1. What is a 'Sale with Right of Redemption'?
A Sale with Right of Redemption (Kai Faak) is a type of sales contract where the 'ownership' of the property transfers to the buyer (investor) immediately upon signing!
However, it comes with a condition or special privilege: the seller has the right to 'redeem' (buy back) the property within an agreed-upon timeframe. If redeemed in time, the ownership reverts to the original owner.
2. The Difference Between 'Sale with Right of Redemption' and 'Mortgage'
Many people confuse these two terms, but legally, the outcomes are completely different:
- Mortgage (Jam Nong):Ownership 'remains yours'. You merely use the property as collateral for a debt. If you default, the investor cannot seize the property immediately; they must sue in court to force a public auction.
- Sale with Right of Redemption (Kai Faak):Ownership 'changes hands immediately' from day one. If you fail to redeem it by the deadline, the property 'permanently falls' to the investor immediately, without them needing to go to court.
3. Timeframes and the 'Redemption Price'
The law sets time limits and monetary frameworks to protect sellers from severe exploitation:
- Redemption Period:Immovable property (e.g., land, house) has a maximum redemption period of 10 years. Movable property (e.g., cars, jewelry) has a maximum of 3 years. (Extensions can be agreed upon, but the total cannot exceed the legal limits).
- Redemption Price (Sin Thai):If no price is agreed upon, it is redeemed at the original sale price. If agreed upon, the law caps the 'remuneration' (effectively the interest) at a maximum of 15% per year.
4. Precautions Before Signing the Contract
To avoid losing your property or being scammed, keep these crucial points in mind:
- Must be in Writing and Registered:For real estate (land, house, condo), the contract 'must' be registered before a competent official at the Land Office. A private paper contract is legally 'void'.
- Strictly Remember the Deadline:Do not let it pass by even a single day. If the deadline arrives and the investor is uncontactable, immediately deposit the redemption money at a 'Property Deposit Office' (Legal Execution Department) to prove your intent and save the property.
- Read the Contract Carefully:Always verify names, amounts, timeframes, and conditions match your verbal agreement before signing.
Conclusion
A Sale with Right of Redemption is a financial tool that provides quick lump-sum cash, but it comes with significantly higher risks than a traditional mortgage.
Therefore, before deciding to use your house or land for this type of contract, carefully evaluate your ability to repay and strictly follow legal procedures to protect your valuable assets.