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Legal Financing Term
What is Kai-Fak (Sale with Right of Redemption) in Thailand?
Fact-checked by a REMAX Thailand Real Estate Expert
The Definition
Kai-Fak (ขายฝาก) is a Thai legal transaction often translated as sale with right of redemption. In Thailand, the seller transfers ownership to the buyer immediately, keeping a contractual right to buy it back within an agreed period by repaying the price plus lawful charges. It differs from a mortgage because the title actually transfers to the buyer immediately.
The Thai Legal Context
In Thailand, Kai-Fak is governed by the Civil and Commercial Code. Unlike Western mortgages where the borrower retains ownership, Kai-Fak transfers ownership immediately to the buyer, granting the seller only a strict contractual right of redemption. If the seller fails to redeem on time, the buyer retains permanent ownership. This structure poses severe risks if misunderstood as a simple loan. Furthermore, since Thailand generally prohibits foreigners from owning land directly, using Kai-Fak for land transactions is legally problematic and highly unadvisable for non-Thai nationals.
Benefits & Risks
Advantages
- Provides fast liquidity to a seller while preserving their right to recover the property within the redemption period.
- Gives the buyer immediate registered ownership, providing stronger security than an unregistered informal pledge.
Risks & Disadvantages
- If the seller misses the strict redemption deadline, they can lose their property permanently.
- Due to strict foreign land ownership restrictions, this structure is generally unsuitable and highly risky for non-Thai buyers.
Showcase: How It Works
Let’s look at a real-world scenario to understand how Kai-Fak (Sale with Right of Redemption) is applied during a property transaction.
The Scenario
- A Thai owner of a 2-bedroom Bangkok condo valued at THB 4,500,000 needs cash.
- Both parties agree to a Kai-Fak transaction at the Land Office with an 18-month redemption period.
- The redemption price is THB 4,500,000 plus a THB 270,000 premium. The buyer takes immediate ownership.
The Result
At month 16, the seller is ready to repay the total agreed amount within the redemption period. The buyer must then transfer the title back at the Land Office.
Outcome:The seller pays THB 4,770,000 and gets the condo back; otherwise, the buyer keeps it permanently.
Frequently Asked Questions
Is Kai-Fak the same as a mortgage in Thailand?
No. A mortgage keeps ownership with the borrower, while Kai-Fak transfers ownership to the buyer immediately and gives the seller only a strict right of redemption.
Can a foreigner use Kai-Fak to buy Thai land?
Generally no. Foreign land ownership is restricted in Thailand. Foreigners should use lawful structures like condo freehold, leasehold, or usufruct instead.
What happens if the seller cannot repay on time?
The buyer normally keeps the property because they are already the registered owner. This is the primary legal risk of Kai-Fak for the seller.
Related Terms
Why It Matters
Kai-Fak can look like a simple financing tool, but it legally transfers ownership immediately. Misunderstanding these rules can lead to permanent property loss or costly disputes.
💡 REMAX Pro Tip
Always have a Thai property lawyer review the redemption clause and Land Office paperwork. Exact wording on the redemption period, possession, and payment timing is crucial.
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