Mortgage in Thailand: What the Civil Code Requires

A mortgage can also transfer to a new debt on a novation under Section 352, as covered in the novation in Thailand article.

Security over movable assets works differently. See our guide to a pledge in Thailand.

What is a mortgage in Thailand under the Civil and Commercial Code?

Section 702 defines a mortgage as a contract in which one person, the mortgagor, pledges property to another, the mortgagee, as security for a debt without delivering the property. The mortgagee is paid from the property ahead of ordinary creditors, even after the property passes to a third party.

Which property can a mortgage in Thailand cover?

Section 703 permits a mortgage over immovable property of any type. It also permits a mortgage over registered movables in four categories: ships of five tons or more, rafts, transport animals, and other movables that a law allows the parties to register. Only the owner at the time of mortgaging may mortgage the property (section 705).

Who may mortgage, and for whose debt?

What must a mortgage contract state and record?

Three rules govern the form of a mortgage contract. The contract must identify the property (section 704), state a fixed sum in Thai currency or the maximum amount the property secures (section 708), and exist in writing registered with the competent official (section 714).

In addition, section 707 applies the guarantee provision in section 681 to mortgages, with adjustments as appropriate. Our guarantee contract guide sets out section 681. Section 713 then lets the mortgagor repay the secured debt in instalments to release the mortgage, unless the contract provides otherwise.

The Department of Lands publishes a Thai-language note on mortgage registration for land. It lists the title documents that the Land Office accepts, and it ties the registration step to section 714. Read the Department of Lands mortgage note for the registration side.

Can the mortgagee take the property when the debtor defaults?

Not by prior agreement. Section 711 makes an agreement invalid when the parties reach it before the debt falls due and it lets the mortgagee take ownership on default, or deal with the property outside the enforcement rules. Section 714/1 adds that mortgage terms departing from sections 728, 729 and 735 are void.

Taking the property outright runs through a court action under section 729. The mortgagee may sue for the property itself, instead of an auction, only on three conditions:

• No other registered mortgage or registered priority right exists over the same property.
• The debtor has failed to pay interest for five years.
• The mortgagee shows the court that the property’s value is lower than the amount outstanding.

How does a mortgagee enforce a mortgage in Thailand?

The mortgagee first sends the debtor a written notice to pay within a reasonable time, which must be at least 60 days from the debtor’s receipt (section 728). If the debtor ignores the notice, the mortgagee may sue for an order to seize the mortgaged property and sell it at public auction.

1. Notice to the debtor. The written notice sets a payment period of not less than 60 days from receipt (section 728, paragraph 1).
2. Copy to a third-party mortgagor. Where the mortgagor pledged its own property for someone else’s debt, the mortgagee sends the mortgagor a copy of the notice within 15 days (section 728, paragraph 2).
3. Notice to a transferee. Before enforcing against a person who acquired the mortgaged property, the mortgagee sends that person a letter at least 60 days in advance (section 735).
4. Court action. The court may order seizure and sale at public auction (section 728).

Which notice period runs to whom?

Read together, the four periods fall into two groups. Two are waiting periods before the mortgagee may act (section 728, paragraph 1, and section 735). The other two are deadlines on the mortgagee, and the text releases the mortgagor if the mortgagee misses them (section 728, paragraph 2, and section 729/1). Section 714/1 names sections 728, 729 and 735. It does not name section 729/1.

Can the mortgagor start a sale without a lawsuit?

Yes, in one case. After the debt falls due, and only if no other registered mortgage or registered priority right exists over the same property, the mortgagor may notify the mortgagee in writing to arrange an auction without a court case (section 729/1). The text treats that notice as the mortgagor’s consent to the sale. The mortgagee must complete the auction within one year of receiving it.

What happens if the sale price falls short of the debt?

Section 733 answers this directly. If the mortgagee takes the property outright and its value is lower than the amount outstanding, or if the net auction proceeds are lower than that amount, the debtor does not owe the remaining shortfall.

How does a mortgage in Thailand end, and what must the parties register?

Section 744 lists the grounds on which a mortgage ends: the secured debt ends other than by prescription, the mortgagee releases the mortgage in writing, the mortgagor is released, the mortgage is withdrawn, a court-ordered auction or an auction under section 729/1 sells the property, or the mortgagee takes the property outright.

Registration matters at this stage as well. Under section 746, any payment of the debt in full or in part, any discharge of the debt, and any agreement to amend the mortgage or the secured debt must go to the competent official for registration when an interested person requests it. Without registration, no one may raise the change against third parties.

Frequently asked questions about a mortgage in Thailand

Mortgage in Thailand: points to confirm before signing

A mortgage in Thailand rests on a short list of rules. The contract identifies the property, states a fixed amount, exists in writing and carries registration. Advance agreements to forfeit the property fail under section 711. Enforcement follows the notice periods in sections 728, 729/1 and 735. For a related enforcement question, see our debt recovery lawyer in Thailand page.