Property Mortgages in Thailand. Mortgages are the primary tool Thai lenders use to secure loans against immovable property. When correctly created and registered a mortgage gives a creditor a ranked, enforceable claim against sale proceeds; done sloppily it can be worthless. This article explains the law that governs mortgages, the practical steps for creating and perfecting security, enforcement mechanics, important foreign-buyer traps and pragmatic drafting/ diligence points that change real outcomes.
Legal foundation: where mortgages come from
Thai mortgages are statutory creatures under the Civil and Commercial Code (CCC). The Code defines a mortgage as an instrument by which a mortgagor assigns immovable property to secure an obligation without delivering possession to the mortgagee, and it sets out the notice, enforcement and priority rules that apply to mortgagees.
What property may be mortgaged
Usual collateral includes land with Chanote title (Nor Sor 4 Jor), other registered land titles, and condominium units (under the Condominium Act). Conventional long leases and certain statutory rights (see below) can also be used as security, but their mortgageability and bankability differ in practice.
Creation and perfection — why the Land Office matters
A mortgage must be in writing and registered at the provincial Land Office where the property sits to be effective against third parties. Registration is the perfection step: it converts the private contract into an annotation on the title deed (back page of the Chanote) and gives the mortgage legal priority over later claims found in Land Office records. For practical purposes, a certified Land Office extract is the single best indicator of encumbrances and ranking.
Typical registration mechanics (practical checklist)
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Draft mortgage deed in Thai (or Thai-prevailing bilingual wording).
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Collect originals: title deed, ID/passport, company documents (if a corporate mortgagor), board resolutions and powers of attorney.
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Parties attend the Land Office (or send authorized representatives) to lodge the deed and pay fees; the registrar annotates the Chanote and issues a certified extract.
Fees, stamp duty and (recent) concessionary measures
The common rule applied by lenders and Land Offices is a registration fee of 1% of the mortgage amount, often subject to a statutory cap (frequently stated in practice as THB 200,000 for residential transactions), plus minimal stamp-duty administration on the loan instrument where applicable. Note: the Thai government periodically issues temporary concessions (reductions/exemptions for certain transfers or mortgages); confirm current Land Office guidance before closing.
Priority, competing charges and due diligence
Priority among secured creditors is chronological by date of registration in the Land Office. That means: (a) a mortgage registered first is senior; (b) buyers who acquire property with a registered mortgage take it subject to that mortgage; and (c) a later-registered mortgage ranks junior even if economically agreed earlier. For lenders, the standard pre-acceptance due diligence is: certified title extract, encumbrance check, boundary verification, confirmation of seller/ mortgagor authority and corporate certification.
Enforcement: court judgment then Legal Execution Department auction
Thai law does not allow private self-help repossession of mortgaged real estate. The practical enforcement route is (i) give the debtor written demand with a reasonable cure period (statutory notice steps apply), (ii) sue for judgment and an order for seizure and sale of the mortgaged property, and (iii) have the Legal Execution Department (LED) conduct the public auction and distribute proceeds in priority order. Expect litigation + execution to commonly take many months; for complex title disputes it can take substantially longer.
Foreigners and mortgageable assets — the real constraints
Because foreigners are generally barred from owning land in fee simple, the typical collateral for a foreign buyer is a condominium unit (where foreign quota permits) or indirect security (shares in a Thai company that owns the land, or rights over leasehold assets). Banks will finance foreign purchasers of condos under strict underwriting rules; land financing for non-Thai individuals almost always relies on corporate share-pledges or lease-based structures rather than a straight land mortgage. Newer statutory devices such as the Rights over Leasehold Asset Act provide extra structured collateral options for leasehold-based financing — but they carry registration and tax consequences that must be understood.
Practical drafting items that matter to lenders
When you draft mortgage and loan documents in Thailand, pay particular attention to:
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Secured amount wording (define the secured ceiling for revolving facilities).
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Events of default and a clear cure-notice regime (supporting court notices).
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Mortgage boundary schedules and plans (attach scale plan and title numbers).
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Mortgagee remedies (power to apply for judgment and LED execution).
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Insurance & maintenance covenants (mortgagor must keep property insured with lender as loss payee).
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Subordination and intercreditor mechanics where multiple lenders exist.
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Powers of attorney to permit local counsel to register/discharge the mortgage quickly on repayment.
These drafting elements make enforcement administratively simpler and reduce procedural grounds for resistance.
Typical lender protections and commercial practices
Beyond mortgage registration, lenders usually require: corporate guarantees, director/shareholder pledges, assignment of leases and rents, escrowed deposit for transfer costs, and sometimes an express mortgagee’s right to demand re-registration of key operational easements (access servitudes). For large development financings, banks seek intercreditor agreements, direct payment undertakings and step-in rights tied to completion covenants. These commercial layers materially affect ultimate recoverability even where the mortgage is technically sound.
Short case studies (practical outcomes)
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Condo mortgage default — bank obtains judgment; LED auctions unit; auction proceeds repay the lender in priority, with the borrower remaining liable for any shortfall.
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Mortgage over land owned by guarantor (third party) — parent mortgages land to secure child’s business loan; on default the bank forecloses against the parent’s land (third-party security is recognized under Thai law). Due diligence must therefore include guarantor title searches and family-law inquiries.
Practical closing-room checklist (what to demand before signing)
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Certified Land Office title extract and recent official plan.
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Original Chanote or certified copy produced at signing.
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Corporate documents, board resolution, authorized signatory evidence.
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Mortgage deed in Thai with clear schedules and Thai-prevailing wording.
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Calculator run for registration fee and stamp duty (confirm any temporary concessions).
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Insurance assignment and bank guarantee template in place.
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Power of attorney granting registration/discharge authority to counsel.
Final point — treat registration as the principal legal defense
In Thailand a mortgage’s legal power is as much a function of Land Office annotation and proper documentary discipline as it is of the contract. Good drafting, flawless registration, sensible intercreditor mechanics and realistic enforcement planning (expect litigation + LED auction) are what convert a mortgage from a paper promise into recoverable security.
