The ins and outs of usufruct – Phuket Property Legal

PHUKET: The right of usufruct is rarely used and often overlooked when it comes to securing one´s interest in immovable property. Usually, lease rights are registered against the property – providing use and possession rights for the benefit of the beneficiary until the lease is terminated or expired.

The right of usufruct, which is a property right, the same as a lease, is provided by the Thai Civil and Commercial Code (CCC), whereby the owner of an immovable property provides the usufructuary with rights of possession, use, enjoyment and management of a specific property.

A right of usufruct may be created either for a maximum period of 30 years or the life-time of the usufructuary. In the event that a usufruct agreement keeps silent regarding its term, it shall be deemed as valid for the life-time of the usufructuary. In case a right of usufruct is registered for the life-times of more than one person, it seems to be logically consistent to apply the life-time right. Upon its expiration, the usufruct ends by law and the property must be returned to the owner, unless the property owner and the former usufructuary agree to renew. However, the right of usufruct does not cease to exist upon the property owner’s (who granted the usufruct for the benefit of the usufructuary) demise.

The right of usufruct must be registered against a specific property at the competent land department, and is subject to a registration fee. As it is a recorded property right, the right of usufruct can also be legally defended and enforced against a third party.

It is important to understand when considering registering a right of usufruct that usufruct is a personal right of its beneficiary and therefore is not transferable to or inheritable by a third party.

It is interesting to note that a usufructuary is basically entitled by law to lease out the property, as holder of the management right to the property, up to the maximum lease rights for residential purposes of 30 years. However, it is of paramount importance for people to seek professional advice in order to understand the implications which may apply to their specific case, particularly in regard to enforceability of lease rights in case of the usufructuary´s demise.

With regards to payment or consideration reciprocated for registration of a usufruct, it needs to be mentioned that the CCC basically does not require any consideration for such. However, competent authorities might be reluctant in giving consent to registration of usufruct without any consideration or even scrutinizing such a structure in order to verify if it has been used to circumvent applicable laws.

In summary, usufruct can be an interesting alternative, particularly to a recoded lease right, in case a property owner wishes to provide a right of use, possession and management to its beneficiary. However, a professional adviser should be consulted before entering into any such arrangement to help to determine whether or not such a property is suitable for its required purpose.

This article was written by International Law Office Patong Beach Co, Ltd. For any questions you can contact sam@ilo-phuket.com or call ILO’s offices at 076 222 191-5.

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