The Right of Superficies in ThailandJan 20, 2010
A Superficies is defined as a transferable and alienable right of interest in land to own or acquire buildings or constructions made on or above the land of another for a specific period of time. It is a real right over an immovable property granted by Thai law to both nationals and foreigners alike. The right is usually resorted to when the owner of the improvement is not the landowner.
Under the Thailand Civil and Commercial Code, it is required that the agreement creating such a right appear in writing, contain the terms and conditions regarding its exercise and such be registered with the Land Office. Registration entails the presentation of the Superficies contract along with other relevant documents including the land title deed, house registration book, ID cards and passports. Upon payment of the required transfer tax, the right of Superficies is deemed created.
Constituting a right of Superficies over a parcel of land has its advantages, the most salient of which is that it allows foreigners to participate in its creation and permit the exercise of real rights over property. It is one of the few rights in the Thai legal system accorded to foreigners concerning immovable property. Another advantage of the right is that being a real right, it does not cease to exist even if title over the land on which it was constituted had been subsequently transferred. Eventually, the right may be enforced even against third persons not a party to the Superficies contract. Moreover, since a right of Superficies is a transferrable right, a holder may eventually transmit it in favour of his heirs in order to extend its period. Thus, the right has been known to constitute an alternative form of estate planning where interest over the right is transferred from the holder to his or her heirs.
Nevertheless, the right of Superficies, though transmissible, remains a temporary right. Thai law limits its exercise for only thirty (30) years or for a period of time terminating upon the death of the owner of the land or Superficiary. Any possible extension would require the parties to renegotiate and enter into another Superficies contract. Moreover, any transfer of the right requires prior consent of the land owner. Perhaps considered as its biggest disadvantage, the use of the right of Superficies has not yet gained wide acceptance in local commercial dealings. The reason lies in the fact that most landowners prefer disposing their property entirely rather than merely constituting a right of use over it and that most buyers prefer having absolute ownership over the land and not only on the improvement on it.
In order to remedy these perceived inadequacies, an unorthodox practice has been developed wherein a foreigner married to a Thai citizen makes the latter acquire a freehold on real property which shall then be subject to the right of Superficies in favour of the foreigner spouse. This in effect gives added protection in favour of the foreigner spouse by ensuring that the right of Superficies shall be respected during its operation.
In summary, despite its advantages, the right of Superficies in Thailand as a means for foreigners to acquire interest in real property remains underutilized as it has yet to achieve widespread use. Nonetheless, the advantages this right offers to foreign investors makes resort to such a grant worthwhile.