• Usufructs in Thailand

    Jan 20, 2014
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    Securing a usufruct is one of the ways that an individual can secure and utilize a property without even owning it outright. Usufruct allows one party to enjoy a property but not through ownership. Also, such party is obligated to the property’s form and substance.

    Property Rights

    A usufruct may be, depending on his preference of securing it, an ideal method for a foreigner to gain control of the property as he is afforded to certain rights over the property which can be the following:

    • After being registered, the owner of the property subject to a usufruct cannot sell nor transfer the property.
    • The usufructuary may be able to earn income through the property by renting or leasing it out to a 3rd party.

    However, in order for these rights to be fully exercised and enjoyed upon, the usufruct agreement needs to be registered at the Land Office. With this, the property needs to have the proper title deed otherwise registration would not be possible.

    Contract Duration

    The agreement may identify a specific period of time for the usufruct to exist or it may be attached to the lifetime of the usufructuary. If there is no specific period of time then it is presumed that the agreement would be attached to the lifetime of the usufructuary.

    Responsibilities of the Usufructuary

    When the terms of the usufruct are agreed upon and is fully registered, the usufructuary is duty bound to commit to the responsibilities attached:

    • He would be responsible in paying the duties and taxes along with the expenses in managing the property.
    • He should also make sure that the property would be kept intact and in good condition and be returned to the grantor of the usufruct on the same condition.
    • Major alterations of the property is not allowed.
    • The owner of the property can compel the usufructuary to insure the property.
    • In case of depreciation and destruction of the property, the usufructuary can also be held responsible.

    Issues on Usufruct

    As favorable as it is, certain issues still hound the set-up and one of these is the possibility of the usufructuary to transfer the right to an heir or through inheritance. Since the right is attached with the usufructuary, the property would be returned to the owner in case he passes away.

    Some usufructuaries address this issue by leasing the property to their heir so as to secure the property since the lease can still exist in the event of the usufructuary’s untimely demise.

    Usufruct and Servitude

    Similarities exist between the usufruct and servitude nonetheless a distinct difference is also present which is the possibility that the servitude can be passed on through inheritance while usufruct cannot.

    In Closing

    The above-mentioned issues may prove to be the reasons why some may be hesitant with the structure. Nonetheless, the advantages it also provides may convince some to avail of such right.

    To better weigh the options, it would be advisable for any interested party to consult with Thai property lawyers who can provide him with a thorough orientation of the structure and how Thai laws and processes would affect him especially if he is a foreign national.