A taste of luxury
By:The CB Friday - review , Friday, December 17, 2004
The Retracto (literally, ‘retract’ or ‘withdraw’) is a right - in pursuance of a right of pre-emption or first refusal - to have a sale of property to a third party set aside or retracted; the property is then purchasable by the holder of the right at the original price. It is equivalent to the right of redemption. It is called ‘conventional’ when it is created by virtue of agreement between the contractors, and ‘legal’ (statutory right of pre-emption or right of first refusal) when it exists by virtue of the law. The most relevant created by the law are the Retracto de Comuneros or preferential right of pre-emption held by joint users of common property; the Retracto de Colindantes, preferential option of owners of farmland to purchase land adjoining their own; and finally the Retracto de Coherederos, repurchase option of all or any of the co-heirs over share of joint estate sold by one or more of the fellow heirs. This week we deal specifically with the first one, also known as ‘Repurchase Agreement’. By means of the purchase contract with Repurchase Agreement the vendor expressly reserves for himself the right to recover at a later time the Real Estate sold. The Repurchase Agreement has to be simultaneous to the purchase, that is to say, established in the same contract. The principal utility is to obtain financing by means of the selling of the Real Estate, with the possibility of repurchasing it, but without obligation to do so. The vendor cannot be forced to return the received payment and to re-acquire the Real Estate; only if he makes use of the right of repurchase, will he have to return the price. If the vendor does not make use of the above mentioned faculty, the purchaser cannot force him to repurchase. The ‘retract’ has full efficacy when it is inscribed in the Property Registry, in such a way that the vendor can exercise his action against every future holder who bought his right to the purchaser. The Repurchase Agreement constitutes a transmissible right (by means of selling or donation). It is also possible to mortgage this right. The purchase contract with Repurchase Agreement is equivalent to a purchase with optional resolutory condition. The domain is transfered to the purchaser, but the vendor can recover it in the agreed period. The Repurchase right can be executed during four years following the date of the contract, unless a different term was specified in the contract. If the parties did specify a certain period, this cannot be more than ten years. To make use of the repurchase right, the vendor has to fulfill the expressly agreed conditions, returning to the purchaser the price, the expenses of the contract and any other payment made for the sale, including all necessary and useful expenses done in the property. If the vendor exercises the repurchase right, he re-acquires the property free of charges and mortgages constituted by the purchaser, except the leases that this party granted in good faith. If the vendor executes the Repurchase Agreement, a new repurchase deed has to be granted and a new entry made in the Land Registry. If the purchaser does not agree to grant this repurchase deed, the vendor who wants to repurchase the property has no other option than to take the case to the Court. The repurchase right can be executed by the vendor, his heirs, the person to whom he has sold the right (since it is a transmissible right) and his creditors. The civil action is filed against the purchaser, his heirs and any others who bought to him. Nevertheless, if the repurchase right has not been entered in the Property Registry, the third parties who inscribe their title cannot be affected by the civil action. The Property Registry considers the Repurchase Agreement likewise the resolutory condition (already analysed in The CB Friday edition on December 3). It does not prevent the inscription of the later transmissions, but continues liening the property until the cancellation of the entry.
The Retracto (literally, ‘retract’ or ‘withdraw’) is a right - in pursuance of a right of pre-emption or first refusal - to have a sale of property to a third party set aside or retracted; the property is then purchasable by the holder of the right at the original price. It is equivalent to the right of redemption.
