I am the mortgagee on a piece of land and which is registered on the back of the title deed. In principal the land office will not register a lease to the mortgagee on the same plot. ( fact ) I'm not sure if they will register a lease at all on a mortgaged piece of land??? And when I try it will the land registry government department not say that my girlfriend is my agent holding the land for me, it would be illegal?
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Encumbrance over a mortgaged property
After the mortgage registration the owner (who is called the mortgagor) cannot create any encumbrance on the land without the consent of the mortgagee (the lender in a mortgage, typically a bank). However, with the consent of the mortgagee (say when it is a private loan from you to a Thai national) the land owner may lease out or give a right of usufruct to another person (even to the mortgagee) but you should include this option in the mortgage agreement registered with the land office, with the consent of the mortgagee the owner/ mortgagor (the borrower in a mortgage) would be able to create an encumbrance over the mortgaged property land, even for the benefit of the mortgagee.
The issue of the Thai national being your agent or nominee
It is not likely that the land office (unless you do it all within a short period of time) will raise the issue of the Thai national being your nominee owner because this should have been raised upon registration of ownership of the property. This already lies behind you and you could try to register a lease or usufruct (no guarantee). I would recommend to use a Thai lawyer with connections at the land office and expect to pay a few thousand baht 'extra money'.
Answered 5 years ago
It is true that the mortgagee will refuse a usufruct to be registered OVER a mortgage. However, in practice, I have seen these situations:
a) A usufruct can be done between 2 people WITHOUT ANY REGISTRATION. So you can have a mortgage at Bangkok Bank and make a PRIVATE USUFRUCT AGREEMENT between your wife and yourself. But because that contract is NOT registered, it does NOT bind third parties and therefore is not very strong. But it is valid between both of you. We have done usufruct on land like Por Bor Tor WITHOUT REGISTRATION because it is impossible to register it. it is not very strong, but better than nothing. Now if your wife dies for example, or sell to her sister, you do not have any claim against the sister because you have no contract with the sister. In these situations, a LAST WILL can be a good combinaison with a usufruct. Or a loan, or a MOU. Each case is different.
2. I have seen the opposite: A mortgage on TOP of a usufruct registered. That is extremely rare and not illegal. It means your wife can borrow and mortgage to a third party but this third party MUST RESPECT YOUR USUFRUCT. This was done in bad faith, in a divorce case and the usufructuary is protected. To AVOID THAT, be sure that your usufruct agreement is WELL DRAFTED and INCLUDES clauses like the owner can't do A, B, C and for example the usufructuary can retain the title deed during the usufruct length. USE CONTRACTS DONE BY PROFESSIONALS. There are also many levels of protections. A house of 500,000 baht is different than another one of 10,000,000 baht. The person with a property of 10 million baht might wish to pay more to have more benefits, while following the limitations of Thai law.
Answered 5 years ago
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Q&A land laws in Thailand
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