Although foreign individuals are prohibited from owning land in Thailand, there is a legal option for them to enjoy the benefits of land ownership. A Thai usufruct is an agreement in which one party confers upon another, full enjoyment of a Thai property. The usufructuary has an obligation to take care of the property as a person of ordinary prudence would take of their own property. The property must be returned to the owner in the same condition in which it was granted.
The holder of the Thai usufruct does not hold the title deed to the property and cannot sell it, but can utilize the property as she/he likes. This agreement can be drafted for the lifetime of the holder of the Thai usufruct, giving her/him rights nearly identical to the owner. However, the Thai usufruct cannot be transferred, and upon the death of the holder, the agreement would extinguish. Conversely, usufruct agreements do not automatically terminate upon the death of the owner, and the agreement can continue despite the fact that the land owner has died.
While a usufruct agreement cannot be transferred, the holder of the Thai usufruct, also known as the ‘usufructuary’, does have the ability to enter into a lease agreement with a third party. More information on lease agreements can be found here. Where the usufructuary dies prior to the lease agreement expiring, the lessee will maintain the rights and obligations under the lease until its expiration.
Mahanakorn Partners Group’s lawyers can help draft a Thai usufruct agreement that ensures the rights and duration that the foreign holder intends.