Property Mortgages in Thailand

Property Mortgages in Thailand. Mortgages are the principal way banks and lenders take security over Thai land, condominiums and other immovable assets. But the rules, documentary expectations and practical enforcement steps differ from many common-law systems. If you’re lending, borrowing or advising on a Thai real-estate finance transaction, the difference between a solid, enforceable mortgage and a paper one that won’t help in enforcement usually comes down to process: correct Land Department registration, airtight evidence of title, clear loan documentation, and realistic enforcement planning. This guide explains how mortgages work in Thailand, the practical steps lenders and borrowers must take, what banks look for, how enforcement works, and a ready checklist for closing.

1. Legal character — what a mortgage does in Thailand

A mortgage (thinly put) is a registered encumbrance on immovable property that gives a lender a preferential right to recover the secured debt from proceeds of sale of the mortgaged asset. In Thailand the mortgage must be registered at the Land Office to be effective against third parties and to create the public priority position lenders rely on. Without proper registration the lender’s remedy is limited and difficult to enforce against other creditors and purchasers.

Key practical point: registration is not optional. Treat the Land Office entry as the moment security becomes real.

2. What can be mortgaged

• Freehold land (chanote, Nor Sor 3 Gor etc.) — chanote (title deed) is the cleanest collateral and readily mortgageable. Non-chanote or provisional titles require extra lender due diligence and often attract conservative LTVs.

• Condominium units — units with a registered condominium certificate are mortgageable; banks will check the foreign-ownership quota and registration evidence where the buyer is a foreigner.

• Structures and fixtures — may be secured if they are part of the immovable property or by separate security documents.

• Leasehold interests — if properly registered and acceptable to the lender, a long lease (and any registered renewal rights) can be used as collateral, though lenders usually treat leasehold security as inherently weaker than freehold.

Always confirm the exact type of title and its registrability with a local land-law specialist before pricing the loan.

3. Typical parties & documents (practical pack)

A market-standard mortgage package in Thailand will include:

• Loan agreement / facility letter — principal terms, drawdown conditions, covenants and events of default.

• Mortgage deed — Thai-language mortgage instrument drafted in the Land Office form or in a format acceptable for registration; signed and witnessed as required.

• Power of attorney (if the borrower or seller will not attend registration in person) — properly notarised and legalised if executed overseas, with a certified Thai translation.

• Title documents: original Land Office certificate (chanote), certified Land Office extract, survey plan if relevant.

• Corporate documents (if borrower/seller is an entity): company extract, board resolution authorising the mortgage, signature specimen.

• Insurance assignment & evidence — buildings insurance with the lender as loss payee or co-insured.

• Valuation report — independent, recent market valuation by a recognised surveyor.

• Evidence of source of funds and tax compliance — especially for foreign borrowers.

Lenders will usually refuse to proceed without originals of the title and a fresh Land Office extract showing no prior encumbrances, or with a title that has problematic annotations.

4. Registration mechanics & practical steps

1. Obtain a fresh Land Office extract (issued within days of signing) and sight the original title.

2. Prepare the mortgage deed in the form acceptable to the local Land Office; ensure Thai-language text is present (the Land Office will often require Thai text for registration).

3. Attend the Land Office with borrower (or attorney-in-fact), borrower ID/passport and corporate documents, the original title and copies for filing.

4. Pay the Land Office registration fee and any applicable stamp duty or administrative charges.

5. Register the mortgage — the Land Office will endorse the title and enter the mortgage on the extract, creating public notice and priority.

Practical tip: hand the Land Office a fully assembled packet (originals and one copy) and stay until the endorsement is issued — the entry is the lender’s primary protection.

5. Lender underwriting practice — what banks check

• Title quality and encumbrances: lenders require a clean, recent extract and will reject titles with prior unredeemed mortgages, caveats or unresolved disputes.

• Valuation and LTV: conservative loan-to-value ratios are typical; LTV depends on title type (chanote vs provisional), property class and borrower profile.

• Borrower capacity & documentation: audited accounts, tax compliance, provenance of deposit funds and corporate governance records for company borrowers.

• Third-party consents: lessor/landlord consent, corporate group approvals, or approvals from regulatory bodies if the asset is regulated (hotels, factories).

• Enforcement and exit plan: lenders assess the practical ease of getting court or auction proceeds; liquidity of the asset in the local market matters.

Underwriting is heavily documentary — missing or uncertified papers commonly trigger rejection or increased pricing.

6. Enforcement: remedies, procedure & timing

If the borrower defaults, Thai law gives a few routes:

• Judicial foreclosure / court ordered sale: lenders frequently apply to the civil court to obtain a judgment and enforcement writs to seize and order sale of the secured asset. This can take months depending on congestion and whether the borrower contests.

• Power of sale / agreed sale mechanics: certain mortgage instruments can give the lender contractual rights to sell on default, but in practice most lenders still use court enforcement to avoid challenges and to obtain writs for possession and auction.

• Preservation (conservatory) orders: for urgent cases lenders may seek interim injunctions or preservation orders at court to prevent asset dissipation.

• Bankruptcy proceedings: if the borrower is insolvent, enforcement may be stayed and lenders must act within the bankruptcy/rehabilitation framework — priority rules then apply.

Realistic timeline: expect enforcement to be measured in months to over a year in contested cases. That timeline drives lenders’ preference for conservative LTVs and robust covenants.

7. Taxes, fees and other costs

Mortgage registration attracts Land Office registration charges and possibly stamp or other taxes — the exact amounts depend on the secured sum and local rules. In addition, lenders and borrowers should budget for valuation fees, legal fees, notarial/legalisation costs (for foreign PoAs), and insurance premiums.

Because government fees and tax treatments change, confirm current figures with local counsel or the Land Office before closing.

8. Common pitfalls & how to avoid them

• Relying on copies instead of originals — always obtain and lodge originals for Land Office registration.

• Incomplete powers of attorney — overseas PoAs rejected at registration are a frequent cause of delay. Use correct form, legalisation/apostille and Thai translation.

• Non-chanote titles — these need extra diligence and typically lower LTVs. Don’t assume all land titles are equal.

• Ignoring third-party rights — outstanding utilities, municipal orders, or unregistered mortgages can derail registration. Run full searches and require seller warranties.

• Unrealistic enforcement assumptions — plan for contested enforcement timelines and price the loan accordingly.

9. Practical closing checklist (hand to counsel)

• Fresh Land Office extract (dated within 7 days).

• Original title deed and certified copy.

• Mortgage deed in Thai + English (if used) ready for signature.

• Loan agreement / facility documentation executed.

• Valuation report, insurance policy naming lender, and evidence of premium payment.

• Company extracts, board resolution and PoA (where needed), properly legalised and translated.

• Funds for Land Office registration and tax/fee amounts.

• Escrow or closing instructions if seller proceeds are being held pending registration.

Final practical note

Mortgages in Thailand are powerful if they are implemented with procedural discipline: fresh Land Office searches, original title sighting, Thai-compliant mortgage deeds, and realistic enforcement planning.