufruct to Third Party
A lot of people ask whether or not a usufruct can be transferred to third parties through any means. According to section 1422 of the Civil and Commercial Code of Thailand, a usufruct can further transfer his usufructuary rights to a third party. In case a transferee violates any terms of the usufruct agreement, the owner will hold him liable directly. A usufruct can enter into a lease with the third party for thirty years, which can expire only on his death.
Transfer of Usufructs Through Inheritance
It is important to note that the usufructuary cannot transfer his right to use an immovable property to another person by means of inheritance. A usufruct expires on the death of the usufructuary, therefore such rights cannot be transferred to the third party through inheritance.
Usufruct Term in Thailand
Just like a lease agreement, a usufruct agreement can last for a period of up to thirty years or for the lifetime of the usufructuary. When it comes to a juristic person, the right of usufruct cannot extend for a period of more than thirty years. If the usufructuary dies then the agreement and the rights vested in it will expire. However, if the owner dies, then the right of usufruct shall continue.
Payment for Usufruct
According to a general principle of law, a contract can only be made enforceable when it involves some kind of consideration. However, a right of usufruct can be established with or without any consideration. Therefore, consideration for usufruct is not a necessary element to complete a usufruct contract.
Characteristics of Usufruct in Thailand
The following are some important characteristics of usufruct agreements in Thailand that you must remember:
- The title of the property does not get transferred to the usufructuary.
- The usufructuary cannot sell the property.
- The usufructuary is responsible for taking care of the management of the property.
- The usufructuary cannot transfer the right of usufruct to another person.
- The right of usufruct cannot be delivered to another party through inheritance.
Usufruct in Thai Marriages
A lot of times foreigners register a usufruct in the name of their Thai national’s spouse. Foreigners do this to preserve their interest in the land, but problems may arise in case of a divorce between the husband and wife. Even though it is legal for a foreigner to usufruct the land of his national spouse, it is not a recommended practice by legal professionals since it comes along with various issues. In such situations, it is always better to register a right of superficies on the land of your spouse if you wish to establish a building over the land.
After analyzing the laws and practices of usufruct in Thailand, it is established that it comes along with both pros and cons. One of the major advantages of usufruct in Thailand is that you are not required to pay any consideration for it. Moreover, the usufruct can be attained by a person for his entire life. While a lease can only be registered for a maximum of thirty years, you can register your usufruct in Thailand for as long as you want to without having to renew the said right. The non-limitation on time has proven to be beneficial for foreigners in Thailand. However, there are some restrictions attached to the usufruct right as well. Firstly, you cannot transfer the right to another party without the permission of the Land Department. Moreover, the Land Department will check the purpose for which the foreigner is registering the usufruct right and whether it is for a legal reason. Lastly, there is no express provision in Thailand regarding residing on the said property.
Thailand Property Lawyer
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