Right of Usufruct (Use and Fruits)
Usufruct grants the legal right to use and control another man's real estate property. The contract or memorandum of usufruct (สัญญาให้สิทธิเก็บกิน) is the legal document that states and confirms the formal agreement between the owner and the usufructuary (the person granted the right of usufruct). Usufruct transfers possession, use and enjoyment of an immovable property from the owner to the usufructuary. Usufruct can only be registered over titled immovable property and is established by agreement with the owner and registration at the local land office.
FACTS ABOUT USUFRUCT IN THAILAND
- The usufructuary does not obtain the title to the property, nor can he sell or consume the property;
- The usufructuary must take as much care of the property as a person of ordinary prudence would take of his own property;
- The usufructuary is responsible for ordinary maintenance and pretty repairs and liable for the destruction or depreciation in value of the property, unless he proves that the damage was not caused by his fault;
- The usufructuary is bound to keep the substance of the property unaltered (section 1424), therefore if the property is raw land to be usud for building a right of superficies and/or land lease would be more suitable;
- Ones established the right of usufruct cannot be transferred from one person to another, but the usufructuary is allowed (unless restricted in the contract) to transfer the exercise of his right under the usufruct to another person, contrary to for example the right of habitation;
- The usufruct is not transferable by inheritance. Wheteher given for a period of time or for the life of a person, the usufruct will in any case (by law) be terminated at death of the person or persons granted the right of usufruct, contrary to for example a right of superficies;
- Usufruct in Thailand is governed by the sections 1417 to 1428 Civil and Commercial Code.
Term of the usufruct
The right of usufruct can be created for a period of time up to 30 years or for the life of a person or persons. If the right of usufruct is granted to a juristic person the period can't exceed 30 years. If a usufruct is created for a period of time the usufruct remains depending on the life of the person (or persons) granted the right of usufruct. If the owner of a property grants to B the right of usufruct for a period of 30 years and B dies after 20 years the usufruct will be terminated after 20 years and the property will return to the owner. The right of usufruct distinguishes itself in this matter from for example the right of superficies (which is an inheritable right if registered for a period of time).
Renting out the property under usufruct
Unless restricted in the contract of usufruct the usufructuary is allowed to rent out the property without the consent of the real owner and keep the rent. Usufruct could include the power to register the contract for hire exceeding 3 years with the land department. In case of a foreign national as the usufructuary the land offices in Thailand will however not allow registration of the contract as foreigners are not allowed to manage land under the Thailand Land Code Act and can also not obtain this right under a usufruct. The land offices make in this case a distinction between a foreign or Thai national as the usufructuary. Therefore, in practice, a foreign usufructuary can only rent out the property under usufruct for periods not exceeding 3 years at the time.
When a valid rental or lease has been established the lease is not automatically terminated together with the end of the usufruct (supreme court ruling 2297/2541).
Registration of the usufruct
A usufruct can be granted with or without consideration. Usufruct must be registered at the local land office and registration fees are 1% and 0,1% stamp duty over the total consideration, or if the usufruct is granted without the exchange of value (money) the registration will cost less than 100 THB per plot.
Practical use of usufruct rights
A right of usufruct is often used to protect a foreign spouse's interest in a property in Thailand that is registered in a Thai spouse's name as a personal property. The right of usufruct is based on an agreement and as an agreement between husband and wife entered into during marriage it may not offer a full protection in case of a divorce (section 1469 Civil and Commercial Code), but in case of a marriage it is the only suitable right under Thai law that offers protection.