Getting full control of land through USUFRUCT

[jazzman]

usufruct |ˌjuːzjʊfrʌkt| (notice how the new forum software also supports the IPA, provided you have your browser set to UTF-8)
noun
the right to enjoy the use and advantages of another's property short of the destruction or waste of its substance.
DERIVATIVES
usufructuary |-ˌfrʌktjʊəri|
adjective & noun
ORIGIN early 17th cent.: from Latin usus (et) fructus ‘use (and) enjoyment,’ from usus ‘a use’ + fructus ‘fruit.’
(courtesy of the Ultralingua Dictionary™ )

สิทธิโครงการชีวิึึึต - sittikrongkarn chiwit = usufruct for life.

One CTH board member received a quote from a lawyer of around 20,000 baht for doing everything necessary for obtaining quasi ownership of land through usufruct. Usufruct is a very straight forward procedure, it costs a fee of 75 baht at the land office, eventually a small tax based on the property value, and the process does NOT need a lawyer at all. It can be made for the rest of your natural life (chiwit). This posting treats the actual process - other posters have explained the details of the legal implications, and compared it with other solutions here. You will notice that one board member has an aversion to lawyers, but his problems are often of his own making - read Dozer's advice on lawyers here.

Basically, usufruct gives you full rights over the land as if you were the owner; you can never be thrown off it; you can build anything on it, and you can be the full registered legal owner of anything you build on it, but you may not sell the land or do anything to damage it or reduce its value. The rights to the property revert to the owner on your death. You are not required to pay the owner for a lease or rent, or to compensate him/her in any other way.

If you must have the usufruct done in your absence, it is such a simple procedure that you will not need to scour the country for an expert lawyer who is 'specialised' in farang matters, and you will get a much lower quote from a local lawyer.
For some people, 20,000 baht is a lot of money. For others who have well paid jobs and risk to lose a lot more salary by taking by taking the time off to go to the land office and do it themselves, it is only a tiny investment when taken into consideration with the total costs of the house construction project. Sometimes it is just impossible to avoid shelling out money for professional services such as doctors, dentists, accountants, architects, consultants, lawyers or maybe some trustworthy project management if you will be absent much of the time.

20,000 baht for this service from a nearby 'farang' specialist lawyer really is far too much and in the opinions of many CTH members (here, here, and here), lawyers who focus on a farang clientele are frequently specialised in ripping them off, so you may also find that your architect or your consultant can do this for you very easily if you give him Power of Attorney to act as your proxy.

Failing this, if you live up country and feel that the only solution is to use a lawyer from the Greater Bangkok area, his fees would probably look something like this:

• 1 day professional fee: 9,600.00
• Owner Contract (if needed): 500.00
• Travel (domestic air ): 5,900.00
• Taxis: 960.00
• Sundries: 1,000.00

• TOTAL: 17,960.00

From the above figures, you can calculate how much a local lawyer would charge.

The usufruct is done at the province land office and your name will be entered on the back of the chanote. You (or your legally designated representative) will need to go to the land office together with the owner. There is a lot of form filling to be done and the process can take up to two hours or more. The processing fee is 75.00 baht and some provinces will charge a tax - which won't break the bank - of between 0.5% and 1.5% of the land value (which can be anything that the owner wants to declare). To find out more about the exact local requirement, your wife could send a friend to the Land Office to find out exactly what rate, if any, they apply. That information would be free and would commit you to nothing. The following documents are required and if any are not available on the day, you will have to come back again, or pay your lawyer again for another day's visit to the Land Office.
If you cannot go to the land office yourself, you may also have to pay a local lawyer near you to certify the copies of your passport.

• Originals and signed photocopies of ID cards or passports of the current owner(s) listed on the chanote.
• Originals and signed photocopies of House Registration Certificate(s)of the current owner(s).
• The chanote.
• Contract* between the owner and the Candidate for usufruct.
• Passport of the candidate for usufruct, or notarised certified copies of all pages.
• Work Permit or notarised certified copies of all pages if the candidate is living and working in Thailand.
• Notarised Power of Attorney granted to the person or lawyer who will be signing on the candidate's behalf.

* The contract between you and the owner is not a legal requirement, and it is not a lengthy document. Some clerks want to see something just to be sure that both parties fully understand the implications and are in mutual agreement of what they are about to do. Neither you nor your lawyer will know in advance as it depends entirely on the clerk who will do the processing. Some lawyers already have a template contract for this. In Jazzman's case, the clerk looked at the paper and did not keep it or want a copy of it.

Note again that this is all done at the Province Land Office and not at the district or sub-district office, and that not all Land Offices will entertain a usufruct. A comprehensive argument on the usufruct law is available as a PDF download: Usufruct in Thailand

[Attila]

Nice summary, Jazzman!

Let me add that although the presence of a lawyer is not required by law or regulations, it might come in handy to have a lawyer present or at least on stand by, so you can give him a call in case the usually highly educated and motivated officer at the land office does not do what you want from him, in order to have the lawyer giving that officer a free course in Thai land law / usufruct law, sponsored by you, of course.

In some land offices the officers also expect a tip, usually as soon as they see a farang, and if such an officer does not cooperate, it is quite difficult to force them. They have power, and a low salary, and they use the one to increase the other

[jazzman]

Actually, Attila, that is precisely what I did do

I must add however, that I do have a particularly friendly, knowledgeable, and helpful lawyer

Also, the clerk in the Land Office did not want any 'gifts' - furthermore, because he worked through his lunch hour to do all the paperwork, he organised a free meal in the staff canteen for me and my entire Thai family

[thaifly]

gidday to the great jazzman...its the thaifly from mae rim.....we had USUFRUCT...as you stated in your excellent post excuted in mae rim 3 yrs ago using our lawyer who had previously done conveyising work for us when we were looking for land to buy....... last nite i took a CAPTAIN COOK at the costs and was as follows TAXES 12.000 baht....LEGAL FEES... box and dice....13.000 baht... TOTAL 25.000 baht........yes i agree with you that it can be carried out by your self and save money .....but i engaged a lawyer mainly because i did nt want to deal with the authorities in other words HASSLE FREE...and at that time my experience in such dealings were limited....i feel the legal fees of 13.000 baht a mere price to have your name on the back of the chanote title done with no head aches...and at the same time COVERING YOUR ARSE...IF THE s**t HITS THE FAN AT A LATER DATE....its a good bargaining chip to have in your pocket ..... i encourage everybody to do the same...as the tide can move out very quickly in thailand and indeed other countries as well... AND THEN YOU WILL FIND OUT WHO IS SWIMMING NUDE......its a SKINNY DIPPING GIDDAY TO ALL its the thaifly from mae rim

[jazzman]

I agree with you wholeheartedly THAIFLY. If one can afford to have things done the comfortable way, then that's the way to go - there are a lot of things I gladly pay to get done here that I would have no option but to do myself in Blighty. What I don't understand is the folks who have the smackeroos, looking for the cheapskate solutions and then they wonder why nobody takes them seriously and why they finally end up getting ripped off.

[tung]

Scenario. I have 49% shares in Thai Company which bought 800 Sq Meters Land. (No Comments On Land Ownership Please )

If the usufruct is issued to me can I cancel it at any time or indeed am I allowed a usufruct in my situation?

Trying to way up the pros and cons when building the house of a company house, lease or usufruct. Legal implications, taxes , payments etc

[jazzman]

Looks as if you are going for a failsafe: owning the land through your company AND wanting a usufruct.
You can of course back out of a usufruct any time you like. There shouldn't be any reason why your company shouldn't be able to give you a usufruct - it depends who in your company has the legal right of signature to commit your company to the usufruct. It won't be able to be yourself, it would look a bit odd if you were to turn up at the Land Office to represent both parties
Nevertheless, unless there is a lawyer who is a member of this forum, you may have to dip your hand in your pocket for some expert legal advice.
And don't ask Jazzman to recommend a lawyer

[tung]

Thanks for your input Jazzman, much appreciated.

It's a minefield and guess your right may need to get the law involved for help. Got the land in 2005 via a company before all the nominee issues surfaced. Now don't want the house in the company name. My g/f and me are the main shareholders in the company and we have a 1.5 year old daughter so it's not straight forward. Went to try and get some plans made up for a simple 200 Sq M - 2 storey - 2.5 million (I hope based on apptley) and got quoted 3% of value at 1 place and 300 baht square meter at another. arghhhhhhhhhhhhhhhhhhh

[jazzman]

Thanks for your input Jazzman, much appreciated.
...and got quoted 3% of value at 1 place and 300 baht square meter at another. arghhhhhhhhhhhhhhhhhhh

I'm sorry, but I don't quite understand who quoted you that sum? A lawyer? (monstrous: 60,000 baht!).
If it is the quote from the horse's mouth at the Land Office, then you may just have to shut-up-and-put-up.
Get some alternative legal advice, never base anything on what one lawyer tells you. Good lawyers don't charge for advice, you only pay when you instruct them to go ahead and act for you.

[tung]

No jazzman the quotes were from 2 design companies here in Hua HIn. They will do the plans blueprints etc. The 3% one will also produce 3d sketches. Kind of think that you would get a proper engineering job done with electrics/water etc but for a simple 10M * 10M plan with only a bathroom downstairs (Open plan for the moment) and 3 beds 2 baths upstairs. It's expensive for me.

About the usufruct. I was thinking that if me and my girlfriend control the company then I do not need to do anything about building a house on it, just build. Is this ok?

[jazzman]

Unless this is a very special 'designer' house of the kind that Nawty or Grant are building, even if you are able to easily afford the 60,000 baht for an architect, I think it's essential, before you make any decision, that you ask some of the other CTH members how much they paid for their drawings for similar projects to yours. 60,000 sounds very high to me, and I do know that Hua Hin is going the same way as Pattaya and Phuket. You don' strictly need an architect from HH.
10,000 would be about right for a standard house where the architect is not expected to come up with a prize-winning creation. Going through a 'company' is not a good idea anyway. There are plenty of indepndent architects. But we are off topic here.

[Smithson]

Good thread, I have a usufruct on our land, the main reason is in case of my wife's death. A large portion of the money to buy the land came from our combined savings from working in our own business.

We've been together 7 yrs, but only got married a little over 1yr ago as it made the WP and 1yr visa much easier.

As I understand it, she may well be able to cancel the usufruct because we're married. Furthermore, as my wife she is entitled to 50% of all assets bought while married. Does this sound right?

[jazzman]

As I understand it, she may well be able to cancel the usufruct because we're married. Furthermore, as my wife she is entitled to 50% of all assets bought while married. Does this sound right?

Strange coincidence - Dozer and I were discussing this only yesterday. We're in the process right now of getting a clear ruling on this. Watch this thread

[dozer]

There is some disagreement regarding this, but it is definitely an area of concern. My lawyer friend of mine confirms what I had heard: that it depends on a particular interpretation of the applicable Thai law that may allow the court the power in divorce proceedings to terminate all preexisting agreements at the request of one of the parties. In any event the risk can be mitigated if you grant a lease to another party, as the preexisting agreements can't be terminated if another party is impacted.

Still and all its silly that they allow the agreement in the first place if the above is true.

[jazzman]

Generally a usufruct is a very safe form of obtaining control of a piece of land. However, as Dozer states, there is some ambiguity in the way that different lawyers, hence judges, interpret the ruling in the case of married couples. A source informs me that some lawyers suggest that if no third party interests are involved, such as a tennant with a rent agreement, one marital partner can request a dissolution of the usufruct. This means effectively that if the land is in your wife's name, any extra documents to be drawn up to afford additional protection would probably require the intervention of a legal service and thus negate the ease, simplicity and low cost of the usufruct. In this case, it is probably worth considering a superficies - an alternative, not unlike a usufruct. There are template contracts which you can obtain, but you will need to consider the cost of notarising the documents. This however should not be excessive , but as always, compare the costs between those of Thai and western lawyers.
Read all about how members of CTH have fared with a superficies in THIS thread.