Reviewed by ThaiLawOnline, a licensed Thai law firm practising in Thailand since 2006. Thai lawyer of record: Wichuda Atthamethakon, LL.M., Thai Bar Licence 3149/2556.
Last updated on September 5, 2026
Novation (การแปลงหนี้ใหม่, plaeng nii mai, sometimes rendered substitution of obligation) is the extinction of an existing obligation by a contract that replaces it with a new one whose essential elements are different. It is governed by Sections 349 to 353 of the Civil and Commercial Code. Foreigners meet it when a loan is restructured, a buyer is swapped in a condominium sale contract, or a debt is converted into a different kind of payment. The trap is that novation wipes out the old debt together with any security attached to it.
Table of Contents
How the Code defines novation
Section 349 provides that when the parties conclude a contract changing the essential elements of an obligation, the obligation is extinguished by novation. Three forms follow. Change of object: the same parties agree that a different performance is owed, for example a car instead of 500,000 baht. Change of debtor (Section 350): a contract between the creditor and the new debtor, which cannot be made against the will of the original debtor. Change of creditor (Section 351): subject to the rules on transfer of claims, so the debtor must be told in writing.
Section 352 allows a pledge or mortgage securing the old debt to be carried over to the new one, but only up to the amount of the original security, and only with the consent of any third party who provided it. Section 353 is the safety net: if the new obligation is never validly created, or is void or avoided for a reason such as fraud, the old obligation is not extinguished.
Practical points for foreigners
Security is the first casualty. A surety is discharged when the guaranteed debt is extinguished, and a mortgage or pledge is accessory to the debt it secures. A lender who rewrites a Thai borrower’s loan agreement with new terms, without saying that the old security continues, may find the guarantor gone and the mortgage lapsed. The cure is an express clause preserving the security, the written consent of the guarantor, and a fresh registration or amendment of the mortgage at the Land Office.
Formalities restart. A novated money loan is still a loan, so the new agreement needs written evidence signed by the borrower under Section 653 and its own stamp duty. In a condominium purchase, a developer’s “change of buyer” form is in substance a novation, which is why the developer’s consent is needed.
Novation, assignment and amendment compared
The word is often used loosely. An assignment of claim (Sections 303 onwards) transfers an existing debt to a new creditor; the debt survives, defences survive, and the assignor must give the debtor written notice, but the security stays intact. An amendment changes non-essential terms such as the payment date or the interest rate without creating a new obligation. Only a change to the essential elements amounts to novation.
| Mechanism | Old obligation | Security and guarantees | Who must agree |
|---|---|---|---|
| Novation | Extinguished | Lost unless expressly carried over (Section 352) | Creditor and new debtor, or all parties |
| Assignment of claim | Continues with new creditor | Pass with the claim | Assignor and assignee, notice to debtor |
| Amendment | Continues as varied | Continue, but a surety may need to consent | Original parties |
Safe drafting states whether the parties intend a novation or a variation, and lists every guarantee, mortgage or pledge that is to survive.
Frequently asked questions
What is the difference between novation and assignment in Thai law?
Assignment transfers an existing claim to a new creditor and the debt, with its security, continues. Novation extinguishes the old debt and creates a new one, so guarantees, mortgages and pledges fall away unless Section 352 is used to carry them over. Assignment needs written notice to the debtor; novation by change of debtor needs the creditor’s agreement with the new debtor.
Does a guarantor stay liable after a novation in Thailand?
Not automatically. A surety is discharged when the original obligation is extinguished, and novation extinguishes it. The guarantor remains bound only if he or she agrees to guarantee the new obligation, which should be done in writing at the time of the novation.
Does a novation have to be in writing in Thailand?
The Code does not impose a general written form for novation, but the new obligation must satisfy whatever form the law requires for its own type. A novated loan of money over 2,000 baht needs written evidence signed by the borrower, and a new mortgage must be registered at the Land Office. In practice a written novation agreement is always used.
See also: loan agreement, suretyship and guarantee, mortgage, promissory note, and our guides on personal guarantees in Thailand and debt collection in Thailand.
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