Sale with Right of Repurchase
Sale with a repurchase option allowing the seller to recover their property within a set period, a solution to avoid seizure.
Full definition
The sale with right of repurchase (or sale with a repurchase option) is a property transaction in which the seller retains the possibility of repurchasing their property within a set period, generally 6 months to 5 years. It is a last-resort solution for obtaining liquidity while hoping to recover the property.
This arrangement is mainly aimed at homeowners in financial difficulty (over-indebtedness, banking blacklisting) who can no longer borrow through conventional means. They sell their property to an investor, obtain liquidity to settle their debts, and have the possibility of repurchasing the property once their situation has been put in order.
The sale with right of repurchase carries significant risks: if the seller cannot exercise their repurchase option within the period, they lose their property permanently. The sale price is generally discounted (60-70% of the value), and the repurchase price includes a significant mark-up. This solution must be overseen by a notary and is only recommended after all other options have been exhausted.
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Related terms
Life Annuity
Property sale where payment is made in the form of an annuity paid to the seller until their death, with or without an initial bouquet.
Lifetime Mortgage
Loan granted to senior homeowners, secured by their property, repayable only on death or sale.
Sale on Deferred Terms
Property sale with payment spread over a fixed, predetermined period, unlike the life annuity which depends on lifespan.
Mortgage
Property guarantee registered on the property to secure payment of the life annuity to the seller.
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