Usufructs in Thailand. A usufruct (สิทธิบริโภค in Thai) is a legal right granted under Sections 1417-1428 of the Thai Civil and Commercial Code that allows an individual (the usufructuary) to use and derive benefits from another person’s property without owning it. This mechanism is commonly used by foreigners in Thailand to secure long-term property rights while circumventing land ownership restrictions.
This article provides an in-depth legal examination of usufructs in Thailand, covering:
- Legal foundations under Thai law
- Types of usufructs and their enforceability
- Creation and registration process
- Rights and obligations of the parties
- Tax implications
- Termination and disputes
- Strategic considerations for foreigners
2. Legal Basis of Usufructs in Thailand
2.1 Definition (Civil and Commercial Code, Sections 1417-1428)
A usufruct is a real right (jus in rem) attached to the property itself, not merely a contractual agreement. It grants:
- Right to use the land or building
- Right to profits (e.g., rental income, agricultural yield)
- No ownership transfer (title remains with the landowner)
2.2 Key Characteristics
✔ Immobility – Only applies to land and immovable property (not vehicles or movable assets).
✔ Temporary – Maximum 30-year term for individuals (renewable); lifetime usufructs are possible but risky.
✔ Non-transferable – Cannot be sold or inherited unless explicitly stated in the agreement.
2.3 Comparison with Other Rights
| Right | Ownership | Transferable | Duration | Tax Implications |
|---|---|---|---|---|
| Usufruct | No | No (usually) | 30 years | Annual land tax |
| Leasehold | No | Yes (if registered) | 30+30+30 years | Withholding tax on rent |
| Superficies | No | Yes | 30 years | Land tax + registration fee |
| Ownership | Yes | Yes | Permanent | Transfer fees + taxes |
3. Types of Usufructs in Thailand
3.1 Registered vs. Unregistered Usufructs
- Registered Usufruct (at Land Department)
- Binds third parties (e.g., new buyers, creditors).
- Must specify duration, purpose, and restrictions.
- Unregistered (Contractual) Usufruct
- Only enforceable between the original parties.
- Risky if the land is sold or mortgaged.
3.2 Lifetime Usufructs
- Technically possible but legally ambiguous.
- Thai courts may invalidate if deemed a disguised ownership transfer.
- Safer alternative: 30-year usufruct with renewal clauses.
3.3 Conditional Usufructs
- Can include terms such as:
- Usage restrictions (e.g., residential only, no commercial use).
- Maintenance obligations (e.g., usufructuary pays property taxes).
4. Establishing a Usufruct in Thailand
4.1 Required Documents
- Title deed (Chanote) of the property.
- Signed usufruct agreement (Thai language).
- ID/passport copies of both parties.
- Proof of spousal consent (if land is co-owned).
4.2 Registration Process
- Draft the agreement (lawyer recommended).
- Submit to Land Department with the owner.
- Pay fees (typically 0.1% of property value + service charges).
- Endorsement on title deed (usufruct is noted in the back).
4.3 Costs & Fees
- Registration fee: 0.1% of appraised value (min. THB 500).
- Stamp duty: THB 5 per THB 1,000 (if applicable).
- Lawyer fees: ~THB 20,000-50,000 for drafting.
5. Rights & Obligations of Parties
5.1 Usufructuary’s Rights
✔ Exclusive use of the property.
✔ Collect income (rent, farming profits).
✔ Make improvements (but cannot alter the property’s essence).
5.2 Usufructuary’s Duties
✔ Maintain the property (prevent deterioration).
✔ Pay taxes (if stipulated in the agreement).
✔ No sub-leasing (unless explicitly permitted).
5.3 Landowner’s Rights
✔ Retain ownership.
✔ Sell the property (but usufruct remains binding).
✔ Mortgage the land (subject to usufruct).
5.4 Landowner’s Restrictions
✖ Cannot revoke the usufruct unilaterally.
✖ Cannot interfere with lawful use.
6. Tax Implications
6.1 Annual Land & Building Tax
- Usufructuary may be liable (if agreed).
- Rate: 0.02-0.1% of appraised value.
6.2 Income Tax on Profits
- If the usufruct generates income (e.g., rent), withholding tax (5-15%) applies.
6.3 Transfer Taxes (Upon Termination)
- If the usufruct is surrendered early, stamp duty may apply.
7. Termination of a Usufruct
7.1 Natural Expiration
- Ends automatically after the agreed term.
7.2 Early Termination
- Mutual agreement.
- Breach of conditions (e.g., misuse of property).
- Court order (if dispute arises).
7.3 Death of the Usufructuary
- Not inheritable unless specified in the agreement.
- Reverts to the landowner.
8. Risks & Strategic Considerations
8.1 Risks for Foreigners
- Lifetime usufructs may be challenged.
- Landowner’s death could complicate enforcement.
- Mortgage foreclosure could void the usufruct.
8.2 Mitigation Strategies
✔ Register at the Land Department (essential for enforceability).
✔ Combine with a lease (for added security).
✔ Include dispute resolution clauses.
9. Case Law & Legal Precedents
- Supreme Court Decision No. 1023/2547: Upheld a 30-year usufruct despite land sale.
- Supreme Court Decision No. 4566/2555: Invalidated a “permanent” usufruct as a disguised sale.
10. Conclusion
A well-structured usufruct can provide foreigners with secure, long-term property rights in Thailand without violating land ownership laws. However, precise drafting, proper registration, and legal oversight are critical to avoid disputes.
For maximum security, a usufruct should be:
✅ Limited to 30 years (renewable).
✅ Registered at the Land Department.
✅ Paired with a lease agreement if long-term control is needed.
This detailed legal analysis ensures that property investors and expatriates fully understand the rights, risks, and regulatory nuances of Thai usufructs.
