A small room, a wooden table, and the sentence that sounded most reasonable that day
Two people sitting across from each other. One needs two million baht. The other has it and is willing to lend.
Then the sentence arrives.
Let us just register it as a sale for now, it keeps things simple, and when the debt is paid I will transfer it back. We have agreed. We trust each other.
They agree. They go to the Land Office together the following week, register a sale of the plot at a price written far below what anybody actually paid, and part ways.
Three years later the borrower has repaid everything and calls to ask for the land back.
The other party says the plot was bought properly, that there is a registered sale contract to prove it, and that there was never any loan.
Cases like this reach the courts every year, and Thai law has a name for it: a simulated juristic act.
The good news is that Thai law anticipated this and wrote a way out. The bad news is that the way out is narrower than people assume, and one condition can close it entirely.
This article covers what the law actually says, the patterns that turn up in real life, what has to be proved to win, and the lawful routes that achieve the same thing without the risk.
What the law says
Section 155 of the Civil and Commercial Code has two paragraphs, and both matter in different ways.
The first: a declaration of intention made in collusion with the other party, not intended to have effect, is void, but that voidness cannot be raised against a third party who acted in good faith and would be prejudiced by it.
The second: where such a declaration was made to conceal another juristic act, the law governing the concealed act applies instead.
Translated into how it actually works, the story above contains two layers stacked on top of each other.
The visible layer is the registered sale, which both parties knew was not a real sale. That is the simulated declaration, and under the first paragraph it is void.
The concealed layer is the loan, which is what both parties genuinely intended, and under the second paragraph the law of loans governs the relationship between them.
So if it can be proved, a court treats it as no sale at all, only a loan, and when the debt is repaid the land must go back.
Which sounds like a fine remedy, until you notice one word in the first paragraph.
The words if it can be proved carry the whole thing
The most common misunderstanding is that void means it already has no effect, so you can walk into the Land Office and have it transferred back.
It does not work that way.
What the world sees is a registration record stating that this plot was lawfully sold, signed by both parties, certified by an official.
The person saying that document does not match reality is the person who has to prove it.
And that proof happens in court, with evidence, not by recounting what was agreed at the time.
Most people who lose these cases do not lose because the law fails to protect them. They lose because they have nothing but their own account, while the other side has an account too, and the paperwork is on their side.
The condition that closes the door: a third party in good faith
The end of the first paragraph says the voidness cannot be raised against a third party who acted in good faith and would be prejudiced.
That sentence ends a great many cases.
Back to the story. Suppose that during those three years, the person holding the title sold the land on to somebody else who knew nothing about any of it, saw the deed in the seller's name, checked what a buyer normally checks, paid market price, and registered the transfer properly.
That person is a third party in good faith.
You cannot tell them the earlier sale was void because it was really a loan.
The land is theirs, and what you have left is a claim for money against the person who betrayed you, which is a different thing from getting the land back, and usually ends in chasing somebody with nothing left to seize.
This is why a promise to transfer it back is not a risk you control. It does not depend only on the other party's honesty, but on whether they still hold the land at all.
And they may not have intended to cheat anybody. They may simply have died in the meantime, leaving the land to heirs who never heard of your arrangement.
Pattern one: a sale concealing a loan
The classic and the most common, and the story told above.
The reason people do it is that the lender wants security stronger than a mortgage, because a mortgage means suing and enforcing through auction if the borrower defaults, which takes time and costs money.
Transferring ownership into the lender's name means there is nothing to do. The land is already in hand.
What the borrower does not think through is that on the day of transfer, they are left with nothing enforceable except trust.
If what is wanted is security, the law provides tools that genuinely work without this exposure, which the closing sections cover.
And if the conversation is about a sale with right of redemption, read raising money against your title deed first, because that is a lawful arrangement with its own protections, unlike a simulated sale.
Pattern two: declaring a price below what was paid
The one most people do without feeling they are doing anything wrong.
The reason is that fees and taxes at the Land Office are calculated from the declared price, so declaring less costs less, both sides benefit, and the difference changes hands off the record.
The problem is that it does not end there.
Criminal exposure. Causing an official acting in their duty to record a false statement in a public or official document is an offence under section 267 of the Criminal Code, punishable by up to three years imprisonment, a fine of up to 6,000 baht, or both.
Tax exposure. The low declared price becomes your own paper cost base. On the day you sell at the real price, the paper gain is larger than the real one, and the tax follows it.
Saving tens of thousands on the day of transfer and repaying hundreds of thousands on the day of resale is an ordinary outcome.
Exposure in a dispute. If the price is ever litigated, what appears in the official record is the declared figure, not what was paid.
A buyer who paid five million with two million on the paperwork is in a very difficult position when asked to prove what changed hands.
Exposure on financing. Banks look at the sale price when setting a loan amount, so under-declaring can cost the buyer borrowing capacity, which comes back to bite the same person who thought they were saving.
This pattern differs from the others in that people rarely mean to cheat anybody. They just want to save. The legal consequences do not make that distinction for them.
Pattern three: putting the land in somebody else's name
Two quite different situations that people tend to lump together.
A Thai holding for a Thai. Buying land but registering it in a sibling's name because of a credit problem, or in a child's name for estate planning.
That is not unlawful in itself, but the exposure is that you are not the registered owner.
If the nominal owner has debts, their creditors can reach the land. If they marry, it can become a marital property question. If they die, it goes to their heirs, not to you.
And if they change their mind, you are back to proving the arrangement in court, which returns to the evidence problem.
A Thai holding for a foreigner. Far heavier, because foreigners cannot own land in Thailand except under specific conditions the law opens.
The route the law actually provides is section 96 bis of the Land Code, which lets a foreigner who brings in investment of not less than 40 million baht into a business beneficial to the economy hold up to one rai of land for residential use.
And if the land ceases to be used on those terms, it must be disposed of within a period set by the Director-General, not less than 180 days and not more than one year.
The conditions are narrow, narrower than most people can meet, which is where nominee arrangements come from.
Both sides carry risk.
On the foreign side, the land can be ordered disposed of, and any private agreement with the Thai nominee is unenforceable because its object is prohibited by law.
On the Thai side, there is criminal exposure for making a false statement to an official, plus registered ownership of an asset they do not really control while carrying all the tax and civil consequences of owning it.
People who agree to hold a title for a fee of a few tens of thousands rarely think about that last part at all.
Pattern four: transferring to escape creditors
Somebody who knows a lawsuit is coming and hurriedly transfers land to a relative is common, and the law is ready for it.
A creditor prejudiced by such a transfer can ask the court to revoke it, which is known as revocation of a fraudulent act.
And in some cases, disposing of assets so a creditor cannot be paid is also a criminal offence.
What makes this one different is that the harm does not stop at the two parties. The relative who took the transfer thinking they were just helping can end up a defendant too.
Anybody considering it should know that chronology is the easiest thing in the world to check. A transfer registered days before a lawsuit, or after a demand letter arrived, is visible immediately in the registration record.
Pattern five: registering a gift when money changed hands
This one appears inside families, usually to reduce fees and tax, or to sidestep some restriction.
The trouble it causes is rarely about tax. It is about inheritance.
Because property received by gift during a marriage is separate property in law, which produces a different outcome from property bought with shared money.
When the day comes to divide things, what the register says is always the starting point, and the party claiming that reality differs is the party who has to prove it.
We covered family transfers and what each method actually does in transferring a house to a child with a usufruct.
If you are the injured party, what does a court look at
The question that decides everything is how to prove that what happened is not what the paperwork says.
What carries weight in practice:
- The actual money trail. Who transferred what to whom and when. Bank records are among the heaviest evidence there is, because money that does not match the sale contract is hard to explain away.
- Who possessed and used the property afterwards. If it was really sold, why is the seller still living in the house, still farming the plot, still collecting the rent.
- Who paid the land tax and the utilities across those three years.
- Who held the original title deed, which sometimes says a great deal.
- The messages exchanged, including chat, email and recordings, especially anything mentioning a balance owing, interest, or transferring it back.
- A price far below market, which courts always weigh.
- Conduct after the transfer, such as regular periodic payments that look more like interest than rent.
What to do immediately if this is happening to you:
One, obtain a copy of the registration record for the plot at the Land Office, so you know exactly whose name it is in now and what else has been registered against it.
Two, gather everything on the list above, especially the messages, which disappear most easily. Screenshot them now.
Three, take legal advice before contacting the other side, because everything you send from here on becomes evidence too, and messages written in anger rarely help.
Four, ask your lawyer about limitation periods at the first meeting, because the clock runs whether or not anybody is watching it.
The lawful routes that achieve nearly the same thing
Almost every reason people give for a simulated transaction already has a lawful tool that does the same job.
To secure a debt, use a mortgage, registered on the deed, giving the creditor a real right over the property while the borrower stays the owner.
If the lender wants something stronger, a sale with right of redemption under the 2019 Act is lawful, with a ceiling on the redemption sum, a minimum term, and the seller's right to keep living there, none of which a simulated sale provides.
To let somebody else use the property while you stay the owner, use a usufruct or a right of habitation, both registrable and both enforceable.
For estate planning, use a will, or transfer while registering a usufruct in your own favour, which is more direct than parking a title with somebody and hoping they honour a conversation.
To save on fees and tax, take advice on the transfer structure that fits your case, because lawful methods exist and often save more than people expect, without the criminal exposure.
The principle that covers all of it: if what you actually agreed cannot be written into the document, the structure is wrong. That is not a signal to conceal it more carefully.
As a buyer, how not to inherit somebody else's simulated transaction
The side people rarely consider is that you may be about to buy land with one of these hidden in its history.
What to do:
- Pull the registration history. See how many times the plot has changed hands and how close together. Unusually frequent transfers at unusually low prices are a warning.
- Visit the land and ask locally who actually uses it, because if the person in possession is not the person on the deed, that needs answering before any money moves.
- Be wary of a price that is too good, which always has a reason.
- Pay every baht through the banking system, and make the contract price the price actually paid, so you hold strong evidence if it is ever needed.
- Do everything at the Land Office, and decline any offer to sign documents elsewhere.
That last point matters especially, because being a buyer in good faith who paid real value is exactly what protects you under the end of the first paragraph of section 155.
What to check before buying, including boundaries and encumbrances, is in what to read in a sale and purchase contract and selling bare land and what buyers need.
Frequently asked questions
What is a simulated juristic act?
One transaction created as a front to conceal another that the parties actually intend, such as registering a land sale to conceal a loan. Under section 155 the front is void, and the law of the concealed transaction applies instead.
If it is void, do I get the land back automatically?
No. What the world sees is a register showing a lawful transfer. The party claiming reality differs from the document is the party who must prove it in court.
What if the nominal owner sells it on?
If the new buyer acted in good faith and paid value, you cannot raise the voidness against them. The land is theirs, and what remains is a claim for damages against the person who broke the agreement.
What is wrong with declaring a price below what was paid?
It risks an offence under section 267 of the Criminal Code, up to three years imprisonment, a fine of up to 6,000 baht, or both. It also sets a low paper cost base, raising the tax when you resell.
Is putting land in a sibling's name unlawful?
Between Thais it is not unlawful in itself, but you are not the registered owner. The land is exposed to their creditors, to marital property questions, and passes to their heirs if they die.
Can a foreigner hold land through a Thai nominee?
No, and both sides carry risk. The land can be ordered disposed of, the private agreement is unenforceable because its object is prohibited, and the Thai nominee risks criminal exposure for a false statement to an official.
Can I transfer land to a relative before being sued?
A prejudiced creditor can ask the court to revoke the transfer, and in some cases it is also a criminal offence. The timing of a transfer is easy to check in the registration record.
How do I reassure a lender without transferring the land?
Use a mortgage, registered on the deed, giving a real right over the property while you remain the owner. If a sale with redemption is unavoidable, do it under the 2019 Act, which caps the redemption sum and lets you keep living there.
In short
- A front transaction both parties know is not real is void, and the concealed transaction's law applies instead, under section 155.
- Void does not mean the land comes back by itself. The person claiming it must prove it in court.
- Once the land reaches a third party in good faith, you cannot raise the voidness against them.
- Under-declaring the price risks section 267 and raises the tax when you resell.
- Putting land in somebody else's name brings their creditors, their spouse and their heirs into your property.
- A Thai nominee for a foreign owner risks a disposal order and criminal exposure.
- A transfer made to escape creditors can be revoked, and its timing is easy to check.
- The heaviest evidence is the money trail, who possessed the property, and the messages exchanged.
- If what you agreed cannot be written into the document, the structure is wrong, not the concealment.