For starters, you might want to check out our article that details the circumstances in which a foreigner could be allowed to own real estate.
This is because, by law, you as a foreigner cannot own land in Thailand. However, the instance described in that article could help clear out your questions on whether or not there are exemptions to the rule. In addition, you could also read up on why foreigners are allowed to own condominiums instead and what restrictions apply to those.
Those two articles are important, so you can gain a background on what we will talking about today. Today’s topic is about foreclosure, which you will certainly encounter when you own something that is under loan by a third party, i.e a bank or any kind of lender. The term, however, almost exclusively applies to real estate.
Foreclosure occurs when a property that is under mortgage is forcibly taken by the issuer of the mortgage, also known as a mortgagee. This happens when, in most cases, a mortgagor has failed to keep up with his or her obligations under the contract. Basically, a house is seized and foreclosed by the mortgagee when the mortgagor has failed to pay the monthly amortization for a specific number of months
How quick the bank seizes property depends on the terms of the contract. However, it’s possible for banks to give mortgagors around five months to comply with their default before the property is seized and sold to recover the lost income.
There are other instances in Thailand when the mortgagor is legally empowered to seize property even when the mortgagee has not yet defaulted on the monthly amortizations. One is when the interest of the mortgage has not been paid for in 5 years. This is because there are two components to a mortgage, namely the interest and the principal.
Thus, in theory, a debtor can negotiate to pay for only the principal and not the interest if circumstances prejudice against the mortgagor’s ability to provide for the amortization of both.
In addition, there could also be instances when the mortgaged amount is less than the actual value of the property being pledged as security. Under Thai law, the mortgagor is under obligation to demonstrate that in court. Otherwise, the mortgagee is empowered by law to foreclose the property even when the mortgagor is not yet in default.
If the property is only under one mortgage, the mortgagor can seize the property in the case of a default. However, if the property is pledged under multiple mortgages, there should be a proceeding to decide who gets the right to auction the property publicly.
If you’re looking to invest in real estate property in Thailand, you’d do well to educate yourself adequately and to tap the services of a legal advisor. This legal advisor should be well-versed in Thai law as well as in the language itself, so as to prevent misinterpretations.
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