Property Mortgages in Thailand. In Thailand, mortgages are a critical tool used to secure obligations involving immovable property. Unlike some common law jurisdictions where mortgage lending is heavily institutionalized and standardized, Thai mortgage law follows the civil law tradition, requiring strict formalities for creation, registration, and enforcement.
This article provides an in-depth legal and procedural understanding of property mortgages in Thailand, including key statutes, eligible parties, the role of the Land Office, foreign ownership limitations, and enforcement mechanisms in the event of default.
Thai mortgages are governed by the Civil and Commercial Code (CCC), Sections 702–745, and supported by subordinate regulations issued by the Land Department, Bank of Thailand, and relevant financial authorities.
A mortgage is a real right over immovable property to secure an obligation, usually a debt.
The mortgagor (owner) retains possession and use of the property, but the mortgagee (lender) has a registered security interest.
If the debtor defaults, the mortgagee may force the sale of the property through court action.
Under Thai law, only certain types of immovable property and associated rights can be mortgaged:
Land with a valid title deed (Chanote, Nor Sor 3 Gor)
Buildings constructed on owned land
Condominium units (with valid unit title)
Registered lease rights (in some cases)
Superficies or usufruct (in limited scenarios)
Property with incomplete or non-transferable title, such as Sor Kor 1 or Por Bor Tor 5, cannot be mortgaged.
The mortgagor must be the legal owner of the property or holder of a mortgageable right. This party pledges the property to secure the obligation.
The mortgagee is typically a financial institution, such as a bank or credit company. However, private individuals or juristic persons (e.g., companies) may also act as mortgagees.
Note: Banks must be licensed by the Bank of Thailand, and foreign lenders require special approvals to extend credit to Thai residents or entities.
A mortgage in Thailand must be registered with the Land Office in the jurisdiction where the property is located. Without registration, the mortgage has no legal effect against third parties or in case of enforcement.
Written mortgage agreement (in Thai)
Signed mortgage form issued by the Land Office
ID/passports of parties
Company documents if juristic entities are involved
Land title deed (original)
Payment of mortgage registration fee (1% of loan amount, capped at THB 200,000)
Stamp duty (0.05%)
If the mortgage is created in favor of a foreign lender or mortgagor is a foreigner, additional documentation and scrutiny will apply.
Foreign individuals and entities face strict limitations on owning and mortgaging real estate in Thailand:
Foreign individuals cannot mortgage land unless they own it legally, which is rare due to land ownership restrictions.
They may mortgage condominium units, provided they comply with the Condominium Act B.E. 2522 and own the unit in their name.
Mortgaging leasehold rights is not commonly allowed unless the lease is registered and specifically structured to allow such encumbrance.
A foreign individual or company may be a mortgagee, but the mortgage will be subject to:
Approval under Foreign Exchange Regulations (if funds are remitted from abroad)
Possibly requiring a Foreign Business License if lending is deemed a business activity
Caution: Courts may scrutinize transactions that attempt to circumvent foreign land ownership laws by using mortgage structures as de facto ownership substitutes.
Condominium units may be mortgaged similarly to land. However, the mortgage must be registered with the Land Department along with:
The unit’s title deed (separate from the building’s land title)
Debt agreement (loan contract)
Consent from co-owners in certain cases (e.g., if unit is jointly owned)
Note: If the mortgagor defaults, the mortgagee must seek court approval before selling the condo unit through public auction.
Mortgages may be extinguished by:
Full repayment of the secured obligation
Release deed signed by the mortgagee and registered at the Land Office
Prescription (Statute of Limitations) – 10 years for personal loans; 5 years for commercial credit
Court-ordered foreclosure or auction
Once the mortgage is extinguished, it must be formally released to clear the encumbrance from the title deed.
If the mortgagor defaults:
Thai law requires judicial foreclosure; self-help remedies or private foreclosure are not permitted.
Steps:
Mortgagee files a claim with the civil court
Court determines validity and amount owed
Court orders auction of the property
Proceeds are used to satisfy the debt
The mortgagee must notify the mortgagor in writing and allow reasonable time before initiating legal action.
If auction proceeds are less than the debt, the mortgagee may sue for the shortfall.
If auction proceeds are more than the debt, the surplus is returned to the mortgagor.
Thai law prohibits creating a mortgage for more than the actual debt. False declarations may be considered fraudulent.
If multiple mortgages are registered on a single property, priority is determined by registration date. Second-ranking mortgagees face higher enforcement risks.
Before accepting a mortgage, the lender or investor should:
Verify clear title
Review existing encumbrances
Conduct a Land Office title search
Confirm land use and zoning compliance
Foreign currency-denominated mortgages must comply with Bank of Thailand foreign exchange rules, including proper remittance documentation and purpose codes.
In cases where a mortgage is impractical, parties may consider:
Pledge of company shares or accounts receivable
Personal guarantees or third-party guarantees
Lease with option to buy (requires careful structuring)
Usufruct or superficies rights, though non-transferable, can provide partial security
Each alternative must be evaluated carefully under Thai law, especially where foreign nationals are involved.
Mortgages in Thailand are an effective but formalistic mechanism for securing obligations involving land and property. Strict statutory requirements and procedural formalities, particularly with respect to registration, enforcement, and foreign involvement, make professional legal guidance essential for any party considering a mortgage transaction.
While banks remain the dominant lenders, private mortgages—especially among investors, business partners, and family members—are increasingly common. However, failure to properly register or document the mortgage can render it legally void and unenforceable.
For both Thai and foreign parties, navigating the legal intricacies of mortgages requires diligence, regulatory awareness, and expert legal support.