Ownership of land in Thailand is not open to foreigners but many foreigners who are married to Thai nationals buy land and in practice often land and house on the name of their Thai spouse. The Land Department will allow transfer of ownership of the land to the Thai national who is married to a foreigner after a joint statement 'letter of confirmation' by the couple stating that the money expended on the land is personal property of the Thai spouse and not a Sin Somros or matrimonial or marital property between husband and wife. This procedural requirement is based on a regulation issued by the Ministry of Interior (March 1999). The regulation issued in 1999 is based on the principle of section 1472 of the Civil and Commercial Code that if personal property has been exchanged for other property (in this case land) that property becomes a personal property of that spouse, and not a joint marital property between husband and wife, therefore the foreigner spouse has no ownership rights in that land based on Thai family laws, ‘property between husband and wife’.
To understand the consequences of buying real estate or land in Thailand and ownership in the Thai spouse's name it is important to understand difference between personal property and jointly owned property between husband and wife and the right of management of jointly owned and personal property. |
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Prenuptial agreement and personal property during marriage under Thai law;
Irrespective if a valid prenuptial agreement is made prior to a marriage in Thailand, for all marriagesThai law specifies that property belonging to either spouse before the marriage remains his or her personal property during the marriage. Each spouse shall remain the manager of his or her personal property during marriage. If during the marriage personal property has been exchanged to other property, other property has been bought or money has been acquired from selling it, such other property or money acquired shall remain personal property (Sin Suan Tua).
- Section 1472 of the Thailand Civil and Commercial Code. 'As regards to Sin Suan Tua (personal property), if it has been exchanged to other property, other property has been bought or money has been acquired from selling it, such other property or money acquired shall be Sin Suan Tua'.
Jointly owned matrimonial or marital property under Thai family laws;
Marriage in Thailand creates marital property or property between husband and wife. In general 'benefit and income' of each spouse during marriage will under Thai law become jointly owned 'matrimonial community property' between husband and wife. It is not possible to exclude this in a prenuptial agreement.
The law allows limited freedom between the spouses to create their own matrimonial property regime in a prenuptial agreement. This is largely covered by the section property between husband and wife in the Civil Code. In general property acquired during marriage (subject to the above section 1472) and 'fruits' from personal property during marriage will become jointly owned property (Sin Somros) between husband and wife. In principle property acquired by inheritance, legacy or gift shall become personal property.
As a very simple example how the 'benefit and income' rule in Thailand works; if you have 100,000 Thai baht (THB) in your bank account at the time of marriage and 5 years later you have saved an additional 15,000 THB from your income (profession or business) and you received interest over this amount of 5,000 THB and the total amount in your bank account has grown to 120,000 THB, then, upon divorce your spouse shall according to Thai law be entitled to half of the increase (i.e. 10,000 THB). In the same situation if the amount has increased with another 50,000 THB from an inheritance, this in principle becomes a personal property (Sin Suan Tua) of the person receiving the inheritance. In this case; even though your bank account has in this case increased to (100,000 + 15,000 + 5,000 + 50,000 = 170,000 THB) your spouse will upon divorce be entitled to only 10,000 THB.
Management of property during marriage;
Each spouse shall remain the manager of his or her personal property, however, a marriage contract or Thai prenuptial agreement or ante-nuptial pre-marriage contract may grant management of certain Sin Somros (meaning jointly owned marital property) to one of the spouses. Without a prenuptial or marriage contract certain legal acts with regards to certain jointly owned properties must be managed jointly by the husband and wife.
| Section 1476. 'In managing the Sin Somros in the following cases, the husband and wife have to be joint manager, or one spouse has to obtain consent from the other: |
| (1) |
Selling, exchanging, sale with the right of redemption, letting out property on hire-purchase, mortgaging, releasing mortgage to mortgagor or transferring the right of mortgage on immovable property or on mortgageable movable property. |
| (2) |
Creating or distinguishing the whole or a part of the servitude, right of inhabitation, right of superficies, usufruct or charge on immovable property. |
| (3) |
Letting immovable property for more than three years. |
| (4) |
Lending money |
| (5) |
Making a gift unless it is a gift for charitable, social or moral purposes and is suitable to the family condition. |
| (6) |
Making a compromise. |
| (7) |
Submitting a dispute to arbitration. |
| (8) |
Putting up the property as guarantee or security with a competent official or the Court. |
| The management of the Sin Somros in any case other than those provided in paragraph one can be made only by one spouse without having to obtain consent from the other'. ------- |
The most important and valuable asset that requires joint management under under section 1476 is real estate (unless a valid prenuptial agreement has been made stating different). As a foreigner is not allowed to have joint ownership together with the Thai spouse real estate, and this case specifically land, will as a personal property managed by the Thai spouse. An important aspect for the foreigner is of course the fact that the Thai spouse has full management and control over the property and in case of a divorce the Thai spouse would be able to sell the property without the consent of the other spouse.
Control over personal property (in this case the immovable property) can't be arranged in a prenuptial agreement. Often the foreigner protect his interest in the property by entering into separate agreements with the Thai spouse (this could be a usufruct, superficies, lease, loan, etc), however as a general rule in Thailand:
- Section 1469 of the Thailand Civil and Commercial Code: 'Any agreement concluded between husband and wife during marriage may be avoided by either of them at any time during marriage or within one year from the day of dissolution of marriage; provided that the right of third persons acting in good faith is not affected thereby'.
How to deal with sole management by the Thai spouse
If protection is required the first protection for the foreign spouse lies in registering joint or sole ownership over the building separate from the land. It's only the land aspect of the property that is restricted for foreign ownership, not the structures upon on the land or immovable property as a whole. It most cases land and house will be registered together in the Thai spouse's name, however, the structures on the land (the house) can be a jointly owned property or even owned as a personal property of the foreign husband. By registering ownership or co-ownership over the house in a separate procedure at the Land Department the foreign spouse prevents a situation where the Thai spouse is able to sell the whole property without the consent of the other spouse (see section 1476 'management of Sin Somros' above). The house will be a Sin Somros therefore must be jointly managed by both spouses and selling would need both spouses consent (unless a prenuptial has been made).
- Section 1475: 'Where any Sin Somros is property of the kind mentioned in Section 456 (meaning immovable property) of this Code or has documentary title, either husband or wife may apply for having his or her name entered in the documents as co-owners'.
The second option for protection lies in registering a right of usufruct, or in case of undeveloped land a right of superficies against the property in the foreign spouse's name at the Land Department. The above section 1469 (the right to avoid any agreement) will have limited impact on registered real rights and in any case the Thai spouse would need a Court order to remove the usufruct or superficies from the title. A real right of usufruct or or superficies an acceptable protection for a foreign spouse if the money expended on the property comes from personal property of the foreign spouse.
Divorce or the legal ending of a Thai marriage
Upon divorce or dissolution of the marriage in Thailand the couple must make some form of 'credit balance' (what has become joint or partly joint owned property and how jointly owned property will be divided). Jointly owned property will in principle be divided equally between the spouses. A divorce in Thailand can be by mutual consent (the spouses agree on a divorce settlement or agreement) or the divorce shall be decided by the Court and the Court will divide the community property according to the law and individual circumstances. Even though in some cases land and house is registered as personal property of the Thai spouse, this must be included in the credit balance and division of the couple assets.
Often the couple will have a mix of personal and jointly owned property and a prenuptial and administration of your personal and jointly owned property could help in case of a divorce. Keeping a form of administration of personal assets and payments you made from personal property during marriage would make division of assets in a divorce more simple.
In case of debts, in principle, if upon divorce the debts exceed the couple's 'community of benefit and income' the debts are to be divided between the spouses in proportion to which each spouse caused them to belong to the matrimonial community (an exception may be made). Personal debts remain personal debts.
Benefits of a Thai prenuptial agreement
The first benefit of a prenuptial agreement in Thailand lies in proof in case of a possible divorce and preventing disputes when separating. The second benefit of a pre-marriage contract or prenuptial lies in the right to manage certain marital property during marriage, even though real estate in Thailand is generally excluded as land must become a personal properety of the Thai spouse.
The third benefit of a valid prenuptial agreement is that it can state possible division of marital assets in case the marriage in Thailand is later dissolved.
Note: if one of the spouses has substantial income and/ or assets outside Thailand he/ she should obtain local legal advice to assess the impact of the marriage in that country. In some jurisdictions it is possible to exclude any form of community property between husband and wife, while in others similar rules as in Thailand apply. Mostly spouses have a 'choice of law' option in case of a marriage between spouses with different nationalities, this subject to a 'conflict of law' rule, but generally: you may register your marriage in Thailand but have a prenuptial agreement in another country protecting assets in that country (but this is really a matter of taking local legal advice prior to your marriage). Each country has different rules and it may not be in your interest to have a Thai prenuptial agreement or Thai law governing your assets during a marriage under Thai law.
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