A property mortgage in Thailand is a legal mechanism that allows a borrower to use immovable property—typically land, a house, or a condominium—as security for a loan. Mortgages are commonly used in real estate transactions, business financing, and family arrangements. While the concept is similar to mortgages in many jurisdictions, Thai mortgage law has unique features that foreign buyers, investors, and lenders must clearly understand.
This article provides an in-depth discussion of property mortgages in Thailand, including the legal basis, eligible property types, registration procedures, rights and obligations of the parties, enforcement methods, risks, and practical considerations.
II. Legal Framework Governing Mortgages in Thailand
A. Civil and Commercial Code (CCC)
Property mortgages in Thailand are governed primarily by the Thai Civil and Commercial Code (CCC), particularly provisions relating to:
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Security for obligations
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Rights in rem (real rights)
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Enforcement of debts
Under Thai law, a mortgage is classified as a real right, meaning it attaches to the property itself rather than merely creating a contractual obligation.
B. Land Code and Land Department Regulations
Mortgages involving land or condominiums must comply with:
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The Land Code
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Regulations issued by the Department of Lands
Registration at the Land Office is mandatory for validity against third parties.
III. What Property Can Be Mortgaged
A. Land with Title Deeds
Only land with certain title deeds may be mortgaged, including:
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Chanote (Nor Sor 4 Jor) – full ownership title
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Nor Sor 3 Gor – confirmed use certificate
Lower-grade land documents generally cannot be mortgaged.
B. Condominiums
Condominium units with proper condominium titles may be mortgaged. Foreigners may mortgage condominiums they legally own, subject to:
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Condominium Act compliance
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Lender acceptance
C. Buildings and Improvements
Buildings may be mortgaged separately from land if:
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Ownership of the building is legally registered
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The building owner is not the landowner
This is common in leasehold or usufruct arrangements.
IV. Who Can Be a Mortgagor and Mortgagee
A. Mortgagor (Borrower)
The mortgagor must:
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Be the registered owner of the property
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Have legal capacity to enter into contracts
Foreigners may mortgage property they legally own, such as condominiums.
B. Mortgagee (Lender)
Mortgagees may include:
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Thai banks and financial institutions
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Licensed non-bank lenders
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Private individuals (Thai or foreign)
Private mortgages are legally permissible but require careful drafting.
V. Mortgage Registration Procedure
A. Written Agreement Requirement
Thai law requires that:
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A mortgage agreement must be in writing
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Oral mortgages are invalid
The agreement typically specifies:
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Loan amount
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Interest rate
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Repayment terms
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Default conditions
B. Registration at the Land Office
To be legally enforceable against third parties, the mortgage must be:
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Registered at the relevant Land Office
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Signed before a Land Officer
Without registration, the mortgage has no legal effect against third parties.
C. Fees and Taxes
Mortgage registration fees are generally:
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1% of the mortgage amount, capped by law
Stamp duty or other minor fees may also apply.
VI. Rights and Obligations of the Parties
A. Rights of the Mortgagee
The mortgagee has the right to:
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Enforce the mortgage upon default
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Be paid from the sale proceeds of the property
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Rank according to registration priority
Multiple mortgages may exist on one property, ranked by registration date.
B. Obligations of the Mortgagor
The mortgagor must:
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Repay the debt as agreed
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Maintain the property
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Avoid actions that reduce property value
The mortgagor retains possession unless otherwise agreed.
VII. Interest Rates and Debt Limits
A. Interest Rate Restrictions
Thai law caps interest rates for most loans. Excessive interest may:
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Be reduced by the court
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Be declared unenforceable
Interest provisions must comply with statutory limits.
B. Mortgage Amount
A mortgage may secure:
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A fixed debt
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A maximum amount for future obligations
This flexibility allows mortgages to secure revolving or contingent debts.
VIII. Enforcement and Foreclosure
A. Default and Demand
Upon default, the mortgagee must:
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Issue a formal demand for payment
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Allow a reasonable cure period
Immediate enforcement without notice is generally not permitted.
B. Court-Ordered Enforcement
In most cases, mortgage enforcement requires:
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A court judgment
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Court-supervised auction of the property
Self-help foreclosure is not allowed under Thai law.
C. Distribution of Sale Proceeds
Proceeds from sale are distributed in the following order:
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Enforcement expenses
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Mortgagee(s) by priority
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Remaining balance to the mortgagor
IX. Special Issues for Foreign Buyers
A. Foreign Ownership Restrictions
Foreigners may not own land in Thailand (with limited exceptions). As a result:
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Land mortgages by foreigners are generally not possible
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Condominium mortgages are more common
Structures such as leasehold plus mortgage require careful legal review.
B. Bank Lending to Foreigners
Thai banks often impose stricter requirements on foreign borrowers, including:
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Higher down payments
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Proof of foreign income
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Limited loan-to-value ratios
Private financing arrangements are sometimes used as alternatives.
X. Risks and Common Pitfalls
A. Unregistered Mortgages
Unregistered mortgages are:
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Unenforceable against third parties
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Vulnerable if the property is sold
Registration is essential.
B. Hidden Encumbrances
Failure to conduct proper due diligence may result in:
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Undisclosed prior mortgages
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Conflicting claims
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Reduced security value
Title searches are critical before lending.
C. Improper Drafting
Poorly drafted mortgage agreements may:
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Violate interest laws
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Create unenforceable obligations
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Lead to lengthy litigation
Professional drafting reduces risk significantly.
XI. Practical Guidance and Best Practices
To manage mortgage risks effectively:
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Conduct a full title search at the Land Office
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Register the mortgage immediately
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Ensure compliance with interest and lending laws
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Use clear default and enforcement clauses
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Consider alternative security structures where ownership is restricted
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Obtain legal advice for cross-border or private loans
Careful planning prevents disputes and financial loss.
XII. Conclusion
Property mortgages in Thailand are a powerful and widely used legal tool for securing loans, but they operate within a strict statutory framework. Validity depends on written agreements, proper registration, and compliance with the Civil and Commercial Code and Land Department regulations.
For Thai nationals, foreigners, lenders, and investors, understanding how mortgages are created, enforced, and prioritized is essential. With proper due diligence, correct registration, and legally compliant documentation, mortgages can provide strong security and financial certainty. Conversely, mistakes in structure or procedure can render a mortgage ineffective or expose parties to costly disputes.
