Results 1 to 10 of 10

Thread: Usufruct contract - Can she still borrow against the land?

  1. #1
    Senior Member 2girls1cup's Avatar
    Join Date
    May 2013
    Posts
    675

    Usufruct contract - Can she still borrow against the land?

    Got a friend with a lot of land in the married wife's name, he has a usufruct agreement. Things arn't good, we had a conversation about if she could borrow money with the land as security, ie walk away with the money.

    It looks like the law says she can sell/ transfer the land, but he will have legal rights to use the land for the length of the usufruct agreement. If this is true, she can mortgage out all of the equity and walk away with the cash.


    Usufruct | Definition, meaning & more | Collins Dictionary


    "the right to use and deriveprofit from a piece of property belonging to another, provided the property itself remainsundiminished and uninjuredin any way"


    What do you think?
    #MotoAsia - Ultimate motorcycle tours

  2. #2
    Super Moderator LivinLOS's Avatar
    Join Date
    Mar 2013
    Posts
    14,153
    My understanding is yes, she can borrow on the land.. However almost no financial institution will lend with a usufructee properly registered.. They realize their claim is then a secondary claim and the original usufruct (or lease) is still legal binding and enforceable.

    Of course loan sharks operate very different standards.. But also operate very different collection methods and then it becomes a how much pain is it worth issue..

    Far more worrysome is any agreement between a husband and wife, a lease usufruct or anything.. Is null and void if challenged within the first year after a legal divorce. Basically no husband wife deals are worth anything in the event of a split.. Crazy but a fact. He will be entitled to a 50% of any sales, potentially he can retain the property until sold too (hence resist the sale which is how most wives end up with 100% rather than the 50) but thats going into very grey areas where law v actual enforcement v power games all comes into it.

    If hes married his usufruct is worthless if shes smart enough to contest it.. If she can find a lender she can borrow, but I dont think shes going to find anyone other than a speculative lender to give her anything but a fraction of the value, in which case he might be better off doing that himself.

  3. #3
    Senior Member 2girls1cup's Avatar
    Join Date
    May 2013
    Posts
    675
    Lets say there's 20 years left on the usufruct agreement.

    A smart lawyer might be able to get her say 60% of land value as a secured loan (sale) if its a desirable/ good location with zero interest. Basically someone interested investing in a fixed, 20 year, zero coupon bond, who doesnt want income for tax reasons & would own the land in 20 years, with a very good chance of appreciation in the land.

    If this could be validated by a Thai court, pension funds would love this kind of investment instrument. Basically net present value calculations.
    Last edited by 2girls1cup; 19th July 2016 at 13:56.
    #MotoAsia - Ultimate motorcycle tours

  4. #4
    Senior Member
    Join Date
    Mar 2013
    Posts
    647
    Don't be worth more dead than alive....

  5. #5
    Senior Member nelsonone's Avatar
    Join Date
    Mar 2013
    Posts
    2,862
    Quote Originally Posted by andmel View Post
    Don't be worth more dead than alive....
    yes....and don't underestimate the sort of harassment that a lone farang in the boonies can suffer if other interested parties want him out...

    Does anyone hear a lone farang scream in Issan...555

  6. #6
    Super Moderator LivinLOS's Avatar
    Join Date
    Mar 2013
    Posts
    14,153
    Quote Originally Posted by 2girls1cup View Post
    Lets say there's 20 years left on the usufruct agreement.

    A smart lawyer might be able to get her say 60% of land value as a secured loan (sale) if its a desirable/ good location with zero interest. Basically someone interested investing in a fixed, 20 year, zero coupon bond, who doesnt want income for tax reasons & would own the land in 20 years, with a very good chance of appreciation in the land.

    If this could be validated by a Thai court, pension funds would love this kind of investment instrument. Basically net present value calculations.
    I dont get a lot of this.. Firstly why 20 years ?? usufructs can be lifetime 'use rights'.. So there would be no reason to take anything less than life.. So then its a unknown term.

    Secondly, its a sketchy law, but it has been done where the usufruct holder then issues a 30 year lease.. And the lease is registered and legal, so again the term is hazy.. how about he gets something terminal in a couple of decades and issues a 30 year lease to his kid, or a new wife, or anyone.. It makes it a very unknown term.. Some land offices wont do this, some demand the informal agreement or involvement of the land owner on the title, but some have done it. A lease added on a usufruct, to a 3rd party outside the marriage, secures the land past the 1 year divorce window.

    Lastly 'a clever lawyer' etc.. Thai lenders know how shitty and weak contract law is here.. They have very simple and basic lending rules, sure you might find someone who might do something.. But going to any one of the national banks, with a land paper which has a registered claim against it makes them not the first claimant, they then know it could be tied in litigation forever, the answer is, I am told, simply no. Not even consideration or how much you want.. 10% of the land value etc.. Once they are in a chain they just dont touch it. Other non bank money lenders may, in fact other money lenders may see value in a farang to squeeze even more than the actual land as collateral, bleed him dry with interest and threats, but then your into a totally different ballpark.

  7. #7
    Senior Member 2girls1cup's Avatar
    Join Date
    May 2013
    Posts
    675
    Firstly why 20 years ?? usufructs can be lifetime 'use rights'.. So there would be no reason to take anything less than life.. So then its a unknown term.
    Say the foreigner with the Usufruct is 65 years old. It's a bet life insurance actuaries make all day every day?


    Sun Life's basic calculator:

    https://www.sunlife.ca/ca/Learn+and+...gnLocale=en_CA
    Last edited by 2girls1cup; 19th July 2016 at 16:46.
    #MotoAsia - Ultimate motorcycle tours

  8. #8
    Senior Member 2girls1cup's Avatar
    Join Date
    May 2013
    Posts
    675
    Secondly, its a sketchy law, but it has been done where the usufruct holder then issues a 30 year lease.. And the lease is registered and legal, so again the term is hazy.. how about he gets something terminal in a couple of decades and issues a 30 year lease to his kid, or a new wife, or anyone.. It makes it a very unknown term.. Some land offices wont do this, some demand the informal agreement or involvement of the land owner on the title, but some have done it. A lease added on a usufruct, to a 3rd party outside the marriage, secures the land past the 1 year divorce window.

    That's why I said "validate by a Thai court", then proceed?
    #MotoAsia - Ultimate motorcycle tours

  9. #9
    Senior Member 2girls1cup's Avatar
    Join Date
    May 2013
    Posts
    675
    Lastly 'a clever lawyer' etc.. Thai lenders know how shitty and weak contract law is here.. They have very simple and basic lending rules, sure you might find someone who might do something.. But going to any one of the national banks, with a land paper which has a registered claim against it makes them not the first claimant, they then know it could be tied in litigation forever, the answer is, I am told, simply no. Not even consideration or how much you want.. 10% of the land value etc.. Once they are in a chain they just dont touch it. Other non bank money lenders may, in fact other money lenders may see value in a farang to squeeze even more than the actual land as collateral, bleed him dry with interest and threats, but then your into a totally different ballpark.

    This falls now into more investors than lenders? & opens the door to a massive array of possible investors that look at NPV securitization. The Government annuity securitization (converting annuities/ pensions and other secure CF into up-front lump sums) has become a huge business.
    #MotoAsia - Ultimate motorcycle tours

  10. #10
    Super Moderator LivinLOS's Avatar
    Join Date
    Mar 2013
    Posts
    14,153
    OK sure in theory its possible to be a tertiary claim on a land deed and to make a loan against it. But in the context of a Thai missus shopping it around the banks locally, I dont rate her chances of getting even a fraction of its value, so little in fact he would be well advised to simply buy it at that price and retain it.

    Now if she shopped it out to dodgy money lenders, knowing they can put illegal pressure on him.. Whole nother story..

    Or, if she just plays it smart, gets a lawyer, contests the agreement.. Shes gets 50% of it as a communal asset, the issue then becomes forcing the sale which is hard.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •