Property Mortgages in Thailand. In Thailand, a mortgage is a legal instrument used to secure a loan by placing a lien on immovable property such as land or buildings. It is governed by the Civil and Commercial Code (CCC), Sections 702–752. Mortgages are used primarily in the context of real estate financing by individuals and companies, with different rules applying to Thai nationals and foreigners.
A mortgage is a real right (สิทธิในทรัพย์สิน) that must be registered with the Land Department to be legally enforceable.
Legal Framework and Mortgage Registration
| Component | Description |
|---|---|
| Governing Law | Civil and Commercial Code (Title XXI: Mortgage) |
| Registration Authority | Local Land Office (under the Department of Lands) |
| Form Requirement | Mortgages must be in writing and registered at the Land Office to be valid. Oral agreements or private contracts are unenforceable. |
| Secured Debt Types | Can secure loans, guarantees, or obligations under hire-purchase or installment sale contracts |
| Duration of Mortgage | Typically matches loan term; however, Thai law allows a maximum of 30 years for registered land mortgages. |
Types of Mortgages
1. Traditional Mortgage (Real Estate Collateral)
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Used to secure financing against a plot of land, condominium unit, or house.
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Both principal and interest amounts are recorded in the mortgage contract.
2. Line of Credit or Revolving Mortgage
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Permits borrowers to draw down and repay amounts up to a fixed limit.
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Used mainly by commercial borrowers with fluctuating capital needs.
3. Legal Mortgage vs. Equitable Mortgage
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Only legal mortgages registered at the Land Office are enforceable.
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Equitable mortgages (e.g., deposit of title deed) are not recognized under Thai law for enforcement purposes but may support a claim in tort or contract.
Mortgage Registration Procedure
Required Documents:
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Land title deed (Chanote)
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Loan agreement
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ID and house registration of borrower and lender
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Power of attorney (if signing by proxy)
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Business registration documents (if a corporate party is involved)
Steps:
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Application submitted at Land Office.
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Land officer verifies identity and documentation.
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Mortgage contract drafted and signed in front of officials.
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Official registration noted on the back of the title deed.
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Mortgage fee paid (usually 1% of loan amount, capped at THB 200,000).
Lending Policies and Restrictions for Foreigners
Foreign Individuals:
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Generally cannot obtain mortgages from Thai banks for land purchases due to foreign ownership restrictions under the Land Code.
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May be able to mortgage condominium units from selected financial institutions, usually on a case-by-case basis.
Thai Financial Institutions:
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Lend primarily to Thai nationals or Thai-incorporated companies.
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Foreigners may be eligible if:
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They have long-term income in Thailand (e.g., work permit holders).
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Property is a condominium with foreign quota availability.
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Lender is a foreign bank branch (e.g., HSBC, UOB).
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Foreign-Owned Companies:
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Can mortgage property registered under the company’s name, subject to land ownership regulations and company structure (e.g., BOI-promoted company, 49:51 Thai-to-foreign shareholding).
Legal Consequences of Default
Upon borrower default:
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The lender must file a civil suit for foreclosure.
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Thai courts do not allow non-judicial foreclosure — enforcement must proceed via the courts.
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Once a court issues a judgment, a public auction is scheduled by the Legal Execution Department.
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Lenders can only recover up to the auction proceeds. Deficiency judgments may be possible but are hard to collect.
Note: If the mortgaged property is a residence, courts will require proof of fair process and valuation.
Tax and Fee Considerations
| Item | Rate or Amount |
|---|---|
| Mortgage Registration Fee | 1% of loan amount (capped) |
| Stamp Duty | 0.05% of loan amount (if applicable) |
| Withholding Tax | Not applicable on mortgage creation |
| Property Transfer Fees | May apply if transfer and mortgage occur simultaneously |
Key Practical Considerations
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Early Release or Prepayment: Requires registration at the Land Office; banks may charge an early settlement fee.
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Property Valuation: Mortgages are based on bank-assessed value, not necessarily market value.
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Insurance Requirements: Banks often require property insurance with the lender named as beneficiary.
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Joint Ownership: If property is jointly owned (e.g., married couple), both parties must consent to the mortgage.
Common Use Cases in Thailand
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Developers securing loans for construction using land as collateral.
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Thai nationals buying property with mortgage finance.
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Foreigners purchasing condos (where foreign ownership is permitted).
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Commercial land leases coupled with mortgage guarantees.
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Asset-backed loans for liquidity needs using high-value real estate.
Conclusion: Mortgages in Thailand Are Heavily Regulated and Lender-Favorable
Thai property mortgages require strict legal compliance, registration at the Land Office, and adherence to lending norms. While Thai nationals have broad access to mortgage finance, foreign individuals face limitations due to land ownership laws. Mortgaging condominiums remains a viable path for some foreigners. Regardless of the borrower’s status, legal registration, clear terms, and proper documentation are essential for enforceability and protection.