Foreigners in Thailand are often uninformed about land ownership, rights to habitation, legal aspects of property use – limitations and advantages, and how to safeguard their interests while putting down sometimes considerable sums of money in Thailand for something they are not permitted by Thai law to actually own. The initial impression becomes one where the foreigner thinks there are no real alternatives in the country to controlling property or enjoying benefits of using it, including making a profit. This is where the usufruct may be what’s needed.
The Thai word for usufruct is สิทธิเก็บกิน (sitti kep kin), which literally translates as the right to retain and eat, ostensibly hailing in derivation from a farmer having partial control over a piece of farmland owned by someone else but the farmer has the right to plant crops, gather them, eat or otherwise gain profit from them. In non-farming terms, a usufruct, as applied in Thailand, is defined and stipulated in Thailand’s Civil and Commercial Code, Sections 1417-1428.
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 Seciton 1403 parag. 3 shall apply mutatis mutandis. (Section 1403 reads, “If it is granted for a period of time, the period may not exceed thirty years; if a longer period is stipulated, it shall be reduced to thirty years. The grant may be renewed for a period not exceeding thirty years from the time of renewal.”
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 mutais 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.
The main points of this legal provision is the right of possession, use and enjoyment of a property, and right of management. Limitations of a usufruct include maximum duration of thirty years with a maximum equal, single renewal possible. If not for the lifetime of the usufructuary then the duration is as stipulated between the actual property owner and the usufructuary; under current Thai law in no case can it be longer than thirty years with maximum extension for the same duration . In addition, the usufructuary is not permitted to destroy the property, and at the end of the usufruct, is required to restore the property to the condition that it would normally be in as if the usufructuary was the owner taking care of the property. A disadvantage of a usufruct is that it likely affects the value of the property and ability of the owner to negotiate its sale. The terms of the usufruct would ostensibly contain provisions, limitations and options that address this point.
Online there are various samples of a standard usufruct, including that on Samuiforsale.com . One of the two forms shown is a memorandum for a lifetime usufruct, a copy which will be retained by the Land office. Obviously such legal agreements are to be made through a reputable attorney/lawyer. Another detailed example of what can be done with a usufruct, partly in anecdotal form by the foreigner involved, is available online at http://retiringinthailand.net/usufruct-legalised-on-chanote/. This author personally found this online resource particularly insightful as it offers a close personal view of the process and principals involved in getting a usufruct actually drawn up and legally executed in a way that protects the rights of the foreigner – as told by the foreigner.
References and citations:
Latin roots and original meaning of usufructus – (This is an academic narrative replete with Latin references)
Note the following from http://penelope.uchicago.edu/Thayer/E/Roman/Texts/secondary/SMIGRA*/Ususfructus.html:
Article by George Long, M.A., Fellow of Trinity College
on pp1221‑1222 of
William Smith, D.C.L., LL.D.:
A Dictionary of Greek and Roman Antiquities, John Murray, London, 1875.
USUSFRU′CTUS and USUS were Personal Servitutes [Servitutes.] (Dig. 8 tit. 1 s1). Ususfructus is defined to be “jus alienis rebus utendi fruendi salva rerum substantia” (Dig. 7 tit. 1 s1). Accordingly Ususfructus comprehended the “just utendi” and the “jus fruendi“. Usus comprehended only the “jus utendi.” The complete distinction between Ususfructus and Usus will only appear from a statement of what each is.
A ususfructus was the right to the enjoyment of the fruits of a thing by one person, while the ownership (proprietas) belonged to another. It could be established by Testament, which was the common case, as when the Heres was required to give to another the ususfructus of a thing; and it could also be established by contract between the owner of a thing and him who contracted for the Ususfructus. He who had the Ususfructus was Usufructuarius or Fructuarius, and the object of the Ususfructus was Res Fructuaria. The utmost limit of Ususfructus and Usus was the life of the person who had the right. Thus the Ususfructus and Usus were generally life estates; but not more (Dig.45 tit. 1 s38 § 12).
There might be Ususfructus both in Praedia Rustica and Urbana, in slaves, beasts of burden and other things; and a Ususfructus of a whole property (omnium bonorum) might be given; or of some aliquot part (Dig. 32 tit. 2 s37, 43).
If the Ususfructus of a thing was bequeathed to a person, all the “fructus” of the thing belonged to the Fructuarius during the time of his enjoyment. Consequently if the Ususfructus of a piece of land was given to him, he was intitled to collect and have for his own all the fructus that were already on the land, and all that were produced on it during the time of his employment. But as he only acquire the ownership of the fructus by collecting them (perceptio), he was not intitled to fructus, which existed on the land at the time when his right ended, and which he had not collected: quidquid in fundo nascitur, vel quidquid indeed percipitur, ad fructuarium pertinet (Dig. 7 tit. 1 s59, § 1; tit. 4 s13).
He was bound not to injure the land, and he was bound to cultivate it properly. As to quarries and mines, he could work them for his benefit, if he worked them properly (quasi bonus paterfamilias). If after the bequest of the ususfructus, minerals were found on the land, he could work them. He could be compelled to plant new trees in the place of those which died, and generally to keep the land in good condition. If the ususfructus was of aedes, the fructuarius was intitled to all the rents and profits which he received during the time of his enjoyment. He could be compelled to keep a house in repair, but it seems to be doubtful how far he was bound to rebuild the house if it fell down from decay: at any rate he was liable for all moderate and reasonable expenses which were necessary for the maintenance of the property.
The Fructuarius could not alienate the right to the ususfructus, though he might give to another the usus of his right; and he might surrender the right to the Ususfructus to the owner of the thing. He could not subject the thing to servitutes; nor could the owner do this even with the consent of the fructuarius. The Fructuarius could make such changes or alterations in the thing as would improve it, but not such as would in any way deteriorate the thing, or even render the maintenance of it a greater burden. Consequently he had greater power over cultivated land than over houses or pleasure-grounds, for a part of the value of houses or pleasure-grounds and things of the like kind consists in opinion, and must be measured by the rank, wealth, and peculiar disposition of the owner.
The fructuarius could maintain or defend his rights by action and by interdicts. On the completion of the time of the Ususfructus, the thing was to be restored to the owner, who could generally require securities from the fructuarius both for the proper use of the thing and for its restoration in due time. This security was in some cases dispensed with by positive enactments, and in other cases by agreement; but it could not be dispensed with by testament.
Originally there could be no Ususfructus in things unless they were things corporeal and such as could be restored entire, when the time of Ususfructus had expired. But by a Senatusconsultum of uncertain date, there might be quasi ususfructus of things which were consumed in the use, and in this case the fructuarius in fact became the owner of the things, but was bound to give security that he would either restore as much in quantity and value as he had received, or the value of the things in money (Dig. 7 tit. 5 s7; and compare Randall v. Russell, 3 Mer. 190). It is generally supposed that this Senatusconsultum was passed in the time of Augustus, and a passage of Cicero (Top. 3) is alleged to show that it did not exist in the time of Cicero: “Non debet ea mulier, cui vir bonorum suorum usumfructum legavit, cellis vinariis et oleariis plenis relictis, putare id ad se pertinere. Usus enim non abusus legatur.” The only difficulty is in the words “id ad se pertinere,” which are usually translated “these things, (the cellae vinariae, &c.) are not objects of Ususfructus,” from which it is inferred that there was at that time no Ususfructus in things which were consumed in the Use. But if this is the sense, the words which follow, “for the usus, not the abusus (power to consume) is the object of the legacy,” have no clear meaning. These words simply signify p1222that an Usus is given, not an Abusus; but this does not prove that an abusus could not be given. Puchta shows that the phrase “res pertinet ad usufructuarium,” which exactly corresponds to the phrase in Cicero, does not mean “that the thing is an object of ususfructus,” but that “it belongs to the fructuarius.” In the Digest (7 tit. 1 s68) the question is, whether the young child of a female slave belongs to the fructuarius (an partus ad fructuarium pertineat), and it is answered in the negative, with the following explanation: “nec usumfructum in eo fructuarius habebit.” The passage of Cicero therefore will mean, that wine and oil in the testator’s possession are not given to her by a bequest of the ususfructus of his property, for it is usus, that is, the enjoyment of the future fruits, which is given, and not “abusus” or the power to consume fruits which already exist. In other words the testament gives the woman a Ususfructus in all his property, that is a right to gather the fruits, but he does not give the wine and oil, which are fruits already gathered, to the woman to be her property as if she had gathered them during her Ususfructus. Puchta contends that “abusus” does not necessarily signify that there could be “abusus” only in the case of things “quae usu consumuntur“: he says that in the place of wine and oil Cicero might have given the young of animals, as an example without altering his expression. If this interpretation is correct, Puchta contends that the Senatusconsultum as to Quasi ususfructus is older than the time of Cicero.
Usus is defined (Dig. 7 tit. 8 s2) by the negation of “frui“: “cui usus relictus est, uti potest, frui vero non potest.” The title of the Digest above referred to is “De Usu et habitatione,” and the instances given under that title mainly refer to the use of a house or part of a house. Accordingly the usus of a house might be bequeathed without the fructus (Dig. 7 tit. 8 s18): it has been already explained what is the extent of the meaning of Ususfructus of a house. The usus of a thing implies the power of using it either for necessary purposes or purposes of pleasure. The man who was intitled to the usus could not give the thing to another to use, though a man who had the usus of a house could allow another to lodge with him. A man who had the usus of an estate could take wood for daily use, and could enjoy the orchard, the fruit, flowers, and water, provided he used them in moderation, or as it is expressed “non usque ad compendium, sed ad usum scilicet non abusum.” If the usus of cattle (pecus) was left, the usuarius was intitled to a moderate allowance of milk. If the usus of a herd of oxen was bequeathed to a man, he could use the oxen for ploughing and for all purposes for which oxen are adapted. If the usus was of things which were consumed in the use, then the usus was the same as Ususfructus (Dig. 7 tit. 5 s5 § 2; s10 § 1). Usus was in its nature indivisible, and accordingly part of a Usus could not be given as a legacy, though persons might have the fructus of a thing in common (Dig. 7 tit. 8 s19). As to his duties the usuarius was in most respects like the fructuarius. In some cases Usus is equivalent to Ususfructus, as where there can be no usus of a thing without a taking of the Fructus. As to Usus in the English system, see Slanning v. Style, 3 P. Wms. p335, and Hyde v. Parratt, 1 P. Wms. p1.