Last updated on April 12, 2026
Written by Mr. Sébastien H. Brousseau, LL.B., B.Sc. Sébastien is a Canadian lawyer living in Bangkok. He has more than 30 years of legal experience with extensive knowledge about Thai property laws. He has been managing law firms in Thailand since 2006. With extensive experience in Thai property law, Sébastien emphasizes that Khai Fak transactions can be risky, as sellers often lose their property if they fail to redeem it within the contractual period, making it a common legal trap for those in financial distress. He strongly advises that anyone considering a sale with a right of redemption seek legal consultation to fully understand the risks and ensure fair terms. Full Profile | LinkedIn.
When engaging in personal property transactions, it is essential to have a clear understanding of the legal implications involved, especially when it comes to sales with rights of redemption also called “Kaifak” (ขายฝาก) in Thai. This article aims to provide comprehensive insights into the various aspects of sale with rights of redemption in personal property transactions.
Table of Contents
What is a normal “Sale of Personal Property”
The sale of personal property refers to the transfer of ownership and possession of movable assets from one party to another in exchange for the price of the sale. Examples of personal property include vehicles, furniture, electronics, jewelry, and more. Personal property transactions are governed by specific laws to ensure fairness and protect the rights of all parties involved.
The primary source of law governing the “sale with the right of redemption” in Thailand is the Civil and Commercial Code regarding the ownership of the property.. You will find it specifically sections 456 to 470. It is often use when a person can’t borrow money at the bank. Instead, they use a person, often be “shylocks” or “loan sharks”. These people loan money at very high interest rate. The maximum according to the law is 15% but it is not rare to see 3% to 5% per month for illegal purposes.
What Are Sales with Rights of Redemption?
Rights of redemption refer to the legal rights granted to a party who has sold their personal property. However, he or she has the option to repurchase or redeem it within a specified period. These rights provide a safety net for individuals or businesses who may have experienced temporary financial difficulties and wish to regain ownership of their assets.
Understanding the Implications of Sales with Rights of Redemption
Sale with rights of redemption has several implications for both the seller and the buyer. It is crucial for all parties involved to be aware of these implications and their legal ramifications concerning the price of redemption.
- Seller’s Perspective
From the perspective of the seller, selling personal property with rights of redemption allows them to obtain immediate financial relief while still maintaining the possibility of reclaiming their assets in the future. However, sellers must carefully consider the terms and conditions of the redemption rights, including the timeframe and any associated costs.
- Buyer’s Perspective on the ownership of the property and the risks involved in the transaction.
Buyers of personal property with rights of redemption may benefit from acquiring assets at a lower price. However, buyers must also consider the risks involved, as the seller may exercise their right to redeem the property. Ultimately leading to the loss of the purchased property if the seller exercises their right to redeem. It is essential for buyers to conduct thorough due diligence and fully understand the price of the sale and the terms of redemption. It could be risky to get involved in sales with rights of redemption, especially concerning the period of redemption.
Legal Requirements for Sales with Rights of Redemption in Thailand
Several legal requirements must be met when conducting a sale with rights of redemption in personal property transactions, especially regarding the period of redemption. These requirements may vary depending on the jurisdiction, so it is crucial to seek professional legal advice and ensure compliance with applicable laws. Some common legal requirements include:
- Written Agreement: The sale with rights of redemption should be documented in a written agreement signed by both parties.
- Terms and Conditions: The agreement should clearly outline the terms and conditions of the redemption rights, including the timeframe, process, and any associated costs.
- Consideration: There should be a valid consideration exchanged between the parties involved.
- Notice Requirements: The seller may be required to provide notice to the buyer before exercising their right to redeem the property. Failure to comply with notice requirements may result in the loss of redemption rights.
- Timeframe: The agreement should establish a specific timeframe within which the seller can exercise their redemption rights.
- Recordkeeping: It is essential to maintain proper records of the transaction, including the agreement and any relevant correspondence.
Benefits and Risks : Sales of Rights of Redemption are Dangerous
Engaging in a sale with rights of redemption can provide various benefits and risks for both parties, especially regarding the redemption price. It is important to weigh these factors carefully before entering into such transactions.
Benefits:
- Flexibility: The seller retains the flexibility to regain possession of their property within the agreed timeframe.
- Financial Relief: The seller can obtain immediate financial relief by selling their assets while still having the option to repurchase.
- Lower Purchase Price: Buyers may have the opportunity to purchase personal property at a lower price compared to the market value.
Risks of Sales with Rights of Redemption
- Loss of Property: The buyer may lose the purchased property if the seller exercises their redemption rights within the specified timeframe.
- Uncertain Future: Sellers may face uncertainty regarding their ability to repurchase the property within the redemption period.
- Legal Complications: Failure to comply with legal requirements or properly document the transaction can lead to legal complications and disputes.
It is important to note that the sale with a right of redemption must be made in writing. You must registered these rights with the competent official to be enforceable against third parties. It normally cost 2% of the value to register Sales with Rights of Redemption. This is twice the taxes to pay for a mortgage (1%). When it is done, the land department tells the parties that it is extremely dangerous and that you can lose your property.
Understanding the legal implications of sale with rights of redemption in personal property transactions is crucial. While these transactions offer potential benefits, they also come with inherent risks. It is highly recommended to consult with legal professionals to ensure compliance with relevant laws and to safeguard the interests of all parties involved. By fully understanding the implications and complying with legal requirements, individuals and businesses can navigate personal property transactions with confidence and minimize potential disputes.
FAQs about Kaifak in Thailand
What is a sale with the right of redemption?
A sale with the right of redemption is a contract of sale whereby the ownership of the property sold passes to the buyer, but the original owner, often the borrower, retains the right to redeem or reclaim the property within a specified period, known as the period of redemption.
How does the period of redemption work?
The period of redemption is the time frame in which the original owner can exercise the right of redemption to reclaim the property sold. This period is typically agreed upon at the time of sale and can vary depending on the terms of the contract of sale.
What happens if the borrower cannot exercise the right of redemption?
If the borrower cannot exercise the right of redemption within the specified period, the buyer retains full ownership of the property sold, and the original owner loses their right to reclaim it. This situation often occurs in foreclosure cases.
What is the real danger and pitfall associated with sales with rights of redemption?
The real danger and pitfall lie in the possibility that the original owner may not be able to fulfill the conditions necessary to exercise the right of redemption, such as repayment of the real price of the sale, within the period of redemption, resulting in a permanent loss of property or of a right.
Can the right of redemption be waived?
Yes, the right of redemption can be waived by the original owner, either at the time of the contract of sale or during the period of redemption. Waiving the right means the original owner gives up their legal claim to reclaim the property.
What is the role of khay fah in sales with rights of redemption?
Khay fah refers to the specific provisions or conditions outlined in the contract of sale that govern the terms under which the right of redemption can be exercised. These provisions are crucial in determining the time of redemption and the real price of the sale.
How is the price of redemption determined?
The price of redemption is typically the real price of the sale, which may include the original sale price plus any additional costs or interest agreed upon in the contract. This price must be paid by the original owner to reclaim the property.
What should parties consider before entering into a sale with the right of redemption?
Parties should carefully consider the terms of the contract of sale, including the period of redemption, repayment obligations, and any statutory conditions that may affect their ability to exercise the right of redemption. Seeking legal advice from experts, like the founding partner of ThaiLawOnline, is recommended.
Where can I get more information about sales with rights of redemption?
For more information or specific legal advice regarding sales with rights of redemption, you can contact us at ThaiLawOnline where our team of experts, including our founding partner, can provide guidance tailored to your needs.al property transactions with confidence and minimize potential disputes.