Usufruct in Thailand. Usufruct is a legal right in Thailand that allows a person, known as the usufructuary, to use and benefit from another person’s land or property for a set period, typically up to the usufructuary’s lifetime, without transferring ownership. The concept is regulated under the Civil and Commercial Code, and it’s an important tool for individuals, particularly foreigners, who are prohibited from owning land outright but wish to use land or property for personal or commercial purposes.
1. What is Usufruct?
A usufruct is a real right that gives the usufructuary the ability to use, enjoy, and benefit from someone else’s land. The usufructuary may use the land for farming, living, or even renting it out to third parties, depending on the terms agreed upon with the landowner. Despite having full use and rights over the land, the usufructuary does not own the land itself.
Usufructs can be granted for a specific period, up to 30 years, or for the life of the usufructuary. The right expires upon the death of the usufructuary, at which point the land reverts back to the landowner.
2. Key Characteristics of Usufructs in Thailand
a) Ownership and Rights
While the landowner retains ownership of the land, the usufructuary holds rights over its use. These rights allow the usufructuary to:
- Occupy and use the land for residential, agricultural, or commercial purposes.
- Rent out the property to third parties and collect income, if permitted by the usufruct agreement.
The usufruct can cover both movable and immovable property, though it is most commonly used with land.
b) Duration
A usufruct can be granted for any period of time, with a maximum of 30 years if specified in the agreement. If no specific time limit is indicated, the usufruct will last for the lifetime of the usufructuary.
c) Transferability and Inheritance
A usufruct cannot be transferred or sold to another person. It is a personal right granted to the usufructuary, and it terminates upon their death. While it cannot be inherited, the usufructuary can lease the property to a third party, though the lease will terminate upon the death of the usufructuary.
3. Usufruct for Foreigners
For foreign nationals, usufructs provide a legal way to use and benefit from land in Thailand without violating the country’s land ownership restrictions. Foreigners cannot own land in Thailand outright, but through a usufruct agreement, they can secure long-term rights to use the land.
a) Use Cases for Foreigners
- Residential Use: Foreigners can live on the land or build a house on it without owning the land itself.
- Commercial Use: Usufruct can be used to operate businesses or rent out the property to others, generating income.
Usufructs are especially popular for foreigners who wish to live in Thailand long-term or invest in rental properties without the ability to own the underlying land.
4. Legal Process for Creating a Usufruct
a) Drafting the Usufruct Agreement
The usufruct agreement must be carefully drafted, specifying the rights and obligations of the usufructuary and the landowner. Key points include:
- Duration: Specify whether the usufruct will last for a specific number of years or for the lifetime of the usufructuary.
- Scope of Use: Clarify the purposes for which the land may be used (e.g., residential, agricultural, commercial).
- Maintenance and Costs: Establish who is responsible for maintaining the land and covering expenses like property taxes.
b) Registration
To be legally enforceable, the usufruct must be registered at the Land Department where the property is located. This involves submitting the signed usufruct agreement, along with proof of ownership and other required documentation.
The usufruct will be recorded on the title deed of the property, giving it legal effect and protecting the usufructuary’s rights for the agreed-upon duration.
c) Rights and Obligations of the Usufructuary
The usufructuary has the right to use and enjoy the land, but they are also responsible for:
- Keeping the property in good condition.
- Paying for any upkeep or necessary repairs.
- Not using the property in a way that diminishes its value or violates the terms of the agreement.
5. Termination of Usufruct
A usufruct is terminated under the following circumstances:
- Expiry of the Term: The usufruct ends when the agreed-upon term (up to 30 years) expires.
- Death of the Usufructuary: If the usufruct is granted for the lifetime of the usufructuary, it terminates upon their death.
- Mutual Agreement: Both parties can mutually agree to terminate the usufruct before the term expires.
Once the usufruct ends, the full control of the land returns to the landowner. Any leases or sub-leases the usufructuary may have made with third parties also come to an end.
6. Advantages and Disadvantages of Usufruct
Advantages
- Long-term use of land without the need for ownership.
- Legal security for foreigners to use Thai land.
- Flexibility to use the land for personal or commercial purposes.
- Usufructs can be tailored to specific needs (e.g., duration, type of use).
Disadvantages
- The usufructuary has no ownership rights, and the land reverts to the owner upon termination.
- The usufructuary cannot sell or transfer the usufruct to another person.
- If the usufructuary passes away, the usufruct ends, and any income from the land (e.g., rental agreements) is terminated.
Conclusion
A usufruct in Thailand is a highly effective legal tool for both foreigners and Thai nationals who wish to use and benefit from land without owning it. It provides significant flexibility, allowing individuals to reside on or commercially exploit land for long periods. However, it is important to understand the legal obligations involved and ensure the usufruct is properly registered to protect both the usufructuary and the landowner’s rights. Proper legal advice and careful drafting of the usufruct agreement are essential to maximizing the benefits while minimizing risks.