What is a Usufruct in Thailand?
A usufruct is a legal right given to a person or party called the usufructuary. It is an ownership right to use, enjoy and manage someone else’s immovable property. This comes with the advantage of deriving income or benefit from it as long as the property has no damages or alterations in any way.
Basically, it is a right that allows the usufructuary to live on the land and his/her name registered on the Title Deed (Chanote).
The right of usufruct in Thailand is only valid and enforceable after completing the registration with the Land Department. Such registration makes the public aware of the recorded burden on the property. This is therefore enforceable against any third-party such as a successor of the property. It is usually for a 30 year period or for the lifetime of the usufructuary. If the time has not been fixed, it is presumed that the usufruct is for the life of the usufructuary.
The usufructuary shall, during the usufruct period, bear expenses for the property management, ordinary maintenance and petty repairs. They shall also be responsible to pay taxes and duties, and interests payable on any debts charged upon it.
If major repairs are necessary to keep the property, the usufructuary must immediately inform the owner. He needs to ask permission to carry out the necessary repairs. In case of default by the owner, the usufructuary may have the work carried out at the owner’s expense.
The owner must bear all extraordinary expenses, but in order to meet these, he may realize part of the property unless the usufructuary is willing to advance the necessary funds without charging interest.
Limitations of a Usufruct in Thailand
You cannot inherit a usufruct. Its right and benefit dies with the usufructuary. A usufructuary cannot sell the property. However, he can transfer his rights on the property to a third party with up to 30-year lease. When usufruct comes to an end, the usufructuary must return the property to the owner. He must replace anything which he has wrongfully consumed. The usufructuary is liable for the destruction or depreciation in value of the property, unless he proves that the cause of the damage was not his fault. He shall not give compensation for depreciation in value caused by reasonable use.
Benefits of a Usufruct in Thailand
For foreigners who cannot own land directly, the benefit of a usufruct is that the Thai land owner will find it more difficult to sell or register a mortgage on the land with the usufruct. The buyer would ask the owner to terminate the usufruct before buying such land.