Loaning money to a Thai secured against a Channote...

**Listerman** · 17-12-2012, 07:03 PM

I would appreciate some advice regarding this (presently hypothetical) situation.......

My wife who lives with me in the UK, has a younger brother presently studying for a law degree at Tamesat University, upon completion of this degree and final grades permitting. He wants to come to the UK to study for a one year MSc in International Law (I myself fail to see how this qualification is relevant to Thai law

).

My wife (and to a lesser degree her family) are pressing me for a loan to cover his stay in the UK, which will cover: course fees, traveling expenses, study materials, and any other incidental costs. I live quite close to the intended place of study, so he will live rent free in my house.

On prevoius occasions I have lent my wife money interest free (to bridge the gap) when buying land in her village, the money has always been repaid in full by the agreed date. This time however the amount involved takes it to a whole new level.

The brother is the youngest of a family of five siblings, the rest are elder sisters.
He is by Thai standards very intelligent, however he also exhibits most of the well known and typical Thai male traits, mainly due to his familly all doting on him, with new clothes, new phone, new laptop, new tablet computer, new moped, etc, etc, all been provided on tap courtesy of his sisters. From what I hear and see, now that he is a student they also give him a monthly allowance, which from his Facebook page seems to fund quite a hectic social life.

My wife has a number of part time jobs, the income from which she is proposing to repay his loan herself, which will place her under considerable financial strain when taken with other financial commitments she is already honouring, and will take her some considerable time to repay. I am also concerned it will become a cause of friction between us.

My proposal is to loan the brother the money, interest will be charged for the loan duration (at a competitive rate and lower than say Thai Farmer bank), the loan will be secured against a Channote (the channote is worth approx 4 x the loan value, the land is the property of two of the sisters, and until the loan is repaid the channote will reside with me in the UK). It is my intention that the brother will repay me the loan (and not my wife) this will teach him the true value of money, and also it will introduce for him to a degree of financial responsibility he has previously not experienced to date.

My wife works tirelessly for the benefit of her familly back in Thailand, and has on numerous occasions given over money which she knows will never be repaid. This is one more financial burden she does not need, but Thai thinking is at present preventing her from seeing this.

As you can well imagine my proposal has not been well recieved, however as far as I am concerned this is a take it or leave it offer.

Do you think I am been fair ? how would I go about tieing the debt to the channote ? and is this practical ?

Thanks in anticipation of your carefully considered responses.

**chassamui** · 17-12-2012, 07:09 PM

I think Failsafe knows all about this. He's sort of unofficial head of TD farang mafia.

**Mid** · 17-12-2012, 07:12 PM

ffs it is a loan that will never be repaid .

**liveinlos** · 17-12-2012, 07:12 PM

Loaning money that is never repaid is always the beginning of the end. To think you will teach a young Thai male to be responsible with money? You already lost that one. If he was responsible he wouldn't have all those expensive things at the expense of someone else working and paying for them.

**Gerbil** · 17-12-2012, 07:16 PM

The debt has to be recorded on the back of the chanote and registered at the land office. You also have to pay stamp duty on the value of the loan.

Practically although as a foreigner, because you cannot take possession of the land in the event of a default, most land department offices will refuse to allow this.

You will need to use a lawyer who will draw up a contract which will enforce the sale of the land if necessary.

**Thetyim** · 17-12-2012, 07:17 PM

Holding the Chanote is not much security.
It is possible to report it lost and get another one issued.
You can never sell the land because you can't sign the sale agreement.

Unless there is a way to get the Chanote legally stamped as being subject to a loan then I wouldn't go down that road.

**superman** · 17-12-2012, 07:17 PM

You're getting confused as to what 'Chanote's are. Anything regarding title papers and loans, stay clear of. That's the job for lawyers and banks.

**can123** · 17-12-2012, 07:25 PM

Don't lend the money. He just wants to continue his student life at your expense. The qualification would not be worth much anyway and, as you say, of no use in Thailand.

Another point to consider is the fact that a British university is willing to accept a Thai student with a first degree. I wouldn't have thought that any Thai degree would have been adequate preparation for a real Masters course. Is the university running "Mickey Mouse" courses just to earn money ? A lot of that sort of thing has happened, the University of Cardiff being a prime example. It blagged itself out of existence.

Convince the family that he would be better of with a Thai second degree, which he could do part time and pay for himself.

**Orroz** · 17-12-2012, 07:29 PM

Originally Posted by Mid

ffs it is a loan that will never be repaid .

True, but he does have the channote. The question is how can he legally keep it and what turmoil will it cause in the family if he does.

**helge** · 17-12-2012, 07:36 PM

Originally Posted by Listerman

I am also concerned it will become a cause of friction between us.

Seems it already have

You are in a lose-lose situation

Suggest to the family to sell some land

**superman** · 17-12-2012, 07:38 PM

Originally Posted by Listerman

the land is the property of two of the sisters, and until the loan is repaid the channote will reside with me in the UK).

And what will that achieve? I'll tell you, Jack Shit. The only difficulty it will impose on the sisters is they can't sell it. But they can still farm it. A bit of advice from a person who got shit on through a land paper loan.

**FailSafe** · 17-12-2012, 07:50 PM

Originally Posted by chassamui

I think Failsafe knows all about this. He's sort of unofficial head of TD farang mafia.

I wouldn't say that, but I know a little bit.

After doing your due diligence and making sure the property doesn't have any loans or liens against it, there's a power-of-attorney form you can get from the land office which will give the lender (in this case you) the right to take over and/or sell the land on a certain date- the land owners(s) have to sign it- EVERYBODY needs to sign if there is more than one owner- if one refuses, you can't do the deal- you'll also need signed copies of ID cards, tambien baan, etc. Obviously you will hold the original chanote.

Since you will be charging less than current interest rates, you can also set up a legally binding contract with the exact details of the loan, payment schedule, and interest rate (there's a way to do also do it 'legally' if you're charging a higher rate, but that's not an issue here).

Essentially, if the land owner defaults on the loan, you can present your contract to the land office as an agreed-upon paid bill-of-sale after a certain date- obviously most of the trust and risk is on the part of the borrower, and an unscrupulous lender could cause problems- most of these contracts are done between people who know each other fairly well or with a lender that has a good reputation.

If you're lending money at 50% or less of the land valuation, you're in a very good position, but dealing with family comes with its own set of problems...

This would all need to be in your wife's or some other Thais name- you can't do it in your name as a foreigner.

**superman** · 17-12-2012, 07:59 PM

Originally Posted by FailSafe

Obviously you will hold the original chanote.

You, along with others, need to understand what Chanote means. It doesn't mean title papers.

Land title deeds in Thailand are divided into 4 categories as follows:

1. Freehold Title Deed (Chanote or Nor Sor 4)

This type of title grants the holder of this document the full right over the land. The holder has absolute authority over the land. Thus, if you are planning to buy land in Thailand, this type of title deed is the best option.

2. Nor Sor 3 Gor

A land awaiting a full title deed is granted the document Nor Sor 3 Kor. The land is measured by the Land Department; therefore, it has its exact boundaries. The owner knows exactly what he owns. This type of land may be sold, transferred, or mortgaged, as a land with freehold title deed (Chanote). The owner of the land may file a petition to the Land Department demanding to change it to a full title deed (Chanote), and the Land Department may do so if there is no opposition made against the petition.

NOTE: The person whose name appears as the owner of Nor Sor 3 Kor has a right to transfer, sell, dispose of and mortgage the Land upon registration with the relevant local land department in accordance with the Land Code and other regulations, notifications and announcements relating to it. Any transaction in connection with the real property (except where the lease is not more than 3 years) must be registered with the relevant local land authority and will be shown at the back of Nor Sor 3 Gor.

3. Nor Sor 3

Same as Nor Sor 3 Gor except that the land with Nor Sor 3 has never yet been measured by the Land Department; hence the land has no exact boundaries. However, Nor Sor 3 may later be switched to a Nor Sor 3 Gor, then a freehold title deed (Chanote) in the future although; transfer of ownership needs 30 days posting to see if anyone wishes to contest ownership. In practice, neighbors can turn up in this 30-day posting claiming possession of the land.

4. Possessory Right

This type of title deed is the least recommended. A land with a possessory right has never been substantiated by Department, but is only recognized by tax payments at the Local Administrative Office, which means no sale, purchase or lease can be registered or building permits allowed.

https://teakdoor.com/doing-things-leg...te-or-not.html

**ChrisM** · 17-12-2012, 07:59 PM

the sisters will never let you call in the loan.

either pay or tell them to fok off... in a polite Thai way. IE say yes with a smile but always have an excuse for not fronting the cash.

**nidhogg** · 17-12-2012, 08:13 PM

Originally Posted by Listerman

I would appreciate some advice regarding this (presently hypothetical) situation.......

My wife who lives with me in the UK, has a younger brother presently studying for a law degree at Tamesat University, upon completion of this degree and final grades permitting. He wants to come to the UK to study for a one year MSc in International Law (I myself fail to see how this qualification is relevant to Thai law

).

Of course it is relevent. Even Thai companies have contracts etc with international companies. Such a qualification would be a definate "edge" in the employment market.

Originally Posted by Listerman

On prevoius occasions I have lent my wife money interest free (to bridge the gap) when buying land in her village, the money has always been repaid in full by the agreed date.

Every marriage is different. Personally, I find the notion of lending my wife money strange, but different folks different for different folks, and what works for you......

Originally Posted by Listerman

This time however the amount involved takes it to a whole new level.

My proposal is to loan the brother the money,

My wife works tirelessly for the benefit of her familly back in Thailand, and has on numerous occasions given over money which she knows will never be repaid.

Your wife knows the scene - between family, "loans" are often (not always) written off - even before the money is handed over.

Originally Posted by Listerman

This is one more financial burden she does not need, but Thai thinking is at present preventing her from seeing this.

Family places enormous burdens on Thais, especially the "responsible" ones....

Originally Posted by Listerman

As you can well imagine my proposal has not been well recieved, however as far as I am concerned this is a take it or leave it offer.

"take it or leave it" seldoms works well - its your marriage, but I would look for an acceptable solution, rather than take it or leave it.

Personally (note, personally) - I would look at what I could "throw into the pot" so to speak - you are talking free board and lodging - maybe a contribution to tuition fee etc - then be clear - this is what we can afford and I am giving it as a gift. You say your wife works etc, what she throws in is up to her.

There is a saying along the lines of: If some one asks you for 1,000 dollars as a loan, give them 100 dollars as a gift - you will be much happier in the long run.

**FailSafe** · 17-12-2012, 08:15 PM

^^^

I know what it is- you still need to keep the original chanote (assuming that's the level of the deed- I think you're making an issue of the terminology- chanote, nor sor sam, etc- pretty much anything except tor bor ha will work- 'chanote' is a catch-all phrase referring to the land title paper- this is what the Thais call it, mostly because the deeds upon which loans are made are usually at the chanote level)- the point is to have the signed power of attorney- the land owner stipulates in the agreement that it was given over freely- it's illegal for the land owner to get a new chanote in this case- it takes 30 days from the initial report of a lost or stolen chanote to be reissued- after that, the land owner would lose (and face fraud charges) if it goes to court- it wouldn't be an issue with proper documentation- this goes on all the time in LOS- it's not just a matter of handing over the chanote itself, and too many people think it's all you need- it's not, but you still need to hold the current copy if you make this sort of loan- it's part of the required documentation.

Did you have a power-of-attorney form when you got screwed? I bet you didn't.

**taxexile** · 17-12-2012, 08:39 PM

You will get screwed here.

Play willing for a while and then break the news that one of your close family members needs urgent financial help and that you cant fund the student loan, or any other credible story to explain why you just dont have the funds.

Then suggest that the thai family take out a loan to cover einsteins expenses in the uk from a thai bank using the land deeds as security, which is what they should have done in the first place rather than come begging from you via your wife, who seems to be something of a cash cow anyway.

Good luck.

**Rural Surin** · 17-12-2012, 08:43 PM

Originally Posted by Mid

ffs it is a loan that will never be repaid .

This becomes troublesome, universally, today.

The access to "easy" loans.

**FailSafe** · 17-12-2012, 08:46 PM

I agree that you will very likely have a problem as family is involved- you're not charging enough interest to make much money, and if the guy defaults, will your wife actually keep and/or sell the land? Probably not.

These deals shouldn't be done with friends or family as there's too much guilt if things go south (which they usually do). A lender has to be devoid of emotion and keep it on a business level- that's the opposite of how a family works.

I know someone who recently lost a 40mil piece of land to a 20mil loan (I wasn't involved)- I told the borrower not to do it, but he wouldn't listen (he paid some interest too- it all is lost if the full balance isn't paid)- usually you can see how it will end from the time it starts.

**Listerman** · 17-12-2012, 08:51 PM

Thanks folks for your speedy and considered responses, plenty of sage advice to consider, in reply here are my initial thoughts:

Originally Posted by can123

The qualification would not be worth much anyway and, as you say, of no use in Thailand.

Thats exactly what I thought all along, this qualification has little or no relevance in Thailand. In fact when I think of all the comments on here how incompetent and shady most Thai Lawyers are, I wonder why the brother is interested in studying for a qualification such as this, but what do I know as a Farang, when confronted with the superior Thai interlect.

Originally Posted by can123

Another point to consider is the fact that a British university is willing to accept a Thai student with a first degree. I wouldn't have thought that any Thai degree would have been adequate preparation for a real Masters course. Is the university running "Mickey Mouse" courses just to earn money ?

This is a reputable UK university, I am myself also VERY doubtful he can achieve the entry requirements, as a typical Thai first degree seems no more challenging than UK 'A levels'. The real test will be if he can meet the IELTS and GPA scores neccesary for enrolment. I am of the opinion this is at best a pipe dream, but whatever happens I want to be in a position where I have the answers to hand if and when the time comes, hence this post.

Originally Posted by can123

Convince the family that he would be better of with a Thai second degree, which he could do part time and pay for himself.

That is a suggestion that makes a great deal of sense, for everyone concerned.

Originally Posted by Thetyim

Holding the Chanote is not much security.
It is possible to report it lost and get another one issued.

That is a concern of mine, however as failsafe eludes to, it would appear there are steps that can be taken to eliminate this risk.

Originally Posted by FailSafe

After doing your due diligence and making sure the property doesn't have any loans or liens against it, there's a power-of-attorney form you can get from the land office which will give the lender (in this case you) the right to take over and/or sell the land on a certain date- the land owners(s) have to sign it- EVERYBODY needs to sign if there is more than one owner- if one refuses, you can't do the deal- you'll also need signed copies of ID cards, tambien baan, etc. Obviously you will hold the original chanote.

I know that no loans are outstanding on the land, but can you explain what a lien is?

If either of the sisters refuse to sign. From my perspective this would be ideal, as I would be able to walk away from the problem (financialy speaking).

Originally Posted by FailSafe

Obviously most of the trust and risk is on the part of the borrower, and an unscrupulous lender could cause problems- most of these contracts are done between people who know each other fairly well or with a lender that has a good reputation.

I have no desire to shaft them on this, but at the same time I have no desire to be on the receiving end of a shafting myself, hence if the risk is mostly on the borrower it will learn the brother a valuable lesson in money management.

Originally Posted by FailSafe

If you're lending money at 50% or less of the land valuation, you're in a very good position, but dealing with family comes with its own set of problems...

Been as the loan is approx 1/4 of the land price when it was bought, that is what I thought as well. I am not overly concerned what her familly thinks, because I dont live amongst them (apart from brief holidays) and am never likely to, if I ever decide to retire to Thailand. They also know when it comes to loaning money I am doing my best to try and become there least prefered option.

Originally Posted by FailSafe

This would all need to be in your wife's or some other Thais name- you can't do it in your name as a foreigner.

That I did not know, but it does not surprise me, fortunately I have someone in mind.

**nidhogg** · 17-12-2012, 08:55 PM

Originally Posted by Rural Surin

The access to "easy" loans.

I have to agree on this one. It is a recurring discussion with my missus. ""XYZ has a new car, house, whatever" Yes, and XYZ is in debt upto their eyeballs. You and me owe nothing to nobody, you have land plus money in savings and my money is safely outside the country. You want to swap places? "Mai kha. But the new car is nice........"

**FailSafe** · 17-12-2012, 09:01 PM

^^

By 'lien' I meant you need to make sure another person (private party- not a bank) hasn't lent money on the land as well- of course they'd be holding the deed, but there are fake ones out there as well as other scams a lender can employ- it's a potentially tricky situation, especially if you're new to it.

Just think very hard before committing- loans like this can turn very sour, and the farang often gets the short end of the stick here (as I'm sure you already know

).

**pseudolus** · 17-12-2012, 09:04 PM

typical Thai family BS. The conversation they will be having is;

"AAhhh poor little somchai. All he wants to do is get good education in farang university. Gain great face for his mother and family. Will send her lots of money and be pride of village. Farang man very rich. He will pay. Sister farang already send us so much money. They must be rich like Thaksin"

If you pay up;

"Ahh Farang rich man sticky poo. Not give Somchai enough money to have own car and house there. Shame on our house, sister marry sticky poo like him. Poor somchai"

If you don't

"Ahh Farang richman not pay up. Lucky sister pay up and Somchai go Australia"

You're damned if you do, and damned if you don't. I doubt you will ever be able to call in the loan as others say, and if you have the Chanote there they will chuck a bung at the land registry and get a new one. Just say no, and thank your lucky stars you will not have a spoilt brat somchai living in your house for a year asking you to wipe his arse for him and tell the Mrs that you just lost a bundle on shares and your skint and ask her to ask them for a loan. Then she might see their value.

**Thetyim** · 17-12-2012, 09:05 PM

Originally Posted by taxexile

Then suggest that the thai family take out a loan to cover einsteins expenses in the uk from a thai bank using the land deeds as security,

Now that idea might have some mileage if you add a sweetener that you will pay the first years interest

**Rural Surin** · 17-12-2012, 09:10 PM

Originally Posted by nidhogg

Originally Posted by Rural Surin

The access to "easy" loans.

I have to agree on this one. It is a recurring discussion with my missus. ""XYZ has a new car, house, whatever" Yes, and XYZ is in debt upto their eyeballs. You and me owe nothing to nobody, you have land plus money in savings and my money is safely outside the country. You want to swap places? "Mai kha. But the new car is nice........"

Yep. The dangerous ideals of living beyond your and obsessed consumption.

Credit. Loans.

That's what it's all about.

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