There are two basic methods of enforcing a mortgage under Thai law. The first and far more common method of enforcement is to obtain a court judgment ordering the mortgaged property to be seized and sold at a public auction. This can only be done after the mortgagee has first notified the debtor in writing to perform its obligation within a reasonable time as specified in the notice. If the debtor fails to comply with the notice, the mortgagee may then proceed to file an action with a court of competent jurisdiction. CCC Section 728. As a rough estimate, it generally takes at least one year to obtain a court judgment ordering seizure of the mortgaged property, but this depends on how vigorously the defendant decides to defend the case. After the court order is obtained, several more years may lapse before there is a public auction of the seized property particularly if the defendant appeals the judgment. The proceeds from the public auction are paid over to the mortgagee, and any excess over the amount secured by the mortgage is then paid over to the debtor (mortgagor).
The second method of enforcing a mortgage is through foreclosure proceedings. In practice, this is rarely done because the following conditions must first be met before the mortgagee is entitled to claim foreclosure:
- the debtor has failed to pay interest for five years;
- the mortgagor has not satisfied the court that the value of the property is greater than the amount due; and
- there are no other registered mortgages or preferential rights on the same property.
Although it can be difficult and time consuming to enforce mortgages in Thailand, all other things being equal, a secured creditor is in a stronger position than an unsecured creditor. If, for example, the debtor goes into bankruptcy liquidation or bankruptcy reorganization, a secured creditor will generally have superior rights to the assets of the debtor.