What should a Mortgage Agreement Addendum (Land, Building or Machinery) include under Thai law?

1. Definitions and Interpretation
2. Relationship with Other Documents
3. Mortgaged Property
4. Secured Debt and Mortgage Amount
5. Liability of the Mortgagor
6. Mortgagor's Representations
7. Care of the Property
8. Insurance
9. Loss of or Damage to the Property
10. Release of the Mortgage
11. Enforcement of the Mortgage
12. Costs and Taxes
13. Personal Data
14. Notices
15. Governing Law and Disputes
16. General

• A Thai mortgage exists only once it is made in writing and registered with the competent office (Civil and Commercial Code s.714). The registration office uses its own official form, in Thai. This Addendum does not replace that form.
• This Addendum is a binding contract between the Mortgagor and the Mortgagee. It adds the terms that the official form leaves out and gives the foreign party the terms in English.
• A registration office usually accepts an attachment to the official form only in Thai. If you want the Addendum attached to the registered form, bring a Thai translation for both Parties to sign; Clause 16.7 says the Thai and English texts are meant to have the same meaning. If you do not attach it, it still binds the Parties, but terms that are not registered cannot be relied on against third parties.
• The Property and the Mortgage Amount are always as stated in the registered form (Clause 2.1). Check that Schedule 1 and the Mortgage Amount match it word for word.

Registering at the Land Office

• Both Parties, or their attorneys, attend the Land Office where the title deed is kept and sign the official mortgage form before the land official.
• The registration fee is 1% of the Mortgage Amount, capped at 200,000 THB — about (calculated by the system from the figures entered) for this Addendum. The government reduces this fee from time to time for some transactions, so check with the Land Office on the day. Clause 12.1 puts the fee on the Mortgagor.
• Bring: the original title deed; ID cards or passports and house registration of the individuals; for a company, a recent company affidavit, a board resolution approving the mortgage and the signatory's ID; a power of attorney on the Land Office form if an attorney signs; and the signed Principal Agreement.
• If the land is marital property of an individual Mortgagor, the spouse must consent in writing or sign with the Mortgagor (s.1476(1)). A Spousal Consent form in English and Thai makes this simple.
• A foreign individual or foreign company may be a mortgagee of Thai land. It cannot, however, own the land, so it cannot take the land on foreclosure (Clause 11.3(d)). Its remedy is the proceeds of a court auction. Plan the loan on that basis.

Registering the machinery mortgage

• Machinery can be mortgaged only after it has been registered as machinery under the law on machinery registration. If it is not registered yet, the owner must first apply to register it, with proof of ownership and a site inspection.
• The mortgage is then registered at the Central Machinery Registration Office of the Department of Industrial Works in Bangkok, or at the provincial industry office, on the office's official form. Both Parties, or their attorneys, sign before the official.
• The office charges a registration fee set by ministerial regulation. Ask the office for the current amount before the appointment. Clause 12.1 puts the fee on the Mortgagor.
• Bring: the machinery registration certificate; ID cards or passports; for a company, a recent company affidavit, a board resolution and the signatory's ID; and a power of attorney if an attorney signs.
• Keep the machinery at the Machinery Site (Clause 3.3). Moving registered machinery may also require notice to the registration office, so check with the office before any move.
• Machinery that cannot be registered, stock and receivables can instead be offered as business collateral registered with the Department of Business Development, without handing them over. Take advice before choosing that route.

• A mortgage is not itself a dutiable instrument. If the Parties want the mortgage documents to serve as written evidence of a loan, they must carry loan stamp duty: 1 THB for every 2,000 THB of the loan, up to 10,000 THB, paid by the lender (Stamp Duty Schedule, Instrument 5).
• If the loan agreement is a separate document that already carries full stamp duty, no further duty is due. The registration office will usually check that the loan agreement is stamped.
• A document that should carry stamp duty and does not cannot be used as evidence in a Thai civil court until the duty and a surcharge are paid (Revenue Code s.118). Documents signed electronically pay duty through the Revenue Department's e-Stamp system.

• A lender that is not a licensed financial institution may not charge interest of more than 15% per year (s.654). Charging more is also a criminal offence under Thai law on usurious interest.
• Interest paid by a company to the lender is usually subject to withholding tax. The rate depends on who the lender is: commonly 1% for a Thai company and 15% for an individual or for a foreign company, which a tax treaty may reduce. The Mortgagor's accountant should confirm the rate before the first interest payment.
• The Mortgagor remains the owner and keeps paying land and building tax and other charges on the Property (Clause 7.1).

The Mortgagor is securing someone else's debt

• The Mortgagor is liable only up to the value of the Property, and cannot be made liable as a guarantor; any agreement to the contrary is void (s.727/1).
• The Mortgagee must obtain the Mortgagor's consent at the time it gives the Debtor more time to pay. Consent given in advance has no effect, and an extension without consent can release the Mortgagor (s.727 with s.700). A reduction of the debt must be notified to the Mortgagor within 60 days (s.691).
• When enforcing, the Mortgagee must send the Mortgagor a copy of the Enforcement Notice within 15 days after sending it to the Debtor. If it is late, the Mortgagor stops being liable for interest and charges that arise after that 15-day period (s.728, second paragraph).

• If a director or controlling person of a company mortgages their own property for the company's debt and the lender wants them liable beyond the value of the property, they must also sign a separate guarantee agreement (s.727/1, second paragraph). This Addendum does not do that.

• Send the Enforcement Notice by registered post with acknowledgment of receipt, with a copy by email (Clause 14.2). Give at least 60 days from the day the Debtor receives it (s.728). A shorter period agreed in any document is void (s.714/1). If the Property has been transferred, give the transferee at least 60 days' notice as well (s.735).
• If the Debtor still does not pay, the Mortgagee sues in a Thai court for seizure and public auction. The Mortgagee may not take possession, sell the Property privately or keep it without a court process; an agreement allowing that before the debt is due has no effect (s.711), and taking the Property by force can be a criminal offence.
• After the debt falls due, the Mortgagor may ask the Mortgagee in writing to sell by public auction without a lawsuit if there is no other registered mortgage; the Mortgagee must then arrange the auction within one year (s.729/1, Clause 11.4).
• Clause 5.2 keeps the Mortgagor liable for any shortfall after the auction. Without this term, Thai law would release the debtor from the shortfall (s.733).
• Under Clause 5.2 and s.733, if the auction does not cover the debt, the Mortgagor is not liable for the shortfall.

• Within 15 days after full payment, both Parties attend the registration office to register the release, or the Mortgagee hands over a signed consent to release with the documents needed (Clause 10.1). Keep written proof of every payment.
• If an individual Mortgagee is married and the mortgage right is marital property, releasing the mortgage needs the consent of the Mortgagee's spouse (s.1476(1)).

• Initial every page of this Addendum and Schedule 1, and keep a copy of the registered form, the Principal Agreement, the title deed or machinery registration certificate and each Party's ID or company affidavit.
• Ask for a copy of the insurance policy naming the Mortgagee as loss payee within 15 days after it is issued, and diarise each renewal date (Clause 8.1).
• Clause 16.6 allows electronic signatures for this Addendum, but the registered form must be signed in person before the official.

• A Thai court works in Thai. A Party that relies on this Addendum or on English emails in court must file a certified Thai translation. Budget for this cost.
• Enforcement of the Mortgage always goes to a Thai court (Clause 15.3), even though the Parties chose arbitration for other disputes.

Compiled from the notes that accompany the English contract templates on this site, published by Phuwara Krobtaku (ภูวรา ครอบตะคุ), Thai attorney-at-law, licence no. 477/2558. The short answer and summary at the top of this page are put together by the site from the template's clause headings and notes. Statutes are quoted only in the official Thai text: Thai is the only official language of Thai legislation, and an unofficial translation can mislead. Article registry OKC-7ABE0D. If you reuse this content, please credit the author and link to the original.