Define Thai Usufruct Agreement - Usufruct in Thailand

The usufruct agreement is sometimes compared with a lifetime lease agreement or a life estate that ends at death. Contrary to a lease agreement in Thailand, payment of rent is not an element of the right of usufruct and a usufruct agreement does not necessarily need to contain a consideration.

The right of usufruct is granted by agreement between the owner of an immovable property and another person or persons. The term of a usufruct can be for the duration of a person's or persons' life or for a period up to 30 years. The right of usufruct itself grants the right to possess and management over the property and the usufruct contract is often more used to limit the rights of the usufructuary rather than to increase his rights.

The right of usufruct contains the obligation for the usufructuary to maintain the property and to take care of the property as a person of ordinary prudence would take of his own property (section 1421). The usufructuary or the person granted the right of usufruct 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 is not bound to give compensation for depreciation in value caused by reasonable use.

Under Thai law the right of usufruct is a real right, which among others means that it must be registered on the ownership title deed of the property to be effective and enforceable. A real right is a right secured over the property itself, as opposed to a contractual right. As a registered real right the usufruct remains enforceable if ownership of the property is transferred and has priority over any subsequent later registered rights. This means among others that if a second usufruct is registered on the same property the second usufructuary can not claim his rights as the first usufruct has priority. Priority also means that if a mortgage is registered after the registration of the usufruct the mortgage holder must respect the usufruct and should the mortgage holder exercise his rights the rights of the usufructuary are unaffected and any transferee owner has to respect the right of usufruct. 

• Read more about official registration of a usufruct in Thailand
• Read more about legal aspects of usufruct in Thailand
• Thai English script usufruct template agreement (ZIP download)

Below a translation of the chapter 'right of usufruct' in the Thai civil code (source):

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 mutatis 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.

Download a professionally customized usufruct agreement online visit also the website of the Department of Lands in Thailand.