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.
Last modified 19 Jul 2023
Land which has title documents and buildings which are located on such land are considered real estate over which security can be granted to a lender.
Last modified 19 Jul 2023
Yes, this concept is recognized in Thailand in the form of a Real Estate Investment Trust (REIT). While an authorized trustee can own the assets which are to be invested in by an authorized REIT manager, only a trust unit holder can receive the profit gained from such investment. The REIT's investment and business must be focused on real estate only. The REIT, trustee and REIT manager must be authorized by the Office of the Securities and Exchange Commission (SEC) before the REIT can be set up.
Last modified 19 Jul 2023
Yes, the trading of secured debt can be made by either novation or assignment between lenders or other parties. The transferee will acquire only the right to claim if the transaction has been effected in the form of an assignment. In contrast, the transferee will acquire both liabilities and rights if the transaction has been made in form of novation.
Last modified 19 Jul 2023
There is no restriction on granting a mortgage over real estate to foreign lenders but the registration approval is at the sole discretion of the registrar. The registrar can refuse the registration of a mortgage over real estate on the grounds that he believes that the borrower is a nominee of the foreign lenders. Evidence such as loan agreements and a money transfer certificate must be presented to the registrar in order to clarify the nominee issue.
Last modified 19 Jul 2023
There is a mortgage registration fee payable at the Land Office on the registration date at the rate of 1 percent of the total mortgage amount, provided that the total fee may not exceed THB 200,000. Stamp duty may also apply in certain cases, ie if the parties wish the mortgage agreement to be an evidence of the loan or overdraft facility, such mortgage agreement shall affix stamp duty at the rate of 0.5 percent of the mortgage amount but shall not exceed THB 10,000.
Last modified 19 Jul 2023
No. There is no such restriction in Thailand but the board of the directors of the company must give approval before a corporate entity can give valid security over its real estate assets.
Last modified 19 Jul 2023
No.
Last modified 19 Jul 2023
Yes, as specified by law. The Thai Civil and Commercial Code provides for preferential rights which can be generally divided into the following three categories:
For each category, existing secured debt may be postponed to newly created debt according to a certain hierarchy. The law in this area is complex and specific advice should be sought.
Last modified 19 Jul 2023
Yes, generally the foreign law will be respected.
Last modified 19 Jul 2023
The holder of the unperfected security will not have a preference right over the secured property and they will be deemed normal creditors in relation to unsecured assets of the debtor.
Last modified 19 Jul 2023
No.
Last modified 19 Jul 2023
In order to enforce the provisions of the mortgage contract the mortgagee must notify the mortgagor in writing of the mortgagor's duty to perform his obligation within a reasonable time (such reasonable time shall not be less than 60 days from the date of the receipt of the notice) to be fixed in the notice. If the mortgagor fails to comply with the notice, the mortgagee may enter an action in court for a judgment ordering seizure of the mortgaged property and sale by public auction. In addition to this remedy, the mortgagee is entitled to foreclose on the mortgage subject to certain conditions; provided that if the mortgagor is not the debtor, the creditor shall notify the mortgagee in writing within 15 days commencing from the date of the notice to the debtor or else the mortgagee shall be relieved from the obligation to pay interest, indemnity or any ancillary arising from such debt from the subsequence of 15 days. The provisions of the Civil and Commercial Code also provide for the various rights and duties of the parties to such an agreement.
Last modified 19 Jul 2023
Arrangements can be negotiated between the parties, unless otherwise prohibited by the law.
Last modified 19 Jul 2023
No.
Last modified 19 Jul 2023
Creditors are paid in the order in which security has been perfected, including cases in which a creditor holds the same security interest over the same real estate asset. The enforcement shall be in respective orders of date and time which the creditor's right thereof has been legally registered.
Last modified 19 Jul 2023
Which assets and rights are considered to be real estate or real rights over which security can be granted to a lender?
Land which has title documents and buildings which are located on such land are considered real estate over which security can be granted to a lender.
Last modified 19 Jul 2023