A Sale with the Right of Redemption (Kai Fak) is a legally recognized transaction under the Civil and Commercial Code of Thailand that allows a property owner to sell property while retaining the right to repurchase it within a specified period. Although commonly used in Thailand as an alternative financing arrangement, this type of contract involves a full transfer of ownership and carries significant legal consequences if the redemption period expires. Understanding the risks, timelines, and registration requirements is essential before entering into a Kai Fak agreement.
A Sale with the Right of Redemption (Kai Fak) is a contract of sale under the Civil and Commercial Code of Thailand whereby the seller transfers ownership of immovable or movable property to the buyer, but retains the legal right to redeem the property within a specified period.
Redemption occurs when the seller repays the agreed redemption price to the buyer within the registered period. Upon valid redemption, ownership is transferred back to the original seller.
For immovable property, the redemption period must be registered on the Title Deed at the Land Department in order to be enforceable against third parties.
The buyer must return the property in the condition in which it exists at the time of redemption. If the property has been destroyed or deteriorated due to the buyer’s fault, the buyer is liable to compensate the seller.
The following persons may exercise the right of redemption:
The right of redemption may be exercised against:
If the seller does not exercise the right of redemption within the agreed period, the right automatically extinguishes upon expiration of the redemption period.
The buyer then retains full and absolute ownership of the property, free from the right of redemption.
If the buyer cannot be located or refuses to accept payment, the seller may deposit the redemption price with a competent government deposit office within the redemption period.
Redemption is deemed valid from the time payment is made or the deposit is effected within the prescribed period.
If the contract does not specify a redemption period, the right may not be exercised later than:
If the contract provides for a longer period, the law automatically reduces it to the statutory maximum of ten years (immovable property) or three years (movable property).
An extension of the redemption period for immovable property must be made in writing and registered with the Land Department to be enforceable against third parties.
If the parties do not fix a specific redemption price, the seller may redeem the property by repaying:
The law limits the agreed benefit in order to prevent the transaction from being treated as a disguised loan charging excessive interest.
If the agreed return exceeds the statutory limit, the excess may not be enforceable.
Although both involve property, a Kai Fak and a mortgage are legally very different.
A mortgage is a security right over immovable property used to secure repayment of a debt. Ownership of the property remains with the borrower.
The mortgage must be registered with the Land Department. If the borrower defaults, the mortgagee must initiate foreclosure proceedings through the court before the property can be sold.
Key characteristics:
A Kai Fak is not a loan. It is an actual sale of property with a contractual right allowing the seller to repurchase (redeem) the property within a specified period.
Ownership transfers immediately to the buyer at the time of sale.
If the seller fails to redeem within the agreed period, the buyer becomes the absolute owner without needing court foreclosure.
Key characteristics:
Although Kai Fak is sometimes used in Thailand as an alternative financing arrangement, it carries significantly higher risk for the original owner.
If the redemption period expires, the seller permanently loses ownership of the property — unlike a mortgage, where foreclosure requires judicial proceedings.
For this reason, Kai Fak transactions should be structured carefully and with legal advice.
Protect your property and your rights. Contact our legal team today for clear advice and proper contract structuring before you sign any agreement.
Legal Disclaimer
This content is provided for general informational purposes only and does not constitute legal advice. Each Sale with Right of Redemption transaction depends on specific facts, contractual terms, and registration requirements under Thai law. Professional legal consultation should be obtained before entering into any Kai Fak or property-related agreement.
Licensed Attorney-At-Law, The Lawyers Council of Thailand
He has over 40 years of legal practice in financial institutions and constitutional public agencies.
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