This information is for reference only and is not legal advice. Consult a licensed lawyer before any transaction.
Civil and Commercial Code - Mortgage
Civil and Commercial Code ss.702-746
The information is reviewed and updated monthly against official sources.
In short
Thailand's Civil and Commercial Code (sections 702-746) governs mortgage as a registered, non-possessory security over immovable and certain registrable movable property, granting the mortgagee priority payment and, after written demand, a court-ordered public auction rather than automatic ownership.
702: Definition of mortgage and priority of the mortgagee
A mortgage is a contract by which an owner (the mortgagor) charges property as security for an obligation in favor of a creditor (the mortgagee) without handing the property over. The mortgagee may be satisfied out of that property ahead of ordinary creditors, even if the asset is later transferred to a third party.
703: Property that may be mortgaged
Immovable property may be mortgaged. Certain movable assets may also be mortgaged when the law makes them registrable, including ships of qualifying tonnage, floating houses, and registered beasts of burden, together with other movables for which a registration regime exists.
705: Only the owner may mortgage
A valid mortgage can be created solely by the person who is the owner of the property at the time of the transaction. Someone who does not hold title cannot encumber the asset, so verifying current ownership at the Land Office is essential before relying on any mortgage.
708: Stated secured amount in Thai currency
The mortgage instrument must state the secured amount, either as a fixed sum or as a maximum ceiling, expressed in Thai currency. This figure defines the limit of the priority claim the mortgagee can assert against the property at registration and on enforcement.
709: Mortgaging one's property for another's debt
A person may mortgage his own property as security for an obligation owed by someone else. This third-party mortgagor is not personally liable for the debt; the creditor's recourse is limited to the mortgaged asset unless a separate personal guarantee is also given.
711: No automatic forfeiture to the mortgagee
Any clause agreed before default that lets the mortgagee simply become owner of the property, or dispose of it outside the lawful enforcement procedure, if the debtor fails to pay, is void. Enforcement must follow the statutory route, protecting the mortgagor from loss of surplus value.
714: Writing and registration required
A mortgage is valid only if made in writing and registered with the competent official, in practice the Land Department for real estate. An unregistered mortgage agreement does not create the security right, so registration at the Land Office is a mandatory step, not a formality.
715: Scope of the secured claim
The mortgaged property secures not only the principal obligation but also accrued interest, compensation owed for non-performance or default, and the costs incurred in enforcing the mortgage. All of these may be recovered from the proceeds within the registered ceiling.
717: Mortgage over the whole and each subdivided parcel
When mortgaged land is later subdivided, the mortgage continues to burden the entirety of the property and each resulting parcel. A buyer of one subdivided plot therefore takes it still subject to the registered mortgage unless the encumbrance has been formally released.
728: Written demand before court enforcement
Before enforcing, the mortgagee must send the debtor a written notice setting a reasonable period to perform. If the debtor still fails to comply, the mortgagee may apply to the court for an order to seize the mortgaged property and sell it by public auction.
729: Foreclosure (taking the property) in limited cases
Instead of a sale, the mortgagee may ask the court to award the property itself, but only in narrow circumstances: notably when interest has been unpaid for at least five years and the value of the asset does not exceed the outstanding debt, with no other registered charge.
732: Distribution of auction proceeds
Money raised by the public auction is paid to the mortgagees according to their order of registration priority. After all secured claims and enforcement costs are covered, any remaining surplus must be returned to the mortgagor rather than kept by the creditor.
735: Notice to a transferee of mortgaged property
Where the mortgaged property has passed to a new holder, the mortgagee who wishes to enforce against that person must give one month's prior written notice before proceeding. This protects a later acquirer who took the asset already burdened by the registered mortgage.
744: How a mortgage is extinguished
A mortgage ends in several ways, including extinction of the secured obligation, a written release of the mortgage by the creditor, the debtor's release from the charge, redemption, completed foreclosure, or sale of the property by court order. Removal should then be registered to clear title.
745: Enforcement despite prescription of the debt
The mortgagee may enforce the mortgage even after the underlying obligation has become time-barred. However, arrears of interest accruing during the prescription period can be recovered only for the last five years, limiting how much overdue interest the security covers.
746: Registration of payment, release or modification
Any full or partial payment, any extinction, and any agreement altering the mortgage or the secured obligation must be registered by the competent official at an interested party's request. Without registration, such a change cannot be relied on against a third party.
foreigner-as-mortgagee: A foreigner may hold a mortgage (lend against Thai property)
The Code sets no nationality bar on being a mortgagee, so a foreigner may lawfully take a mortgage over Thai property as security for a loan and register it at the Land Office. This differs sharply from ownership, where foreigners cannot generally hold land outright.