Thailand Law Library

by Thailand Lawyer

Part 2: Subrogation

A person is subrogated to the rights of a creditor is entitled to exercise in his own name all the rights which the creditor had in respect of the obligation including any security for it.

By real subrogation, a property is substituted for another property in the same juristic position as the previous one.

When a creditor has received as compensation for damage the full value of the thing or right which is the subject of the obligation, the debtor is, by operation of law, subrogated into the position of the creditor with regard to such thing or right.

If, in consequence of the circumstance which makes the performance impossible, the debtor acquires a substitute or a claim for compensation for the object owed, the creditor may demand delivery of the substitute received or may claim for compensation by himself.

If the creditor has a claim for compensation on account of non-performance, the compensation to be made to him is diminished, if he exercises the right specified in the foregoing paragraph, by the value of the substitute received or of the claim for compensation.

Subrogation takes place by operation of law and ensues to the benefit of the following persons:

1. The person who, being himself a creditor, pays another creditor who has priority to him owing to such other creditor having a preferential right, pledge or mortgage.
2. When acquires an immovable property, the person who uses the purchase price in paying off the persons who have mortgages thereon.
3. The person who, being bound with other or for others to pay a debt and was interested in paying the same, has paid it.

Section 230. Substitution of Court Ordered Possession

If the creditor levies compulsory execution upon an object belonging to the debtor, any person who through the execution incurs danger of losing a right in the object is entitled to satisfying the creditor. The same right belongs to the possessor of a thing if he incurs danger of losing possession through the execution.

If a third person satisfies the creditor he is subrogated of the claim of the latter. Such claim may not be enforced to the detriment of the creditor.

Section 231. Mortgaged Property

If properties mortgaged, pledged or otherwise subject to a preferential right, are insured, the mortgage, pledge or other preferential right extends to the claim against the insurer.

In case of immovable property, the insurer shall not pay the indemnity to the assured until he has given notice of his intention to do so to the mortgagee or other preferred creditor, and has not within one month from such notice received any objection to the payment, provided always that the insurer knew or ought to have known of the mortgage or other preferential right; however, any right registered in the Land Registry is deemed to be known to the insurer.

The same rule shall apply to mortgage of movables allowed by law. In case of movable property, the insurer may pay the indemnity to the assured directly, unless he knew or ought to have known of the pledge or other preferential right.

The insurer is not liable to the creditor if the insured property is restored or a substitute for it is provided.

The same rule shall be applied mutatis mutandis in case of expropriation as well as in case of indemnity due to the owner of the property for destruction or damage.

Section 232. Escrow of Debt

If under the foregoing section a sum of money is being substituted for the property destroyed or damaged, such sum shall in no case be delivered to the mortgage, pledge or other preferred creditor before the obligation secured is due, and if the parties cannot come to an agreement with the debtor, each of them is entitled to demand that the said sum be deposited at the Deposit Office their common benefit unless the debtor gives proper security.