Thailand’s legal framework offers various methods of property rights and interests. Each had its own set of legal implications and considerations. In this comparative study, we will explore the key aspects and specificities of three property rights concepts: lease, usufruct, and sap ing sith.
Usufruct Law in Thailand (see clauses 1417-1428 of the CCCT)
Usufruct is a real right in Thailand that provides the holder with the right to enjoy and utilize another person’s property. This right grants the holder the legal ability to use. But also keep the profits from, and manage the property for a specified period, without transferring ownership rights. It can be for a lifetime and granted for free. The registration cost at the land department is very low and it suits people who wish to live in a property for the rest of their life. They can’t sell. But they can use it, enjoy it, and even sublease it.
Definition and Scope
In accordance with the Thai Civil and Commercial Code, usufruct is defined as a temporary right. It allows the usufructuary to use the property of another and derive benefits from it. At the same time, the owner retains the overall ownership rights. In French, we call the owner “nu-propriétaire” or “naked-owner” and he does not have many rights. He is not the one enjoying the property. Well-drafted agreements can limit his rights to sell, mortgage or do other things.
Duration and Transferability:
Usufruct can be established for a fixed period or for the lifetime of the holder. It is not transferable but the usufructuary can sublease should they wish. It could allow the holder to convey their rights to others or pass them on to their heirs through subleasing. Remember that any lease of more than 3 years must be registered. We believe the owner of the land will have to sign to register a lease of more than 3 years.
Rights and Limitations of usufruct agreement in Thailand:
The holder of a usufruct has the right to possess, utilize, and enjoy the property as any ordinary owner would, provided it does not harm the property’s substance. However, there are certain restrictions, such as the inability to alter the property’s fundamental structure without the owner’s consent.
As a legal arrangement, usufruct grants the holder a degree of control and economic benefit from the property without assuming the responsibilities and liabilities associated with full ownership. It also ensures that the owner retains ultimate control over their property, thus providing a balanced approach beneficial to both parties.
Lease and Sap Ing Sith in Thailand
In addition to usufruct, Thailand’s legal system recognizes lease and sap ing sith as property rights concepts, each with its own unique implications and considerations.
A lease grants the lessee the right to possess and use the property for a limited period. It involves entering into an agreement, typically for residential or commercial purposes, where the lessee pays rent to the lessor in exchange for usage rights. Unlike usufruct, lease agreements do not provide the lessee with the same level of usage and profit rights as a usufruct holder unless the contract gives these rights to the lessee.
Sap Ing Sith:
Sap ing sith is a new form of ownership in Thailand. Some would call it limited possession but we believe it goes further than just possession. It allows a person to possess and occupy real property owned by another person without anything else. This right arises under specific circumstances where the possessor developed and cultivated the property in good faith and without objection from the true owner. However, sap ing sith can also also confer ownership or sale rights. It means that you do not need the consent of the owner to sell the balance of your term. Same if you wish to build, modify or use the structures. Defined that way, we believe it goes further than a lease agreement as you really are the owner. However, remember that it is for a limited time of maximum 30 years. We think that we can had a renewal to these agreement, just like a lease agreement. The price to register sap ing sith is 20,000 baht at the land department. It is normally cheaper than a lease which is normally 1.1% of the total rental terms for the total length of the contract. This right was only adopted in 2019 in Thailand and it is still rarely used.
It is essential to consider these varying property rights options in Thailand. Whether you choose a lease, usufruct or sap ing sith, it can have a significant legal implications. You must think about your investment, your age, your goals on short and long terms. Whether one chooses to engage in a lease, usufruct, or sap ing sith, understanding the legal framework and seeking professional advice is crucial to ensure compliance and protection of rights.
- Directives of the land department on usufruct agreements (Thai and from 2016)