What sort of security is typically created or entered into by an investor who is borrowing to acquire or develop real estate?
The most typical security created or entered into by an investor borrowing to acquire or develop real estate in Thailand is the real estate mortgage. A mortgage agreement is defined as a contract whereby a person, called the mortgagor, mortgages an immovable property to another person, called the mortgagee, as security for the performance of an obligation, without delivering the property to the mortgagee. It is a kind of encumbrance over land or other real property registered as a security of a debt repayment on the condition that if the mortgagor does not repay the debt, the mortgagee shall be entitled to enforce the mortgage and collect the debt from consideration of a public auction of the land or the real property; provided that the mortgage will be redeemed should the terms of the mortgage have been satisfied or performed. Apart from the real estate mortgage, under the Business Security Act B.E. 2558, a person, as a security provider, who directly operates the real estate business can also assign an immovable property as security for securing his or others' transactions. A personal guarantee is, in addition, a less popular type of security. A number of schemes such as a pledge of shares and either a conditional or unconditional assignment of rights and liabilities belonging to an investor are also available.
