THAILAND MORTGAGE LAW

A mortgage is a contract whereby a person (mortgagor), assigns a property to another person (mortgagee) as security, without delivering the property to the mortgagee.

This entitles the mortgagee to receive payment out of the mortgaged property in preference to ordinary creditors regardless whether or not performing the transfer of ownership of the property to a third person.

A mortgaged property is a security for the obligation performance and for the following:

Interest
Compensation in case of non-performance of the obligation
Costs of enforcement of the mortgage

What type of properties we can enter into a mortgage?

You can enter any kind of immovable properties. However, you can also use the following duly registered movables:

Ships of five tons and over
Floating houses
Beast of burden
Any other movables with regard to which the law may provide registration for that purpose.

To what extent is a Thailand mortgage enforced?

A mortgage over land does not extend to buildings built upon such land by the mortgagor after the mortgage date. This is unless there is a special clause in the contract. However, in any case, the mortgagee can have such buildings sold with the land. Hence, he can exercise his preferential right only against the price obtained for the land. Mortgages over buildings built or constructed upon or under the land of another person does not extend to such land, and vice versa.

Moreover, it does not extend to the fruits of the mortgaged property except after the mortgagee has notified the mortgagor or the transferee of his intention to enforce the mortgage.

What happens in case the mortgagor defaults?

To enforce it, the mortgagee shall notify the debtor in advance writing to perform the obligation for not less than 60 days from the day that the debtor receives such notice. If the debtor neglects to comply, the mortgagee may bring an action to the court. The mortgagee may ask for a judgment ordering seizure of the mortgaged property and selling it by public auction.

In case the mortgagor mortgaging property as security for an obligation performance by another person, the mortgagee shall deliver such notice to the mortgagor within 15 days from the delivery date of the notice to the debtor. If the mortgagee does not proceed within such 15-day period, the mortgagor shall be discharged from liability in interest and compensation unpaid by the debtor. This includes charge accessory to such obligation incurring as from the date that such 15-day period expires.

If there are no other mortgages or preferential rights registered on the same property, the mortgagee may bring an action to the court for the foreclosure of the property in lieu of public auction under the following conditions:

Debtor’s failure to pay interest for 5 years; and
Mortgagee substantiating and satisfying the Court that the price of the property is lesser than the amount in arrears.

When the mortgagee intends to enforce the mortgage against the transferee of a mortgaged property, the mortgagee shall notify the transferee in advance writing for not less than 60 days to enforce such.

When does the extinction of a Thailand mortgage take place?

Extinction of a Thailand mortgage are through the following:

Extinction of the obligation secured, otherwise than by prescription;
Release of the mortgage granted in writing to the mortgagor;
Discharging the mortgagor;
Removal of the mortgage;
Selling the property by public auction under the court order which is a result of the mortgage enforcement or mortgage redemption or when there is a public auction;
Foreclosure of the Thailand mortgage.

The mortgagee may enforce the mortgage even after barring the obligation secured by prescription. However, it cannot enforce arrears of interest on the mortgage for more than five years.

Competent official must register, on the request of the interested party, any performance, or any extinction, or any agreement modifying the mortgage or the obligation secured . Otherwise, it cannot be set up against a third person.