Thursday, December 17, 2020

Credit in repurchase.

The repurchase sale, also called “sale with the option to buy back”, is undoubtedly one of the least known acts of sale in France. The term “réméré” comes from the Latin “redimere” which means “to redeem”.

The sale to repurchase

The sale to repurchase

Today, the repurchase is most often used as a tool to restructure the debts of individuals, in certain situations. It is sometimes presented as an alternative to the repurchase of credit by the private companies intervening in this sector. This form of repurchase sale is aimed more particularly at people who are owners (or owner-buyers) of their real estate, in a situation of debt or having significant cash flow difficulties, which they cannot resolve by taking out a loan. classic banking, because they are stored in Cream Bank. The repurchase is a solution to allow people in difficulty to avoid a judicial seizure of their property and its auction.

The principle of repurchase

The repurchase is a contract of sale, drawn up before a notary, which will guarantee the seller the possibility of buying back his property later. The seller may continue to occupy the property and must, in this case, conclude an occupancy contract with the purchaser and pay him occupancy compensation.

The repurchase sale has three phases:

– finding an investor and selling the property to this investor,
– occupancy of the property and clearance of the financial situation,
– effective repurchase of the property.

Prepare the repurchase sale

Prepare the repurchase sale

The debtor can organize a repurchase sale himself by calling on his notary and an investor. He can also use the services of a company specializing in this type of procedure.

The company will first assess the financial situation of the debtor and verify that a repurchase sale is suitable or not.
After this study, the company submits to the debtor a written and costed proposal which includes the duration of the repurchase (from 6 months to 5 years maximum), the monthly amount of the occupancy allowance (rent), the price fixed for the purchase of the property (generally 50 to 70% of the appraised value). All conditions for sale and future buyout are set in advance.

With this sale, a sum of money will also be kept by the notary for escrow or security deposit, in order to guarantee the redemption and to constitute the penalty clause as is customary in any what a sales compromise. This amount will be used later as a personal contribution to finance the redemption.

The repurchase of property sold for repurchase

The repurchase of property sold for repurchase

When the seller’s situation is improved, that is to say when he has repaid his debts and he is no longer on the Cream Bank file, he can then take out a new loan to buy his old Property.  For that, he must respect certain conditions. Beyond the total discharge of debts, he will often have to provide proof that the occupancy allowance was paid on the right date and that no new credit was taken out during this period. If he does not exercise his right of redemption within the deadlines fixed by the contract, the new owner becomes the final owner and can give leave to the seller.

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