Usufruct grants the use and possession of another man's real estate property

The right of usufruct transfers possession, use and enjoyment of an immovable property from the owner to the usufructuary. Usufruct can only be registered over properly titled immovable property and is established by agreement with the owner and registration at the local land office. The contract or memorandum for usufruct is the legal document that states and confirms the formal agreement between the owner and the usufructuary (the person granted the right of usufruct).

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 NOT allowed to transfer transfer the right of usufruct, but he is allowed transfer the exercise of his right under the usufruct to another person contrary to the right of habitation (the person granted a right of habitation can't transfer the exercise of his rights).

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 a usufruct is created for a period of time the usufruct also depends 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 supericies (which is an inheritable right if registered for a period of time).

If the right of usufruct is granted to a juristic person the period can't exceed 30 years.

The Civil and Commercial Code sections 1417 to 1428 explains the right and responsibilities of the persons granted the right of usufruct.

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 land offices in Thailand will not allow registration of the contract for hire 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.

In practice foreigners, as the usufructuary, can only rent out the property under usufruct for periods not exceeding 3 years at the time. If the property under usufruct is rented out by the usufructuary the hire of property is not automatically terminated together with the end of the usufruct (Scj. 2297/2541).

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.

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.

Read Ups:

• Sample of a Usufruct Contract
• How to Buy Property on a Thai Spouse's Name
• Custom Thai usufruct agreement
  

Thailand Civil and Commercial Code

USUFRUCT

TITLE VII

Section 1417. An immovable property may be subjected to a usufruct by virtue of which the usufructuary is entitled to the possession, use and enjoyment of the property. He has the right of management of the property.

The usufruct of a forest, mine or quarry entitles the usufructuary to the exploitation of the forest, mine or quarry.

Section 1418. A usufruct may be created either for a period of time or for the life of the usufructuary. If no time has been fixed, it is presumed that the usufruct is for the life of the usufructuary.

If it is created for a period of time, the provisions of Section 1403 paragraph 3 shall apply mutatis mutandis.

In any case the usufuct comes to an end on the death of the usufructuary.

Section 1419. If property is destroyed without compensation being paid, the owner is not bound to restore it; but, if he does so to any extent, the usufruct revives to that extent.

If any compensation is paid, the owner or the usufructuary must restore the property so far as it is impossible to do so, having regard to the amount of the compensation received, and the usufruct revives to that extent; but, if restoration is impossible, the usufruct come to an end and the compensation must be divided between the owner and the usufructuary in proportion to the damages suffered by them respectively.

The same rules apply mutais mutandis in case of expropriation as well as in case of partial destruction of the property or of partial impossibility to restore the property.

Section 1420. When usufruct comes to an end, the usufructuary must return the property to the owner.

The usufructuary is liable for the destruction or depreciation in value of the property, unless he proves that the damage was not caused by his fault.

He must replace anything which he has wrongfully consumed.

He is not bound to give compensation for depreciation in value caused by reasonable use.

Section 1421. The usufructuary must, in the exercise of his rights, take as must care of the property as a person of ordinary prudence would take of his own property.

Section 1422. Unless otherwise provided in the act creating the usufruct, the usufructuary may transfer the exercise of his right to the third person. In such case the owner of the property may sue the transferee direct.

Section 1423. The owner may object to any unlawful or unreasonable use of the property.

If the owner proves that his rights are in peril, he may demand security from the usufructuary, except in the case of donor who has reserved to himself the usufruct of the property given.

If the usufructuary fails to give security within a reasonable time fixed for the purpose, or if, in spite of the owner's objection he continues to make use of the property unlawfully or unreasonably, the Court may appoint a Receiver to manage the property in his stead. Upon security being given the Court may release the Receiver so appointed.

Section 1424. The usufructuary is bound to keep the substance of the property unaltered, and is responsible for ordinary maintenance and pretty repairs.

If important repairs or measures are necessary for the preservation of the property, the usufructuary must forthwith inform the owner thereof and permit them to be carried out. In case of default by the owner, the usufructuary may have the work carried out at the owner's expense.

Section 1425. All extraordinary expense must be borne by the owner, but in order to meet these or expenses coming under the foregoing section he may realize part of the property unless the usufructuary is willing to advance the necessary funds without charging interest.

Section 1426. The usufructuary shall, for the duration of the usufruct, bear expenses for the management of the property, pay taxes and duties, and be responsible for interests payable on debts charged upon it.

Section 1427. If required by the owner, the usufructuary is bound to ensure the property against loss for the benefit of the owner; and if the property is already insures he is bound to renew such insurance when due He must pay the premiums of the insurance for the duration of his usufruct.

Section 1428. No action by the owner against the usufructuary or his transferee in connection with the usufruct or vice versa may be entered later than one year after the usufruct comes to an end. But in an action by the owner who could not have known of the end of the usufruct, the prescription of one year shall run from the time when he knew or ought to have known of it.