Sale with buy-back option (réméré): term and risks

The principle: selling while reserving the right to buy back

The Civil Code defines the option to buy back as an agreement by which the seller reserves the right to take back the thing sold, in return for repaying the principal price and the reimbursements provided for in article 1673 (art. 1659). It is a genuine sale: the buyer becomes the owner on signature, but their ownership remains at risk for as long as the seller can exercise their right.

The seller thus receives the price of their home immediately, while keeping a way out. The buyer, for their part, acquires a property they may have to give back throughout the term of the agreement.

A term of 5 years at most, with no extension

Three articles strictly govern the time allowed for buying back:

The parties may choose a shorter period, but never longer than 5 years. The period runs against everyone, including minors, subject to any claim against whoever is responsible (art. 1663). No personal or financial difficulty allows the seller to obtain extra time from the court.

The buy-back price

A seller who buys back does not just repay the sale price. Under article 1673, they must repay:

• the principal price;
• the frais et loyaux coûts (legitimate costs) of the sale;
• necessary repairs;
• repairs that have increased the value of the property, up to the amount of that increase.

They can only take possession once all these obligations have been met (art. 1673). Buying back therefore costs more than the price received: on top of the price, the seller must budget for the costs of the original sale and the useful works carried out by the buyer.

What the seller gets back. When they take back the property, the seller recovers it free of any charges and mortgages granted by the buyer, provided the buy-back agreement was registered at the fichier immobilier (land register) before those charges. They must, however, honour leases entered into by the buyer without fraud (art. 1673).

Risks for the seller and the buyer

For the seller, the main risk is losing the home for good. If they do not raise the sum within the period, the buyer remains the owner (art. 1662), and the court cannot help them (art. 1661). If the price received was far below the property’s value, the seller can apply for rescision (rescission) if they were “wronged by more than seven twelfths” of the price (art. 1674), i.e. if they received less than five twelfths of the value. But this claim must be made within 2 years of the sale, and this period “runs and is not suspended during the time stipulated for the buy-back agreement” (art. 1676). In other words, the seller cannot wait until the end of the 5 years to complain about the price.

For the buyer, the risk is having to give the property back. If they resell it during the period, the seller can bring their action against the second buyer, even if the option to buy back was not declared in the second contract (art. 1664). Anyone buying in turn a property sold à réméré therefore has every reason to check whether the buy-back period has expired.

Several sellers or heirs. Where a property was sold jointly by several people, each of them can only exercise the buy-back for their own share (art. 1668); the same applies to the heirs of a single seller (art. 1669). The buyer can then require all of them to be joined so as to agree on the buy-back of the whole (art. 1670).

Basic tax

On the sale. A vente à réméré is a disposal of a property: it falls under the plus-values immobilières (property capital gains) regime, with the main-residence exemption if the home is the seller’s main residence on the day of the sale (service-public.gouv.fr). Tax is assessed for the year of the sale.

On a late buy-back. Repurchases made after the expiry of the periods agreed in sales of property with an option to buy back are subject to tax at the rates set by the code (code général des impôts, General Tax Code, art. 688). In any case, once the period is over, the seller no longer has any right to buy back (Civil Code, art. 1662): such a return of the property requires the buyer’s agreement.

Which professional to consult

The notaire (notary) executes the deed of sale, drafts the buy-back clause and registers it at the land register, a condition for the seller to recover the property free of any mortgages granted in the meantime (art. 1673). The agent immobilier (estate agent) helps estimate the home’s real value: this is the benchmark for judging whether the price offered is fair.