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A sale with right of redemption allows the seller to buy back the property within a defined period, according to the conditions of the contract.
Selling a property is an excellent earnings opportunity for its owner. Perhaps you—like many others—are thinking about doing so, but a doubt is holding you back: do you lose ownership forever by selling, or can you buy it back later?
In Italy, usually, when you sell a movable or immovable property, the buyer becomes the owner. However, there is an exception: we're talking about the sale with right of redemption. Thanks to this tool, you can sell a property and get a decent sum of money, without having to give up possession of it forever.
To apply the right of redemption to the sale of your property, it's very important to understand how it works, the rules governing it, and what its effects are. Is a sale with right of redemption really right for you? In this guide, we provide you with all the useful tools to understand it.
What is a purchase with right of redemption and how does it work?
A purchase with right of redemption means that when you decide to sell your property, you can enter into an agreement with the buyer that guarantees you the right to buy back your property at a later date.
As we will see shortly, this occurs when you, the seller, conclude the contract within a period of time established by law or by the agreement with the buyer. At that point, to regain ownership, you are required to return the price of the house to the buyer, plus any expense reimbursements.
The goal of the sale with right of redemption is to give the seller who needs immediate funds—and who does not want to take out a loan—the opportunity to change their mind about the sale.
As you can imagine, the buyer often becomes the weaker party in the contract. This is why the law has established specific rules to ensure that this type of transaction occurs in good faith for both parties.
The law governing the agreement states that the repurchase price must not exceed the sale price. This clarification has two consequences:
- it prevents the seller from devaluing the house in order to obtain quick liquidity;
- it ensures that the buyer does not ask for too high a price to return the property.
Selling with a right of redemption has undeniable advantages, but clearly, it is necessary to know all the aspects well before implementing it. Let's see what the regulations say on the matter.
Sale with a right of redemption: the terms established by art. 1500 cc
As reported in article 1500 of the Italian civil code, according to the redemption agreement:
“The seller may reserve the right to regain ownership of the thing sold by returning the price and the reimbursements established by the following provisions.
The agreement to return a price higher than that stipulated for the sale is null and void for the excess.”
As written previously, this means that:
- whoever sells the property can regain ownership of it at a later time;
- for this to happen, you must return the corresponding price and reimburse the expenses;
- the sum of money given to redeem the property cannot exceed the initial sale price.
But it doesn't end there: timing is also important. The sale with right of redemption, in fact, is valid only if it is carried out within a specific period of time (art. 1501 cc):
“The term for the redemption cannot be greater than two years in the sale of movable property and five years in that of immovable property. If the parties establish a longer term, it It is reduced to the legal one.
The term established by law is peremptory and cannot be extended.”
In the case of those who, like us, deal with real estate, the redemption can take place within a maximum of five years. This is not necessarily a fixed term: you and the buyer, if you prefer, can decide to establish a shorter term. Nothing prevents you from extending it until you reach the five years established by law, which are, however, the maximum term within which to redeem the property.
Finally, it is important to remember that the calculation of the timing starts from the moment in which the ownership is actually transferred from the seller to the buyer.
Of course, this creates a situation of uncertainty for the buyer because the property does not become theirs definitively. The purpose of the legal term is precisely to prevent this uncertainty about home ownership from continuing for too long.
How to exercise the right of Redemption
Now that you understand what a sale with a right of redemption entails, all that remains is to clarify the practical procedures for proceeding.
To exercise your right to repossess the property, you must communicate the redemption declaration to the buyer. Together with the declaration, you will also have to pay the relevant sums, that is, the price of the house and the reimbursement of any expenses incurred by the buyer to renovate or improve it.
But be careful: all of this must be done within the established time limit, otherwise your right of redemption lapses and you lose the possibility of regaining possession.
Another essential requirement for redeeming ownership of the property is the reimbursement of expenses. The seller cannot refuse to pay them; You can instead make a new offer within eight days of the deadline.
But what form must the document have for a sale with right of redemption? If the asset in question is a property, such as a house or an apartment, for the contract to be valid, it must be written and subsequently transcribed.
The same principle applies to the declaration of redemption: its form is always determined by the type of property. To redeem ownership of a property, the declaration must be written, otherwise it is considered null and void. Furthermore, it must be accompanied by the price and reimbursement of expenses. Until these sums are paid, the buyer has every right to retain the property.
Effects of Redemption
Before the seller redeems his property, the sale has the effect of making the buyer the owner of the property. However, the new owner cannot enjoy the house however he wants: in some way, he is always hindered by the possibility that the seller decides to take ownership back.
Let's say you are the buyer: how should you behave then? You must manage the house with correctness and good faith, keeping it in good condition so as not to damage the rights of the original owner. If the property were to be damaged, the seller could go to court to seek compensation for damages.
When the time comes for the declaration of redemption, the seller exercises his right to regain possession of the property by presenting a written document and returning the sums owed. In the meantime, if mortgages have arisen on the house due to the buyer's fault, the buyer is responsible for them.
Furthermore, if the buyer has in turn sold the property to third parties (so-called subbuyers), the right of redemption applies even against them. The seller can exercise the right of redemption directly with them without having to go through the buyer first, if he has been informed of the subsequent transaction.
Ultimately, the sale with right of redemption is an excellent tool for obtaining money quickly without losing complete ownership of your property. The important thing is that you are well aware of all the steps necessary for the correct management of the contract.