Usufructs in Thailand
What is Usufructs?
A usufruct, in Thai language called "Sidhi-kep-kin", provides temporary ownership rights for use and enjoyment of the property along with an advantage of being able to reap the profits from property belonging to another as long as the property is not damaged or altered in any way.
The right of usufruct transfers possession, use, and enjoyment of immovable property from the owner to the usufructuary. Usufruct can only be registered over properly titled immovable property and is established by agreement with the owner and registration at the local land office.
Use of Usufructs
Although the law does not prevent Foreigners from being able to apply to register a usufruct on a land, however, this is still subject to the discretion of the Land Officer.
The person who enters into a contractual agreement with the owner for this right is called the "usufructuary". Section 1418 of the Civil and Commercial Code provides that a usufruct may be created for a period of time or for the life of the usufructuary. A usufruct will be registered in a similar manner to a lease of up to 30 years or until the lifetime of the usufructuary.
Once registered, it will have effects as a servitude on the title. The owner of the land cannot sell or transfer the land until the servitude has been terminated.
The usufructuary must also keep the property intact and returned in the same position that it was when the usufruct was granted.
The usufructuary is responsible for the expenses for the management of the property, paying taxes and duties, and being responsible for interests payable on debts charged to it.
If required by the owner, the usufructuary is bound to insure the property against loss for the benefit of the owner. They must pay the insurance premiums for the duration of their usufruct and your right is also registered on the title deed.
A usufruct interest expires upon the death of the holder of the usufruct and therefore cannot be inherited.
It is likewise provided under Section 1421 that the usufructuary must, in the exercise of his rights, take as much care of the property as a person of ordinary prudence would take of his own property. The usufructuary is under obligation to preserve the property as a consequence of his enjoyment thereof.
The Transfer of UsufructsTransfer to a Third Party
The beneficiary in a usufruct scenario may also transfer his rights to the usufruct to a third party according to Section 1422 of the Civil and Commercial Code. In such a case, when the transferee violates the terms of the usufruct, the owner of the immovable property can likewise sue the transferee directly.
The grantor of the usufruct however will still claim for damages caused by the third party directly against the usufructuary.
An interesting feature of usufruct is that the usufructuary can enter into a 30-year lease with a third party. So if the usufructuary signed a 30-year lease contract before his death, the lessee (tenant) will maintain the rights of the lease until its expiration.
Case Study: The Supreme Court ruling 2297/1998 states that the lessor (landlord) does not have to be the owner of the property. Therefore the usufructuary can rent out the land. Although in the event of death of the usufructuary within the lease term, only the usufruct will be terminated but not the lease.
However, it is important to note that the owner may object to any unlawful or unreasonable use of the property. If the owner proves that his rights are in danger, he may demand security from the usufructuary. If the usufructuary fails to give security within a reasonable time fixed for the purpose, or if, in spite of the owner’s objection, the usufructuary continues to make use of the property unlawfully or unreasonably, the Court may appoint a receiver to manage the property.Transfer Through Inheritance
The usufructuary could not transfer the right of using the land through inheritance. The usufruct terminates automatically upon the usufructuary’s death. However, the usufruct does not terminate upon the owner’s death. As such the usufruct may continue to survive even if the owner of the land has died.
However, it remains to be seen if the Land Department officials would allow a transfer of the rights to the land. There is no annual tax levied on the property compared with the 12.5 percent of the assessed or market rate rental value in the case of a registered lease.
A right of usufruct can be granted with or without consideration or payment. This contract of usufruct can either be onerous or gratuitous. The value for the right of usufruct is not an essential element to the contract.
Registering a Usufruct
There is nothing there is stated that restricts the grants of such usufructs. However, like all other rights in relation to property, it must be noted once again that the registration of such a right is upon the discretion of the Land Officer at the Land Department and may vary between locations. It is advisable that you contact a Property Lawyer or Solicitor to discuss your options in regards to you specific circumstances.