In modern property law, the traditional division between ownership (full title) and leasehold rights is increasingly insufficient to accommodate complex economic activities, long-term investments, and infrastructure development. Many jurisdictions have therefore developed intermediate legal mechanisms that allow long-term use and enjoyment of immovable property without transferring ownership.
In Thailand, this development is reflected in the concept commonly referred to as “ทรัพย์อิงสิทธิ” (property-based use rights), which resembles usufruct, superficies, or long-term real rights found in civil law jurisdictions. Such rights are increasingly relevant in large-scale real estate projects, public–private partnerships (PPP), infrastructure development, and foreign investment structures where ownership restrictions apply.
This article examines the legal nature of property-based use rights under Thai law, compares them with similar concepts in foreign jurisdictions, and analyzes their role as a modern risk-allocation and investment mechanism.
Concept and Legal Nature of Property-Based Use Rights
Property-based use rights refer to real rights (rights in rem) that grant a person the legal authority to use, possess, and derive benefits from immovable property owned by another person for a specified period. Unlike contractual rights, these rights bind third parties once properly registered.
From a legal and doctrinal perspective, property-based use rights typically have the following key characteristics:
- No transfer of ownership – legal title to the property remains with the landowner;
- Enforceability against third parties – the rights bind not only the contracting parties but also subsequent owners or third parties;
- Registrability – registration creates legal certainty and public notice of the right; and
- Limited duration – the rights exist for a defined period, as prescribed by law or agreed by the parties.
Under Thai law, the concept of property-based use rights is grounded in civil law principles governing limited real rights (jura in re aliena). These principles allow ownership of property to be separated from the right to use and economically exploit that property, providing a flexible legal framework for long-term investment and development.
Property-Based Use Rights under Thai Law
Thai property law, grounded in the Civil and Commercial Code, adopts a civil law framework recognizing limited real rights. While the terminology “ทรัพย์อิงสิทธิ” is not always explicitly defined as a single statutory category, its substance can be identified through legally recognized registrable rights that:
- Attach to immovable property;
- Are enforceable erga omnes;
- Allow long-term economic exploitation.
These rights are particularly relevant in:
- State land development;
- Industrial estates;
- Infrastructure and energy projects;
- Foreign-invested real estate structures, where ownership is restricted under the Foreign Business Act.
Economic and Investment Functions
From an economic perspective, property-based use rights serve several key functions:
- Capital Efficiency
Investors can deploy capital into productive use of land without incurring the full cost of acquisition.
- Risk Allocation
Ownership risk remains with the landowner, while operational and commercial risks are allocated to the right holder.
- Regulatory Compliance
These rights allow structuring around foreign ownership restrictions without violating mandatory rules.
- Financing and Security
Registrable real rights play a significant role in financing structures, as they may be pledged, mortgaged, or otherwise used as collateral, subject to statutory and contractual limitations. The ability to register such rights provides a level of legal certainty and enforceability that is essential for lenders and financial institutions when assessing credit risk.
From a financing perspective, property-based use rights that are recognized as real rights and properly registered can enhance the bankability of a project. These rights may serve as security interests in project finance, real estate finance, or structured financing transactions, allowing lenders to rely on the economic value of the long-term use and income-generating potential of the underlying property, even though legal ownership remains with another party.
In practice, the use of registrable real rights as collateral enables investors—particularly foreign investors who are restricted from owning land outright—to access financing while complying with land ownership regulations. Financial institutions may accept such rights as security, provided that the scope, duration, and transferability of the rights are clearly defined and that enforcement mechanisms are legally viable.
Nevertheless, the use of property-based use rights as collateral remains subject to statutory constraints, including limitations imposed by property law, land registration regulations, and sector-specific legislation. In addition, lenders typically require thorough legal due diligence to confirm the validity, priority, and enforceability of the registered rights, as well as to identify any competing encumbrances or restrictions that may affect their value as security.
Accordingly, while registrable real rights offer a flexible and effective tool for financing and security arrangements, their successful use depends on careful legal structuring, precise drafting, and strict compliance with applicable laws and regulatory requirements.
Legal Risks and Due Diligence Considerations
Despite their advantages, property-based use rights present legal risks that must be carefully managed:
- Ambiguity in scope and duration of rights;
- Conflicts with existing encumbrances (mortgages, easements);
- Termination consequences and reversion of improvements;
- Regulatory approval and public law constraints.
Accordingly, legal due diligence plays a crucial role in verifying:
- Valid creation and registration of the right;
- Compatibility with zoning, land use, and sector-specific regulations;
- Enforceability against successors in title.
Conclusion
Property-based use rights represent a complex legal instrument bridging the gap between ownership and contractual use. Comparative analysis demonstrates that Thailand’s approach aligns with broader civil law traditions, while remaining adaptable to domestic regulatory and economic realities.
As cross-border investment, infrastructure development, and public-private collaboration continue to expand, such rights will play an increasingly central role in shaping modern property and investment law. Their effective use, however, depends on precise legal drafting, rigorous due diligence, and a clear understanding of both domestic and comparative legal principles.
Use of Property-Based Rights by Foreign Investors: Functional Applications and Legal Implications
Foreign Land Ownership Restrictions and the Role of Property-Based Rights
In many jurisdictions, including Thailand, foreign nationals and foreign-invested entities are subject to restrictions on land ownership. Under Thai law, foreigners are generally prohibited from owning land outright, except in limited statutory circumstances. As a result, property-based use rights have emerged as a critical legal mechanism allowing foreign investors to achieve long-term economic control over land without violating ownership restrictions.
These rights function as a lawful substitute for ownership, enabling foreign investors to engage in capital-intensive and long-term projects while preserving national land ownership policies.
Permissible Uses of Property-Based Rights by Foreigners
A foreign holder of a properly registered property-based use right may lawfully utilize the land for a wide range of economic and commercial purposes, subject to contractual terms and regulatory approvals. These uses typically include the following:
(a) Development and Operation of Real Estate Projects
Foreign investors may use property-based rights to:
- Develop commercial buildings, hotels, serviced apartments, and mixed-use projects;
- Operate industrial facilities, warehouses, logistics hubs, or data centers;
- Establish infrastructure-related facilities such as power plants, energy storage sites, or utility installations.
In such cases, the right holder enjoys exclusive possession and economic benefit for the duration of the right, even though legal ownership of the land remains with the Thai landowner.
(b) Construction and Ownership of Buildings and Improvements
In line with superficies-type concepts recognized in civil law systems, property-based rights allow foreigners to:
- Construct buildings and improvements on land owned by another person;
- Retain ownership of such buildings during the term of the right;
- Use, lease, or operate the constructed facilities independently from the landowner.
This separation between land ownership and building ownership is particularly attractive for long-term investment projects.
(c) Leasing and Sub-Leasing to Third Parties
Depending on the terms of the registered right and applicable sectoral regulations, a foreign right holder may:
- Lease or sub-lease buildings or facilities to third parties;
- Grant operational rights to affiliated companies or joint venture partners;
- Structure downstream revenue-generating activities without transferring land ownership.
Such arrangements are commonly used in hotel operations, industrial estate development, and commercial leasing structures.
(d) Use as Collateral and Financing Instruments
A properly registered property-based use right may, subject to statutory and contractual limitations:
- Be pledged or mortgaged as security for financing;
- Serve as collateral in project finance transactions;
- Support long-term lending by domestic or international financial institutions.
From a financial perspective, this significantly enhances the bankability of projects involving foreign investors.
(e) Participation in Joint Ventures and PPP Projects
Property-based rights are frequently employed in:
- Joint venture structures between Thai landowners and foreign investors;
- Public–Private Partnership (PPP) projects involving state-owned land;
- Industrial estate and special economic zone developments.
These rights allow the Thai party to retain land ownership while enabling foreign partners to commit capital, technology, and expertise over extended periods.
Regulatory and Contractual Constraints
Despite their flexibility, property-based rights held by foreigners remain subject to:
- Foreign Business Act (FBA) restrictions on certain service activities;
- Sector-specific licensing regimes (e.g., factory licenses, hotel licenses, energy permits);
- Zoning, environmental, and town planning regulations;
- Limitations expressly stipulated in the registered agreement.
Accordingly, foreign investors must ensure that the intended use of the property-based right aligns with both private law arrangements and public law requirements.
Risk Allocation and Legal Safeguards
For foreign investors, property-based rights provide a balanced legal framework that:
- Minimizes exposure to ownership-related legal risks;
- Ensures long-term stability and enforceability against third parties;
- Allows contractual customization to address termination, renewal, and reversion of improvements.
However, these advantages depend heavily on:
- Precise drafting of the underlying agreement;
- Proper registration with the competent authority;
- Comprehensive legal due diligence covering land title, encumbrances, and regulatory compliance.
Concluding Remarks
Property-based use rights offer foreign investors a legally secure and economically viable alternative to land ownership. When properly structured and regulated, these rights enable long-term investment, project financing, and operational control, while remaining consistent with Thailand’s land ownership restrictions and national land policy.
However, the use of property-based rights under Thai law is subject to important legal limitations. In particular, such rights may generally be registered for a maximum period of thirty (30) years, require the consent of the landowner, and must be registered with the competent Land Office in order to be legally enforceable against third parties. In practice, while registered property-based rights may be used as collateral or security, their acceptance as security ultimately depends on the discretion and risk assessment of the relevant creditor or financial institution.
As foreign investment continues to play a vital role in Thailand’s economic development, the strategic use of property-based rights—together with a clear understanding of their legal limitations—will remain a cornerstone of modern real estate and investment law in Thailand.
Author: Pinprapus Chartikavanich
Date: 7 January 2026
Disclaimer
This article is provided for general legal information purposes only and does not constitute legal advice. The information contained herein may not be comprehensive and may not reflect the most current legal developments. Readers should not rely on this article as a substitute for professional legal advice tailored to their specific circumstances. No attorney-client relationship is created by the publication or use of this article. All rights reserved under the Copyright Act B.E. 2537.