Sale with right of redemption: a legal and practical guide for professionals

Published on 15 June 2025. Updated on 1 April 2026 - consolidation of sale with right of repurchase.

Sale with option to repurchase (vente à réméré) - also known as sale with option to repurchase (vente avec faculté de rachat) or portage immobilier (portage immobilier) - is a legal mechanism that allows owners in financial difficulty to temporarily sell their property while retaining the right to repurchase it. Covered by articles 1659 to 1673 of the French Civil Code, this operation offers an alternative to seizure of the property for owners who are no longer able to pay their debts. This article explains in detail how the sale with right of repurchase works, the stages involved, the advantages, the risks and the legal framework.

What is a sale with right of redemption? Legal definition

A sale with right of redemption (vente à réméré) is a sale of real estate that includes a clause giving the seller the right to buy back the property within a specified period. Article 1659 of the Civil Code defines it as follows: «The repurchase option is an agreement by which the seller reserves the right to take back the thing sold, in return for restitution of the principal price and the repayment referred to in article 1673.»

In practical terms, an owner in difficulty sells his property to an investor and immediately receives the sale price, but retains the exclusive right to buy back the property within a period that cannot exceed five years (article 1660 of the French Civil Code). During this period, the seller can continue to occupy the property by paying a monthly occupancy indemnity to the buyer.

Sale with right of repurchase and real estate portage: the same operation

The term «portage immobilier» is a commercial synonym for vente à réméré. The two terms refer to the same legal transaction, governed by the same articles of the Civil Code. Portage immobilier is simply the name used by specialist organisations to designate sale with option to repurchase applied to residential property. Whatever the name, the legal framework is identical.

The legal nature: a sale subject to a resolutory condition

In legal terms, a vente à réméré is a sale subject to a resolutory condition. Ownership is transferred immediately: the buyer becomes the full owner as soon as the deed is signed. However, if the seller exercises his right to repurchase within the agreed period, the sale is cancelled retroactively. Everything then takes place as if the sale had never taken place.

This legal nature has been confirmed by the case law of the Cour de cassation. It is not a question of two successive sales, but of a single sale, the exercise of which constitutes a resolutory condition - a special case of a so-called «potestative» condition (dependent on the will of a single party), which the law expressly authorises in the case of repurchase agreements.

How does a sale with right of redemption work? The practical steps

Step 1 - Valuing the property and agreeing terms

The owner has the property valued, usually by an independent expert. The sale price under the repurchase option is lower than the market value: a discount of 20 to 40 % is required to compensate for the risk taken by the investor and the constraint of the repurchase option. The parties agree on the sale price, the repurchase price (which may be different), the duration of the repurchase option and the amount of the monthly occupancy indemnity.

Step 2 - Signature at the notary's office

A sale with right of redemption of a property must be formalised in a notarial deed. The deed must expressly mention the buy-back clause, its duration, the buy-back price and the conditions for occupying the property. The notary then publishes the deed in the property register (Service de publicité foncière). This publication is essential: under article 1673 of the Civil Code, this formality is a precondition for the sale with right of repurchase being enforceable against third parties.

Stage 3 - Period of occupancy and monthly allowance

Throughout the term of the repurchase agreement, the seller may continue to occupy the property by paying a monthly occupancy fee to the buyer. This compensation, which is comparable to rent, remunerates the purchaser for the use of the property that he or she has become the owner of. The amount is freely determined by the parties in the notarial deed. The Court of Cassation has confirmed the validity of this mechanism in several rulings (Cass. civ. 3^e, 21 May 2014, no. 12-23.607; Cass. civ. 3^e, 1^er Oct. 2020, no. 19-17.668).

During this period, the purchaser is the legal owner of the property. He or she is responsible for the property charges (property tax, major works), while the vendor-occupier is responsible for the day-to-day charges associated with occupancy.

Stage 4 - Exercising the buy-back or losing the property

At the end of the repurchase period, there are two possible scenarios:

• The seller exercises his right to repurchase The buyer pays the purchaser the agreed purchase price, plus the costs stipulated in article 1673 of the French Civil Code (selling costs, necessary repairs, improvements). The buyer then recovers the property free of any charges set up by the purchaser, provided that the repurchase agreement has been published in the property register. The sale is deemed never to have existed (retroactive effect). ab initio).
• The seller does not repurchase within the deadline The buyer loses his right of redemption definitively and irrevocably. The purchaser becomes the definitive owner. Article 1661 of the Civil Code is unambiguous: «The term set is mandatory and cannot be extended by the judge.» If the seller remains on the premises after the expiry of the time limit, he becomes an occupier without right or title and is liable to pay occupancy compensation (Cass. civ. 3^e, 8 Dec. 2016, no. 15-27.762).

Sale with right of repurchase: a numerical example

Let's take a concrete example to illustrate how a sale with right of redemption works:

• The starting situation A property owner owns a flat valued at €300,000. He has debts of €150,000 and is subject to seizure proceedings.
• Selling price under a repurchase agreement 210,000 (30 % discount to market value).
• Use of funds The €210,000 is used to repay debts (€150,000), pay notary fees (~€15,000) and the commission of the repurchase agency (~€15,000). The balance (~€30,000) remains available for the seller.
• Occupancy allowance 1,200/month paid to the investor during the repurchase period.
• Duration 24 months to exercise the buyback option.
• Buyback price 240,000 (sale price + investor's remuneration).
• Conclusion The owner improves his financial situation, obtains a new mortgage and buys back his property for €240,000 before the 24 months expire.

In this example, the owner avoided foreclosure, retained the use of his home and bought back his property at a total cost lower than that of a compulsory sale followed by a market buyback.

Advantages and disadvantages of repurchase agreements

Benefits	Disadvantages
Avoids foreclosure and its consequences (registration on the FICP, sale at auction at knock-down prices)	Sale price below market value (discount of 20 to 40 %)
The seller remains in the property throughout the repurchase period	Monthly occupancy indemnity to be paid in addition to the purchase price
Possibility of buying back the property and regaining full ownership	Risk of losing the property permanently if the buyback is not exercised within the time limit
Rapid access to cash to pay off debts	Significant costs: notary, agency commission, occupancy indemnity, etc.
Transaction governed by the Civil Code (art. 1659 to 1673) and carried out before a notary	Difficulty in obtaining new financing for the buyback within the time allowed
No entry in the payment incident file	Significant discount which reduces the funds actually available

What are the risks and dangers of repurchase agreements?

The risk of losing your property for good

This is the main risk. If the seller is unable to raise the funds needed to buy back the property before the deadline expires, he loses all rights to the property. The time limit is mandatory: article 1661 of the Civil Code prohibits the judge from extending it. Article 1663 specifies that this period runs against all persons, even minors. It is therefore crucial to ensure that the refinancing plan is realistic before committing yourself.

The risk of reclassification as a disguised loan

When a sale with right of redemption is used as a simple financing tool - the investor has no intention of keeping the property - it may be reclassified by the courts as a pignorative contract, i.e. a loan of money secured by a transfer of ownership. The Court of Cassation has specified the criteria for this reclassification in a landmark ruling: the concomitance of a deed of loan and a deed of sale, combined with a usurious repurchase price, may justify the annulment of the arrangement (Cass. civ. 3^e, 21 May 2014, no. 12-23.607, published in the Bulletin).

Similarly, a low sale price - i.e. a price that is clearly derisory in relation to the real value of the property - is an additional indicator of requalification (Cass. civ. 3^e, 24 June 2021, no. 18-19.771).

The trap of usurious financial terms

A clause providing for a repurchase price different from the sale price is in principle valid (Cass. civ. 3^e, 4 Oct. 2018, no. 17-21.894). However, if the increase in the purchase price compared to the sale price, combined with the occupancy indemnities paid, results in a total cost exceeding the usury rate applicable to home loans, the transaction may be requalified. The Court of Cassation, sitting as a section, confirmed this principle (Cass. civ. 3^e, 1^er Oct. 2020, no. 19-17.668).

The costs of a sale with right of repurchase

Notary fees

As a sale with right of redemption is a notarised deed, it incurs notary fees. These are generally between 2 and 3 % of the sale price for the initial sale, and between 1 and 2 % for the repurchase. These costs are lower than for a conventional sale, because certain transfer taxes do not apply due to the resolutory nature of the transaction.

Occupancy allowance

The occupancy indemnity is the «rent» paid by the vendor to the purchaser for continuing to occupy the property during the repurchase period. The amount is freely negotiated between the parties and varies according to the rental value of the property. In practice, it represents between 3 and 5 % of the sale price on an annual basis. Case law cites amounts of €550/month for a studio (Cass. civ. 3^e, 21 May 2014, no. 12-23.607) to €2,100/month for a property complex (Cass. civ. 3^e, 15 March 2018, no. 16-28.537).

The commission of the repurchase agency

If a specialist organisation acts as an intermediary, it generally receives a commission of between 5 and 10 % of the sale price. This commission covers the search for investors, the legal arrangements and support for the seller. If there is no intermediary - in particular when a lawyer structures the transaction directly - this commission is not payable.

The legal nature of repurchase agreements: resolutory condition and retroactive effect

Retroactive effect (ab initio) of the buyback exercise

When the seller exercises his option to repurchase, the cancellation of the sale takes effect with full retroactive effect, as described below. ab initio (from the beginning). The seller is deemed never to have ceased to own the property. The purchaser is deemed never to have been the owner.

The practical consequences are considerable:

• All encumbrances and mortgages created by the purchaser during the repurchase period are cancelled, provided that the repurchase agreement was published in the property register before these encumbrances (article 1673 of the Civil Code).
• From a tax point of view, if the buyback takes place in the same financial year as the sale, any capital gains are cancelled. If the repurchase takes place in a subsequent financial year, tax neutralisation mechanisms allow the initial taxation to be offset.
• The seller is obliged to perform the leases granted without fraud by the purchaser during the period (article 1673 in fine).

Rights and obligations during the repurchase period

For the duration of the agreement, the purchaser is the true owner of the property. He or she may collect the proceeds (rental income if the property is let to a third party) and exercise all the rights attached to ownership. The seller, on the other hand, has only a right of claim: the right to take back the property by repaying the price and costs stipulated by law.

Article 1673 of the Civil Code sets out the obligations of the seller who exercises the repurchase right: «The seller who makes use of the repurchase agreement must reimburse not only the principal price, but also the expenses and fair costs of the sale, the necessary repairs, and those which have increased the value of the land, up to the amount of this increase. He may not take possession until he has fulfilled all these obligations.»

Sale with right of repurchase and taxation

Treatment of capital gains

At the time of the initial sale, the seller recognises a capital gain on the property that is taxable under ordinary law (income tax at the rate of 19 % + social security contributions of 17.2 %, with deductions for the length of time the property has been held). If the seller exercises his buyback option during the same tax year, the capital gain is cancelled retroactively. If the buyback takes place in a subsequent tax year, a neutralisation mechanism is used to offset the initial taxation.

The difference between sale price and buy-back price

The difference between the sale price and the repurchase price is treated for tax purposes as remuneration for a financial service. For the seller, it is an expense. For the buyer, it constitutes taxable income. The occupancy indemnity is taxed as property income for the purchaser.

Sale with right of repurchase of financial securities and other distinctions

The "réméré" mechanism does not only apply to real estate. It is also used on the financial markets for the temporary transfer of securities. The legal principles are the same - sale subject to a resolutory condition - but the practical and tax implications differ. In principle, securities transactions are exempt from VAT.

Réméré vs tied transaction

A tied transaction combines a cash sale with a commitment to resell at a future date. The fundamental difference lies in the way it is unwound: a réméré transaction cancels the initial sale with retroactive effect (rescission), whereas a linked transaction involves a second sale, a new transfer of ownership. The consequences in terms of transfer tax and capital gains are therefore radically different.

Réméré vs repurchase agreements

A repo, as defined by the French Monetary and Financial Code, involves a reciprocal and irrevocable commitment by both parties: one to sell and the other to buy back. The outcome is certain. With a repurchase agreement, only the seller has an option - the buyer is subject to the decision without being able to oppose it or bring it about. The outcome is therefore uncertain, subject only to the seller's will.

Réméré vs securities lending

Securities lending is a consumer loan contract involving fungible goods. The borrower must not return the securities loaned, but securities of the same kind and in the same quantity. A sale with right of redemption, on the other hand, is a sale whose cancellation results in the return of the goods initially sold. There is no sale price in a loan, but the lender is remunerated. The legal and tax regimes are completely different.