Property Mortgages in Thailand. A mortgage in Thailand is a real right (in rem) securing repayment of a debt over immovable property without transferring possession. It is primarily governed by the Civil and Commercial Code (CCC, Sections 702–746), the Land Code, and implementing ministerial regulations. Because it is a registrable security interest, enforceable priority depends on exact paperwork and the time of registration at the Land Office. Below is a nuts-and-bolts guide that goes beyond definitions to cover structure, registration, ranking, enforcement, and thorny edge cases.
Accessory nature: The mortgage exists only to secure a principal obligation (loan, guarantee, revolving facility). If the debt is extinguished, the mortgage must be released.
Specificity: The instrument must identify the particular property and the maximum secured amount (often higher than the principal to cover interest, default interest, and costs).
Indivisibility: Unless released, the whole property remains charged until the entire secured obligation is satisfied—even if part of the debt has been paid.
No appropriation: “Take the property if I default” clauses (lex commissoria) are void. Enforcement is by court-ordered public auction, not self-help transfer.
Right in rem: The mortgage “follows the land”; a buyer takes the property subject to the registered mortgage.
Eligible immovables:
Land with title (Chanote; Nor Sor 3 Gor / Nor Sor 3 if registrable in the province).
Condominium units (with separate unit title and juristic person details).
Buildings separate from land—but only where the mortgagor can prove separate ownership (e.g., documented superficies or construction/ownership evidence). Without separation, a building is presumed to belong to the landowner by accession.
Frequently asked: Can I mortgage a leasehold?
A classic mortgage secures ownership interests in immovables. Leasehold “rights” are typically secured via assignment of lease as security or under the Business Collateral Act (for qualifying parties/transactions), not a standard Land Office mortgage over “land.”
Title examination: Obtain an up-to-date title history printout from the Land Office; check for mortgages, usufructs, servitudes, cautions, or court orders.
Boundaries & encroachment: Where collateral value is tight, request a resurvey or review recent survey sketches to minimize later ranking disputes with neighbors.
Matrimonial property: If the land/condo is marital community property (sin somros), spousal written consent at the Land Office is required for the mortgage; refusal can void the security.
Corporate approvals: For company mortgagors, verify board/shareholder approvals, directors’ authority, and that the mortgage aligns with the company’s object clause.
Insurance: Lenders commonly require fire/all-risk insurance with the lender endorsed as loss payee; verify policy conditions before completion.
Mortgage contract (Thai language; bilingual if needed) stating secured amount, interest/default interest rate, maturity, and collateral description.
Loan/Facility agreement (often referenced but not registered).
Parties’ IDs & civil status; corporate papers (affidavit, list of directors, power of attorney if using an agent).
Title deed and, for buildings, proof of separate ownership (e.g., superficies).
Fees: Land Office mortgage fee is typically 1% of the secured amount, capped at THB 200,000, plus stamp duty under the Revenue Code (prevailing rate). Provincial practice can vary on ancillary charges; confirm locally.
Registration: Officer annotates the mortgage on the title and issues an updated tail page; time-of-registration fixes priority.
Practical drafting tip: Record a secured maximum that comfortably covers principal + accrued interest + enforcement costs. If you under-size the cap, you may find yourself unsecured for the excess.
Interest & default interest: Contractual rates within statutory ceilings; default interest usually steps up upon breach.
Amortizing vs bullet: Consumer mortgages typically amortize monthly; development loans may be bullet or interest-only with a balloon at disposal/refinance.
Reserve & covenants: Lenders often impose LTV caps (e.g., 70–90% for condos; lower for raw land), negative pledge (no junior encumbrances), no structural alterations that diminish value, and information/inspection rights.
First in time, first in right: Priority among mortgages is determined strictly by registration time.
Second/third mortgages: Permitted. Junior mortgagees recover only after seniors are paid in full from auction proceeds.
Split releases / partial discharges: Possible where a parcel is subdivided, but the senior mortgagee’s consent is essential and must be registered.
Intercreditor arrangements: Contractual subordination between lenders is common; nonetheless, Land Office priority still governs vis-à-vis third parties unless mirrored on title (e.g., via structured releases).
Assignment of mortgage: A lender can assign its mortgage to another creditor. The assignment must be registered to bind third parties.
Sale of mortgaged property: The buyer takes subject to the mortgage. The mortgagee may enforce against the property in rem, but has no personal claim against a buyer who didn’t assume the debt.
When the debtor defaults and cure periods lapse, the mortgagee sues for enforcement of mortgage. Key stages:
Filing & provisional relief: The court can order interim measures (e.g., prohibiting transfers or creating a registrar “caution” to preserve status quo).
Judgment for sale by auction: Thai law requires public auction through the Legal Execution Department; private sale is not the default remedy.
Execution & distribution: Auction proceeds pay (i) execution costs, (ii) the senior mortgagee, then (iii) junior mortgagees in order; any surplus returns to the mortgagor.
No “strict foreclosure”: The mortgagee cannot simply take title in satisfaction of the debt.
Limitation: The right to enforce a mortgage is time-barred after 10 years from the due date stated for the secured obligation (separate from personal claim periods on the loan).
Insurance & proceeds: If the collateral is insured, the mortgagee may step into proceeds (check the policy endorsement and assignment wording). Proceeds are typically applied to the secured debt or restoration, subject to the contract.
Foreigners as owners or lenders:
Foreigners may mortgage condominium units they legally own (foreign quota respected).
A foreign lender can be registered as mortgagee; however, lending regulations and licensing issues are separate from Land Office registration—get regulatory advice if lending at scale.
Developer & off-plan projects: Land is often blanket-mortgaged to the construction lender. Unit buyers must ensure release letters (partial discharges) are exchanged at transfer, or the unit will remain encumbered.
Building on another’s land: If a borrower builds on land they do not own, the default rule is the building belongs to the landowner. Secure a registered superficies first; only then can the building be mortgaged separately.
Community property (spouses): Mortgaging sin somros without the other spouse’s express consent risks later invalidation.
Condo juristic person issues: Unpaid common area fees are not a registered encumbrance but can complicate transfers; lenders often require a no-dues letter before disbursement.
Under-secured caps: Setting the registered “maximum secured amount” too low leaves interest/fees unsecured in enforcement—plan headroom.
Junior lender traps: Second mortgagees must monitor senior defaults; a senior’s enforcement can wipe out the junior unless they step in (e.g., refinancing the senior or credit-bidding).
A mortgage ends by:
Full repayment + registered release (the Land Office records a discharge on title).
Merger (mortgagee acquires the property and later registers a release; merger nuances can be fact-sensitive).
Destruction of collateral with no substitution (insurance proceeds may substitute if properly assigned).
Expiry of enforcement right (limitation).
Any variation (e.g., raising the cap, changing the mortgagee, adding parcels) must be registered to bind third parties.
Condo buyer vs developer’s bank: Buyer shows up for transfer; bank’s blanket mortgage still on the building. Transfer stalls until the bank issues a partial release for that unit—typically simultaneous with buyer’s mortgage registration and funds flowing to clear the developer’s tranche.
Third-party mortgagor: A parent mortgages her land to secure her son’s SME loan. On default, the bank enforces against the land only; the parent isn’t personally liable beyond the collateral unless she co-signed the debt.
Conflicting surveys: An auction buyer discovers a 0.3-meter encroachment post-sale. Because auctions are as-is, the buyer bears rectification risk; prudent lenders require updated survey/valuation before first registration to avoid devaluation at execution time.
Confirm title & encumbrances (fresh Land Office printout; check cautions and court notes).
Establish separateness of buildings (superficies) if land and building owners differ.
Lock spousal consent where property is marital.
Size the secured cap to principal + interest headroom + costs.
Record insurance assignments and lender as loss payee.
Register promptly—priority is timestamp-sensitive.
Keep originals (mortgage contract, release letter) ready for future discharge or refinancing.
Bottom line: Thai mortgages are robust security devices when registered and drafted correctly. Most disputes trace back to missed formalities (lack of spousal consent, unclear building ownership, undersized secured caps) or priority mistakes. If you treat registration timing, documentary proof of separate building ownership, and enforcement mechanics as non-negotiables, the mortgage will perform as intended—both in quiet times and at the sharp end of execution.