Amendment to the Mortgage Foreclosure Law: Legal Advice to Guarantors and Mortgagors

On November 13, 2014, new amendments were made to the Thai Civil and Commercial Code (CCC), the law governing surety and mortgages. The amendments will change the way guarantees and mortgages can be given, favouring guarantors and mortgagors and providing security to the lender and their interest by significantly reducing the amount of risk a lender can shift to third parties.[1]

Due to the complex nature of the new provisions of the CCC, guarantors and mortgagors are advised to seek expert legal advice in law firms in Thailand and review the outdated provisions of the law. It will be helpful for guarantors and mortgagors to avoid property or asset seizure in Thailand. Old terms used by lenders that do not follow the new law will be faced by void guarantees and mortgages. This is because the new provisions stipulated that guarantees and mortgages that differ from the mandatory provisions will be declared as void.

Legal Advice for Mortgagors and Guarantors | SBC Interlaw | Law Firm Thailand


Obligations secured by a surety should be arranged by a contract of suretyship; provided with the objectives, description of the obligation, maximum liability, and timeframe (with some exceptions). [2] The guarantee is required by the new contract law in Thailand, limiting the obligations of a guarantor or any loan guarantor in Thailand. This provision prohibits all-money guarantees which lenders commonly extend to borrowers.

If a borrower is in default, the new law requires the lender to notify the guarantor within 60 days. The guarantor receiving the notice specifies the lender to be able to require the guarantor to accomplish the obligations of the borrower. Lenders who have failed to observe this provision will discharge the guarantors from interest and possible charges after the 60 day notice period.

Upon enforcement of the mortgage, lenders are prohibited to require any loan guarantors in Thailand from being jointly liable with the borrower for any of the obligation in excess of the price of the mortgaged property or any property as collateral in Thailand. [3]


The new law does not make the third party mortgagor liable from any excess of the price of the mortgaged property. Any guarantee required by the lender from a mortgagor that attempts to require both the borrower and the third party will be void.

The new law requires the lender to give the borrower at least 60 days to carry out its obligations, starting from the date the borrower received the notice. The lender may file to the court an order for the public auction of the mortgaged property if the borrower failed to comply with the notice.

The lender is also required to provide a copy of the notice to the third party mortgagor within 15 days of the delivery of the notice to the borrower. Failure by the lender to comply with this provision will discharge the third party mortgagor from any interest and possible charges after the 15 day notice period.

Legal Advice for Mortgagors and Guarantors | SBC Interlaw | Law Firm Thailand

The mortgagor is now allowed to demand the sale of the mortgaged property by auction at any time after the secured obligation becomes due without filing any order to the court. The lender is then required to sell the property within one year of receiving the notice from the mortgagor. Failure by the lender to comply with this provision discharges the mortgagor from any interest and possible charges accrued within the specified period of one year. The mortgage will be extinguished as a result of the public auction. [4]

The amended law covers all guarantees and mortgages following its enforcement on February 2015. However, it does not affect any contracts made prior to the date of enforcement. For legal services and legal advice on property investment, property management and the amendments on the collateral law in Thailand, consult any Asian lawyer, preferably a Thailand lawyer or a law firm in Thailand.

Are you looking for a law firm you can trust with legal advice to ensure your contracts drafted according to the amended mortgage foreclosure law in Thailand?

Why not SBC Interlaw? Our law firm has a long history in Thailand with a wealth of experience in legal counsel and litigation. SBC is a law company an innovative firm and highly committed with passion to our clients.

Building on our core values of integrity, initiative and inquisitiveness, we have forged long rewarding relationships with our clients. Our firm is based on a commitment to ensuring quality customer service to our clients. Our background in international law and international business law has given our company a competitive edge in addressing foreign clients’ concerns, and it is this commitment to client services that serves as the backbone of the firm.

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[1] Watson Farley & Williams. 2015. New Protection for Thai Guarantors and Mortgagors. (p 1,2). Retrieved May 25, 2015, from Watson Farley & Williams.

[2] Sathapornnanon, S. 2014. Thailand: Mortgage and Surety Update. International Financial Law Review. Retrieved May 25, 2015, from the International Financial Law Review.

[3] Sirirakwongsa, P. 2014. Amendment to Thai General Collateral Law to be Effective 11/2/2015. EPIC Legal & Tax Consultant. Retrieved May 25, 2015, from Epic Legal and Tax.

[4] Srijayanta, P., Chaistaporn, P. 2014. Thailand: Creditors, Guarantors and Mortgagors. (p. 3) Clifford & Chance. Retrieved May 25, 2015, from Clifford Chance.