Renovating an old rural village home in Thailand.
- Thread starter Faz
- Start date
Faz
Well-known member
Sat 22nd August.
An uneventful weekend really.
Other than tidying up the garden and throwing fertiliser pellets around the rice crops, not much more to do.
A few bushes beginning to bear fruit, but the many bunches of bananas not ready to cut until the next visit.
For the third time in a month, a villager called trying to sell us land.
This lady has 10 rai of land she's asking 150,000 BHT a rai for ( 1.5 million).
It's a nice piece of land, very accessible and on the face of it appears a bargain.
However land opposite her plot is also for sale and was valued by the Land registry surveyors at 120,000 BHT per rai.
So why is this lady asking for 150,000 BHT per rai?
It's simple, and not new, debts!
Her eldest daughter hopes to attend Uni next year, so they need to raise funds.
She owes 800,000 to the bank for previous loans, with the land as collateral, and estimated 700,000 in Uni costs for the next 3 years, totalling 1.5 million BHT.
This is typical from stories I've heard, and from our own personal experience. Thais in debt overvalue the sale of land simply in order to cover debts and other costs, and of course they can't sell it. In this case the asking price isn't extreme against the actual valuation, and if you're looking for a long term investment, and happen to have 1.5 million spare, then it may be worth considering as land will almost certainly increase in value over the coming years.
These approaches are from local villagers that we don't really know, so why approach us, well even the wife agrees, it's partly because we've been renovating the village house, and partly the fact my wife is married to a 'farang', and of course as we all know, in our Countries we have money trees.
An uneventful weekend really.
Other than tidying up the garden and throwing fertiliser pellets around the rice crops, not much more to do.
A few bushes beginning to bear fruit, but the many bunches of bananas not ready to cut until the next visit.
For the third time in a month, a villager called trying to sell us land.
This lady has 10 rai of land she's asking 150,000 BHT a rai for ( 1.5 million).
It's a nice piece of land, very accessible and on the face of it appears a bargain.
However land opposite her plot is also for sale and was valued by the Land registry surveyors at 120,000 BHT per rai.
So why is this lady asking for 150,000 BHT per rai?
It's simple, and not new, debts!
Her eldest daughter hopes to attend Uni next year, so they need to raise funds.
She owes 800,000 to the bank for previous loans, with the land as collateral, and estimated 700,000 in Uni costs for the next 3 years, totalling 1.5 million BHT.
This is typical from stories I've heard, and from our own personal experience. Thais in debt overvalue the sale of land simply in order to cover debts and other costs, and of course they can't sell it. In this case the asking price isn't extreme against the actual valuation, and if you're looking for a long term investment, and happen to have 1.5 million spare, then it may be worth considering as land will almost certainly increase in value over the coming years.
These approaches are from local villagers that we don't really know, so why approach us, well even the wife agrees, it's partly because we've been renovating the village house, and partly the fact my wife is married to a 'farang', and of course as we all know, in our Countries we have money trees.
Faz
Well-known member
Our own experience with lending money, which I've never before told.
There is what you think you know, then what actually transpires.
Part 1.
What I thought I knew.
Almost 5 years ago, a member of the family asked to borrow 200,000 BHT to stop a foreclosure order on her house issued by a bank.
From what I knew of this woman, she didn't work and was single, having previously had several Thai partners, non of whom she was legally married to.
The debt to the bank apparently arose from signing as a guarantor when her daughter took out a loan against buying a new car, lost her job in Bangkok, defaulted on payments, and sold the car for cash to cover ongoing living expenses.
The daughter later moved back home, but neither her or her Mother had the means to repay the debt, so as the guarantor the bank came after the Mother as she owned property, which the bank intended repossessing and selling to clear the debt.
I was against the loan, but it was my wifes money to lend, and it was a family member in need, she went ahead.
At least she took my advice to draw up a written agreement for the loan, detailing the amount, any interest and a repayment schedule.
What could go wrong, the woman owns several plots of land, one of which was 7 rai of land in a prime position directly adjacent the main 202 highway, which she was selling and putting up as collateral against the loan.
My wife drew up an agreement, which they both signed, and the relative gave the Chanote (Land Title Deeds) for the land to my wife to hold.
Over the next 12 months, the daughter who had two young children from her now ex boyfriend, met a German guy online, moved over there and married him.
She was taking responsibility for the position she placed her Mother in and promised to help with the repayments as soon as she found employment.
My wife was in constant communication with the daughter via LINE, and 12 months after moving overseas, she did send a payment of 20,000 BHT to my wife.
Meanwhile the Mother was supposedly trying to sell this 7 rai plot of land she possessed to repay the loan.
Over the course of time, and through consistent questioning, I discovered the 'family' member was nothing more than a friend she attended school with.
Thais often tend to relate to friends as 'sisters', 'cousins', or 'aunties', when in fact they aren't related at all, which is misleading.
So, as of 6 months ago, according to my wife, she'd only received 20,000 BHT + some intermittent repayments varying from 1,000 BHT to 3,000 BHT direct from the Mother, whom the agreement was with. During this period she failed to sell any land, and I became very suspicious of her attempts to actually sell it.
There is a statute of limitations against such civil matters of 5 years in Thailand, so I told my wife it was time to take legal action now, or face the possibility of never recovering the loan.
Fortunately, we do have an actual family member, a cousin of the wife, a practicing lawyer in Bangkok, who gave advice and offered to take the case.
She is from the same neck of the woods, in fact raised in the same rural village, and very familiar with the family of the woman in question.
Some quick enquiries, and she found out that the Mother, although owning various plots of land in and around the village, was also in debt to banks for millions, all borrowed against the plots of land she owned, and they held the Chanotes for the lands as collateral.
But, but ......... we have the Chanote held as collateral against the loan for this 7 rai of land she's intended selling. We'll no we don't, it's just a very good copy!
It gets better, as part of the lawyers investigations she found out that the land in question is indeed up for sale, with an asking price of 1.5 million per rai, being a total of 10.5 million, but further enquiries at the local Land Registry surveyors office, only value the land at 345,000 per rai.
Obviously, this is why she's never been able to sell it, or was it ever her intention to actually sell it.
The wife felt a sense of disappointment with her 'friend', but also a sense of guilty to take any legal action. I eventually convinced her that her friend had been deceitful throughout and the only option was to take legal action now whilst she could, or just forget about the 200,000K and call it a gift!
The lawyer was able to discover that in total, this woman is indebted to the banks for over 8 million baht, and believes her valuation of this 7 rai of land to sell, was purely based on being able to clear her debts and leave sufficient funds to cover her living costs for the future.
The lawyer informed my wife that she'd only charge a fee of 10,000 baht to petition the Court for a hearing and represent my wife in Court, which could be claimed back as part of the case. I thought that fee more than reasonable, given she practices in Bangkok and any Court hearing would be held locally, but she explained she'd use the trip as an opportunity to visit family still living in the area.
There is what you think you know, then what actually transpires.
Part 1.
What I thought I knew.
Almost 5 years ago, a member of the family asked to borrow 200,000 BHT to stop a foreclosure order on her house issued by a bank.
From what I knew of this woman, she didn't work and was single, having previously had several Thai partners, non of whom she was legally married to.
The debt to the bank apparently arose from signing as a guarantor when her daughter took out a loan against buying a new car, lost her job in Bangkok, defaulted on payments, and sold the car for cash to cover ongoing living expenses.
The daughter later moved back home, but neither her or her Mother had the means to repay the debt, so as the guarantor the bank came after the Mother as she owned property, which the bank intended repossessing and selling to clear the debt.
I was against the loan, but it was my wifes money to lend, and it was a family member in need, she went ahead.
At least she took my advice to draw up a written agreement for the loan, detailing the amount, any interest and a repayment schedule.
What could go wrong, the woman owns several plots of land, one of which was 7 rai of land in a prime position directly adjacent the main 202 highway, which she was selling and putting up as collateral against the loan.
My wife drew up an agreement, which they both signed, and the relative gave the Chanote (Land Title Deeds) for the land to my wife to hold.
Over the next 12 months, the daughter who had two young children from her now ex boyfriend, met a German guy online, moved over there and married him.
She was taking responsibility for the position she placed her Mother in and promised to help with the repayments as soon as she found employment.
My wife was in constant communication with the daughter via LINE, and 12 months after moving overseas, she did send a payment of 20,000 BHT to my wife.
Meanwhile the Mother was supposedly trying to sell this 7 rai plot of land she possessed to repay the loan.
Over the course of time, and through consistent questioning, I discovered the 'family' member was nothing more than a friend she attended school with.
Thais often tend to relate to friends as 'sisters', 'cousins', or 'aunties', when in fact they aren't related at all, which is misleading.
So, as of 6 months ago, according to my wife, she'd only received 20,000 BHT + some intermittent repayments varying from 1,000 BHT to 3,000 BHT direct from the Mother, whom the agreement was with. During this period she failed to sell any land, and I became very suspicious of her attempts to actually sell it.
There is a statute of limitations against such civil matters of 5 years in Thailand, so I told my wife it was time to take legal action now, or face the possibility of never recovering the loan.
Fortunately, we do have an actual family member, a cousin of the wife, a practicing lawyer in Bangkok, who gave advice and offered to take the case.
She is from the same neck of the woods, in fact raised in the same rural village, and very familiar with the family of the woman in question.
Some quick enquiries, and she found out that the Mother, although owning various plots of land in and around the village, was also in debt to banks for millions, all borrowed against the plots of land she owned, and they held the Chanotes for the lands as collateral.
But, but ......... we have the Chanote held as collateral against the loan for this 7 rai of land she's intended selling. We'll no we don't, it's just a very good copy!
It gets better, as part of the lawyers investigations she found out that the land in question is indeed up for sale, with an asking price of 1.5 million per rai, being a total of 10.5 million, but further enquiries at the local Land Registry surveyors office, only value the land at 345,000 per rai.
Obviously, this is why she's never been able to sell it, or was it ever her intention to actually sell it.
The wife felt a sense of disappointment with her 'friend', but also a sense of guilty to take any legal action. I eventually convinced her that her friend had been deceitful throughout and the only option was to take legal action now whilst she could, or just forget about the 200,000K and call it a gift!
The lawyer was able to discover that in total, this woman is indebted to the banks for over 8 million baht, and believes her valuation of this 7 rai of land to sell, was purely based on being able to clear her debts and leave sufficient funds to cover her living costs for the future.
The lawyer informed my wife that she'd only charge a fee of 10,000 baht to petition the Court for a hearing and represent my wife in Court, which could be claimed back as part of the case. I thought that fee more than reasonable, given she practices in Bangkok and any Court hearing would be held locally, but she explained she'd use the trip as an opportunity to visit family still living in the area.
Faz
Well-known member
Part 2.
This is what transpired and what I now know.
The wife, feeling a sense of guilt, informed the daughter of now feeling no other alternative than taking legal action against her Mother to recoup the debt.
The daughter was somewhat surprised, informing the wife that a year early one of her grandparents had passed away, leaving her 3 rai of land, which she duly signed over to her Mother in order to sell and repay the wife.
Indeed, she had sold the land for 280,000 BHT, but was using the money for living expenses, rather than repay the debt as intended by the daughter.
The lawyer collated all the evidence and filed a petition for a hearing in a local Court.
We were advised the local Court in Suwannaphum would host the hearing on Wednesday 8th July, which was a month before the statute of limitations expired. I suppose that was the nearest Court to our rural village, where the Mother resides, although it's roughly 30Km away, and even farther for us coming from Roi Et town, but it is what it is.
I intended appearing to support the wife, but the lawyer stated it was better if I stayed away, and the wifes younger sister attended instead.
They were told to arrive at 0900, the case was set to be heard at 1000. Apparently the case was heard from 1000 to 1200, then adjourned for lunch, continuing at 1300 until 1400. They then adjourned until Monday 13th July, which was to allow time for the defendant to inform the Court exactly how she intended to immediately repay this loan, feeling that in almost 5 years she had plenty of opportunities to do so.
The wife, and her lawyer, attended for the appointed time of 1000, the defendant didn't appear.
The Court immediately issued an Order in support of my wifes claim, which was to be issued 7 days later.
An open an closed case, well not exactly, and these are the actual facts I found out as a result, not what I thought I previously knew.
The wife for a long time has loaned locals small amounts, usually just 1,000 or 2,000 until pay days, although she once loaned 5,000 and one 20,000. She charged a flat rate of 10% interest, and in all but two cases the monies were always repaid on time. I'd been led to believe this loan of 200,000 was no different, a flat rate of 10% interest.
It's seemed simple to me, 200,000 + 20,000 interest + 10,000 legal fees = 230,000, less 20,000 already repaid = a balance of 210,000 owing.
That isn't how it went down.
First of all, unbeknown to me, the 'defendant' had attempted at intervals to at least make intermittent partial repayments, sometimes 1,000 BHT, sometimes as much as 3,000 BHT. When the Court added all these payments up, including the one off 20,000 BHT payment, it totaled a repayment of 112,000 BHT, leaving only 88,000 BHT owing. My wife was somewhat taken aback at the amount already repaid, as being in dribs and drabs over almost 5 years it was squirrelled away on school fee's, uniforms and clothing, rather than being transferred to a separate account.
Secondly, for some unknown reason, which both parties to the agreement signed, it stated the interest was 1.5% per month, which they both thought was 20,000 in total. In fact as I later explained and demonstrated to my wife, 1.5% interest pm, amounted to 3,500 BHT per month, which even the odd repayment of 3,000, didn't even cover the interest. (Let's not discuss Thai maths).
It was an error on both parties, as they both agreed the amount should have been 20,000 total interest. The Court didn't rule in my wifes favour on this point, dismissing any claim to interest as the agreement technically broke the law in this respect. Apparently the maximum you can charge on such a loan is an interest rate of 1.25% pm, although that was never the intention.
So the final decision of the Court was that the defendant still owes 88,000 against the loan + 10,000 legal fees = 98,000 BHT.
As the defendant didn't appear for the second hearing, the Court has given her 30 days to repay the outstanding 98,000 in full. which expires the end of this month. They issued a Court Order that after this date, the bank holding the Chanote must release it to my wife, and it gives my wife the authority to sell the said 7 rai of land to recoup the debts, both to the bank and to herself.
There are certain stipulations within the order though.
The Court agreed with the Land Registry valuation of 345,000 per rai, totalling 2,415,000 for 7 rai.
As she apparently owes 1.2 million to the bank and 98.000 to the wife, that totals 1.3 million.
The order allows my wife to sell the land at a discount of 30% below the valuation price (quick sale), essentially allowing her to sell it for a total of roughly 1.7 million, with the option to further reduce it to 1.5 million, but not less than.
That would cover repayment of the loans and anything remaining paid to the defendant.
The lawyer states both the defendant and the bank concerned will have received a copy of the Courts Order.
I've told my wife to contact and discuss the issue with the bank next month, as it's as much in their interest as it is my wifes.
They already have the means and know how to sell the land.
This is what transpired and what I now know.
The wife, feeling a sense of guilt, informed the daughter of now feeling no other alternative than taking legal action against her Mother to recoup the debt.
The daughter was somewhat surprised, informing the wife that a year early one of her grandparents had passed away, leaving her 3 rai of land, which she duly signed over to her Mother in order to sell and repay the wife.
Indeed, she had sold the land for 280,000 BHT, but was using the money for living expenses, rather than repay the debt as intended by the daughter.
The lawyer collated all the evidence and filed a petition for a hearing in a local Court.
We were advised the local Court in Suwannaphum would host the hearing on Wednesday 8th July, which was a month before the statute of limitations expired. I suppose that was the nearest Court to our rural village, where the Mother resides, although it's roughly 30Km away, and even farther for us coming from Roi Et town, but it is what it is.
I intended appearing to support the wife, but the lawyer stated it was better if I stayed away, and the wifes younger sister attended instead.
They were told to arrive at 0900, the case was set to be heard at 1000. Apparently the case was heard from 1000 to 1200, then adjourned for lunch, continuing at 1300 until 1400. They then adjourned until Monday 13th July, which was to allow time for the defendant to inform the Court exactly how she intended to immediately repay this loan, feeling that in almost 5 years she had plenty of opportunities to do so.
The wife, and her lawyer, attended for the appointed time of 1000, the defendant didn't appear.
The Court immediately issued an Order in support of my wifes claim, which was to be issued 7 days later.
An open an closed case, well not exactly, and these are the actual facts I found out as a result, not what I thought I previously knew.
The wife for a long time has loaned locals small amounts, usually just 1,000 or 2,000 until pay days, although she once loaned 5,000 and one 20,000. She charged a flat rate of 10% interest, and in all but two cases the monies were always repaid on time. I'd been led to believe this loan of 200,000 was no different, a flat rate of 10% interest.
It's seemed simple to me, 200,000 + 20,000 interest + 10,000 legal fees = 230,000, less 20,000 already repaid = a balance of 210,000 owing.
That isn't how it went down.
First of all, unbeknown to me, the 'defendant' had attempted at intervals to at least make intermittent partial repayments, sometimes 1,000 BHT, sometimes as much as 3,000 BHT. When the Court added all these payments up, including the one off 20,000 BHT payment, it totaled a repayment of 112,000 BHT, leaving only 88,000 BHT owing. My wife was somewhat taken aback at the amount already repaid, as being in dribs and drabs over almost 5 years it was squirrelled away on school fee's, uniforms and clothing, rather than being transferred to a separate account.
Secondly, for some unknown reason, which both parties to the agreement signed, it stated the interest was 1.5% per month, which they both thought was 20,000 in total. In fact as I later explained and demonstrated to my wife, 1.5% interest pm, amounted to 3,500 BHT per month, which even the odd repayment of 3,000, didn't even cover the interest. (Let's not discuss Thai maths).
It was an error on both parties, as they both agreed the amount should have been 20,000 total interest. The Court didn't rule in my wifes favour on this point, dismissing any claim to interest as the agreement technically broke the law in this respect. Apparently the maximum you can charge on such a loan is an interest rate of 1.25% pm, although that was never the intention.
So the final decision of the Court was that the defendant still owes 88,000 against the loan + 10,000 legal fees = 98,000 BHT.
As the defendant didn't appear for the second hearing, the Court has given her 30 days to repay the outstanding 98,000 in full. which expires the end of this month. They issued a Court Order that after this date, the bank holding the Chanote must release it to my wife, and it gives my wife the authority to sell the said 7 rai of land to recoup the debts, both to the bank and to herself.
There are certain stipulations within the order though.
The Court agreed with the Land Registry valuation of 345,000 per rai, totalling 2,415,000 for 7 rai.
As she apparently owes 1.2 million to the bank and 98.000 to the wife, that totals 1.3 million.
The order allows my wife to sell the land at a discount of 30% below the valuation price (quick sale), essentially allowing her to sell it for a total of roughly 1.7 million, with the option to further reduce it to 1.5 million, but not less than.
That would cover repayment of the loans and anything remaining paid to the defendant.
The lawyer states both the defendant and the bank concerned will have received a copy of the Courts Order.
I've told my wife to contact and discuss the issue with the bank next month, as it's as much in their interest as it is my wifes.
They already have the means and know how to sell the land.
Faz
Well-known member
From what I've digested from this experience, the banks will make their own valuation against any loans.
Financial institutions and lawyers appear to be able to obtain the Land Registry valuation of land wherever it may be from a simple telephone call.
Individuals are probably charged a surveyors fee.
Depending on the location and market trends in that area, banks appear willing to lend between 50% to 70% of the valuation.
Land in the City will obviously rise much faster than in rural areas.
