FONCIÈRE
SPECIALIZED IN
REVERSE REPURCHASES
Company history
FONCIÈRE 1659
Having qualified from the EDHEC Business School in 2004, I obtained my first professional experience in banking and financial brokerage.
At 26 years old, I decided to set up my first company specialized in loan and mortgage consolidation.
My day-to-day work involved examining the feasibility of my clients’ loan applications and also preparing, putting forward and financing these applications through my various banking partners.
In less than 10 years, this total commitment to developing my company led to it becoming one of the largest French consultancies in the loan consolidation sector.
In 2017, I sold my company to BLACKFIN CAPITAL PARTNERS – one of the largest European investment funds specialized in the financial services sector.
Over time, and in the course of my work, I noticed that many applications from owner-clients were unfortunately refused by banking partners.
In my opinion, however, these applications had a big advantage – the clients’ property asset.
On that basis, I started to examine in depth the limitations of the French banking system, with the aim of finding effective solutions that would enable me to meet my clients’ needs and offer them the opportunity to keep their property or to control its sale under the best possible conditions.
That is how FONCIÈRE 1659 specialized in reverse repurchases began.
Jordan GIANFURCARO
Founder and Managing Director
WHAT IS A REVERSE REPURCHASE?
THE SOLUTION WHEN THE BANKS SAY NO
Reverse repurchase (also known as «sale with buyback option») is a notarized deed of sale associated with an agreement which enables the vendor to buy back the property being sold so as to keep their asset or to sell it to a third party.
Reverse repurchase is governed by articles 1659 to 1673 of the Civil Code
The principle is also known as « sale with buyback option »
• In exchange for an occupancy indemnity, the vendor retains use of the property throughout the duration of the contract, as well as rent paid if the property is rented, and an exclusive and irrevocable right to repurchase.
• This buyback option applies for a period and at a price defined when the contract is signed.
• The maximum statutory period for exercising the buyback option is 5 years
• Reverse repurchase provides solutions for natural persons or legal entities in difficulty.
• The exercising of the buyback option enables the vendor to take back their property at any time by putting the parties into the position they were in prior to the sale. Legally it can be seen as a rescission of the initial sale.
• This mechanism offers any owner a second chance, and through reverse repurchase they will retain an option to buy back or to sell their property at best market conditions throughout the duration of the contract.
• Reverse repurchase is an actual sale which involves a transfer of ownership by means of a notarized deed.
• In exchange for an occupancy indemnity, the vendor retains use of the property throughout the duration of the contract, as well as rent paid if the property is rented, and an exclusive and irrevocable right to repurchase.
• This buyback option applies for a period and at a price defined when the contract is signed.
• The maximum statutory period for exercising the buyback option is 5 years
• The exercising of the buyback option enables the vendor to take back their property at any time by putting the parties into the position they were in prior to the sale. Legally it can be seen as a rescission of the initial sale.
• Reverse repurchase provides solutions for natural persons or legal entities in difficulty.
• This mechanism offers any owner a second chance, and through reverse repurchase they will retain an option to buy back or to sell their property at best market conditions throughout the duration of the contract.
• Reverse repurchase is an actual sale which involves a transfer of ownership by means of a notarized deed.
« Reverse repurchase enables solutions to be found for natural persons or legal entities in difficulty »
WHO IS REVERSE REPURCHASE FOR?
ANY NATURAL PERSON OR LEGAL ENTITY NEEDING CASH FLOW
Reverse repurchase is for any natural person or legal entity that owns one or more property(ies), in sensitive personal or professional circumstances requiring cash flow (financial issues, cash flow for the company, bridging finance on a sale, etc.).
Property owners
can take advantage of reverse repurchase and obtain funds
Urgent need of cash flow
Persons facing bankruptcy or judicial liquidation
Property seizure
Prohibited from holding bank accounts
Transactions on behalf of property professionals (Real estate agents and developers)
Loans at maturity
Persons without any income
Persons who can no longer honour their loan repayments
WHAT IS REVERSE REPURCHASE FOR?
AVOIDING OR CONTROLLING A SENSITIVE SITUATION
One of the main advantages of reverse repurchase is to get money quickly without being required to pay it back; even if it means ultimately letting go of the property that is the subject of the transaction when the contract ends.
Obtain sufficient cash flow to meet a need
Be able to keep your property or sell it to a third party
PROPERTY SEIZURE
→ Avoid the seizure of a property and control your asset
CASH FLOW
→ Immediate need for cash flow pending the sale of a property or money owed to you
TAX DEBTS
→ Pay off tax debts
DIVORCE
→ Pay a settlement
INHERITANCE
→ Pay inheritance tax on non-liquid assets
PROFESSIONAL DEBTS
→ Settle professional debts, clear a difficult position, save a company
SETTING UP A COMPANY
→ Cash flow requirements to set up a new company
SALE WITH ENJOYMENT
→ Sell a property and retain use of it for a given period
WHICH PROPERTIES IS REVERSE REPURCHASE FOR?
ALL KINDS OF PROPERTY CAN QUALIFY
We can purchase any kind of property as long as its value is sufficient to meet the client’s need.
All kinds of property
Many solutions are available depending on the property’s use or intended use
Any property located in mainland France
(No limit to the value of the asset)
- Houses, apartments, buildings, commercial premises, offices, land suitable for building.
- No limit to the number of properties we can purchase on behalf of the same client.
- All properties purchased are valued by a property surveyor approved by the courts.
- Properties must comply with planning regulations.
Residential properties whether occupied or not:
• Main residence
• Second homes
• Rental accommodation
Professional property:
• Commercial premises
• Offices
Types of property ownership possible:
• Own name
• Private property company
• Company governed by French or foreign law
• Subdivided property rights
HOW IT WORKS
KEY POINTS
PURCHASE WITHOUT CONDITION PRECEDENT OF OBTAINING A LOAN
Our purchase offers are firm and final, with no condition precedent of obtaining a loan. This gives the client certainty that the transaction will take place.
Our method enables the transaction to take place ethically, with due diligence and in accordance with the law
As a reminder, reverse repurchases are governed by articles 1659 to 1673 of the Civil Code
Purchase value
Foncière 1659 purchases property at 50% and 70% of the market value of the property surveyed (depending on the quality and liquid nature of the property).
Vendor’s buyback option
Foncière 1659 grants the client a buyback option at a fixed price determined at the outset upon signature of the contract with the notary.
« Turnkey » acquisition
Property purchases by Foncière 1659 include the costs of the deed (notarial fees of 3% to be paid by vendors).
Duration of the buyback option
In consultation with the vendor, we offer sales with buyback option over a period established by the client, enabling the transaction to be secure.
Throughout the client’s buyback option period, the vendor retains use of the property, rent paid if the property is rented, and an exclusive and irrevocable buyback option in their favour.
Occupancy indemnity
In exchange for deferred enjoyment granted to the vendor by ourselves, Foncière 1659 is paid an occupancy indemnity covering the period of the reverse repurchase contract.
The occupancy indemnity is deducted directly from the sale price by the notary, and the vendor thus has nothing to pay.
Purchase value
Foncière 1659 purchases property at 50% and 70% of the market value of the property surveyed (depending on the quality and liquid nature of the property).
Vendor’s buyback option
Foncière 1659 grants the client a buyback option at a fixed price determined at the outset upon signature of the contract with the notary.
« Turnkey » acquisition
Property purchases by Foncière 1659 include the costs of the deed (notarial fees of 3% to be paid by vendors).
Duration of the buyback option
In consultation with the vendor, we offer sales with buyback option over a period established by the client, enabling the transaction to be secure.
Throughout the client’s buyback option period, the vendor retains use of the property, rent paid if the property is rented, and an exclusive and irrevocable buyback option in their favour.
Occupancy indemnity
In exchange for deferred enjoyment granted to the vendor by ourselves, Foncière 1659 is paid an occupancy indemnity covering the period of the reverse repurchase contract.
The occupancy indemnity is deducted directly from the sale price by the notary, and the vendor thus has nothing to pay.
PROCESS UP TO SIGNATURE
AT THE NOTARY’S OFFICE
FROM OUR MEETING WITH THE CLIENT UNTIL RELEASE OF FUNDS
Responsiveness, efficiency and due diligence are all necessary to offer our clients appropriate responses according to their situations.
We have developed and put into practice a 4-step method so as to meet our clients’ needs as quickly as possible.
Our collaboration is at once a new departure and an achieved outcome
As a reminder, reverse repurchases are governed by articles 1659 to 1673 of the Civil Code
Initial contact and analysis
• We contact the client to analyze the situation and explain to them how the reverse repurchase process works.
• We collect together the documents required to examine the application.
• Response within 24 to 72 hours depending on when we receive the documents required.
Purchase offer
• If the analysis is positive, we issue a purchase proposal including details and terms of the purchase offer without condition precedent of obtaining a loan.
• If the vendor agrees with the purchase proposal, we ask them to send it back to us once signed, so that we can commission a valuation of the property that is the subject of the sale with buyback option.
Survey and valuation
• Upon receipt of the purchase offer signed by the client, we commission an independent surveyor to value the property.
• If the valuation is in line with the value quoted by the vendor and noted in the purchase offer as a condition precedent, the legal process with the notary can begin.
If it is not, we make a counter-offer if it is possible.
Purchase
• The whole transaction is overseen by a notary specialized in sales with buyback option.
• As for a traditional property sale, the notary in charge will fulfil all the formalities in line with the regulations.
• Once the documentation is ready, the notary will prepare the deed of sale with buyback option.
• Signature at the notary’s office.
Release of funds
• Once the reverse repurchase deed has been signed, the sale price is released to the vendor.
(Having deducted occupancy indemnities, notarial fees, invoices relating to the transaction and any guarantees)
Initial contact and analysis
• We contact the client to analyze the situation and explain to them how the reverse repurchase process works.
• We collect together the documents required to examine the application.
• Response within 24 to 72 hours depending on when we receive the documents required.
Purchase offer
• If the analysis is positive, we issue a purchase proposal including details and terms of the purchase offer without condition precedent of obtaining a loan.
• If the vendor agrees with the purchase proposal, we ask them to send it back to us once signed, so that we can commission a valuation of the property that is the subject of the sale with buyback option.
Survey and valuation
• Upon receipt of the purchase offer signed by the client, we commission an independent surveyor to value the property.
• If the valuation is in line with the value quoted by the vendor and noted in the purchase offer as a condition precedent, the legal process with the notary can begin.
If it is not, we make a counter-offer if it is possible.
Purchase
• The whole transaction is overseen by a notary specialized in sales with buyback option.
• As for a traditional property sale, the notary in charge will fulfil all the formalities in line with the regulations.
• Once the documentation is ready, the notary will prepare the deed of sale with buyback option.
• Signature at the notary’s office.
Release of funds
• Once the reverse repurchase deed has been signed, the sale price is released to the vendor.
(Having deducted occupancy indemnities, notarial fees, invoices relating to the transaction and any guarantees)
EXITS FROM REVERSE REPURCHASE
SEVERAL OPTIONS FOR THE CLIENT
We remain in ongoing contact with the client to enable them to exercise their buyback option or to sell their property.
Flexible, tailored options with no obligation
As a reminder, reverse repurchases are governed by articles 1659 to 1673 of the Civil Code
Buyback of the property using a property loan
Buyback of the property using own funds
Sale of the property
Transfer of a reverse repurchase right to a third party of one’s choice
NO NOTARIAL FEES
When exercising their buyback option, the client will have no statutory notarial fees to pay (only the notary’s own emoluments)
If there is an exit from the contract through the sale of the property, the beneficiary will recover the difference between the final sale price and the amount of the buyback option.
EXTENDING THE DURATION
It is possible to extend the duration of the buyback option upon expiry of the contract, for a single additional period of 12 months.
This enables clients to secure the reverse repurchase exit transaction if they have not yet bought back or sold their property.
OUR OTHER SOLUTIONS
OUR EXPERTISE SERVING OUR CLIENTS
In addition to reverse repurchases, Foncière 1659 is specialized in personalized and innovative property solutions which meet our clients’ immediate cash flow needs.
Strategy and commitment: Making our clients’ lives easier
Foncière 1659, getting ahead
We pay special attention to our clients’ goals.
Our strength consists of transforming challenges into opportunities, using our expertise and our network to safeguard our client’s interests and financial well-being.
Sale with a price supplement
This solution is for clients who want to sell their property but prefer to receive a portion of the price immediately by selling at a reduction to Foncière 1659.
The vendors benefit from a clause enabling them to recover the difference between the final sale price and the amount due to Foncière 1659.
Sale with price supplement on bare ownership
This solution is similar to a so-called « traditional » sale with price supplement.
In this case, however, Foncière 1659 only purchases bare ownership with a reduction, leaving usufruct of the property to its clients.
The amount of the bare ownership purchase will depend on its value according to the Daubry scale, the client’s age and their situation (single / married and gender).
This solution is suitable for a limited client need where a property has increased significantly in value.
The vendor can buy back bare ownership of the property during the contractual period, sell the property or decide to retain usufruct of the property until their death.
Property porting
Property porting is a transaction in which Foncière 1659 purchases a property on behalf of a property professional.
This solution enables the investor or developer to perform a resale transaction without being concerned with obtaining financing.
Upon resale, the property professional recovers the difference between the sale price and the amount due to Foncière 1659.
EXAMPLES OF TRANSACTIONS AND OUTCOMES ACHIEVED
BUYBACK OF A PROPERTY USING A PROPERTY LOAN
OWNER-CLIENTS, BLACKLISTED WITH THE BANQUE DE FRANCE AND FACING PROPERTY SEIZURE
Clients owned an apartment in Nice with a market value estimated by a property expert at €600,000.
Having both lost their jobs, the clients could no longer honour their monthly mortgage instalments.
They were then blacklisted by the Banque de France and prohibited from holding bank accounts.
Default was pronounced by the clients’ bank, triggering property seizure proceedings.
The clients therefore had to pay off the outstanding capital on their mortgage which was €250,000.
The clients’ priority was to find a solution which would enable them to pay off the outstanding capital on their mortgage in order to :
• Not lose ownership of their property
• Give themselves time to reorganize their finances
The aim was to take out a new property loan to enable them to buy back their apartment.
This solution could not be envisaged because of the Banque de France blacklisting.
Intervention FONCIÈRE 1659
CLIENTS NEED : €250,000
MARKET VALUE OF PROPERTY : €600,000
TURNKEY PURCHASE AT 60% OF MARKET VALUE:
€360,000
FONCIÈRE 1659 purchased the apartment in a reverse repurchase at an inclusive price of €360,000 for a period of 12 months with an option for the clients to extend the buyback option for an additional 12-month period.
Upon signature at the notary’s office
Sums deducted directly from the sale price by the notary upon signature of the reverse repurchase deed:
NOTARIAL FEES OF 3% : €10,800
OCCUPANCY INDEMNITY OVER 12 MONTHS ENTIRELY PREPAID : €57,600
(On the basis of a monthly occupancy indemnity of €4,800)
OUTSTANDING CAPITAL ON THE MORTGAGE : €250,000
Positive balance for the clients
The notary paid the clients a positive balance of €41,600. This amount enabled them to set right their financial situation and to have a substantial deposit for their future mortgage.
€41,600
OUTCOME ACHIEVED
The clients succeeded in obtaining their property loan a few months after the reverse repurchase was put in place.
PRICE OF THE REVERSE REPURCHASE : €360,000
The clients bought back their property at a price of €360,000 plus notarial fees of around €3,600.
These figures are not set in stone.
They can vary according to the property’s quality, its geographical location, the client profile and tariffs in force.
BUYBACK OF A PROPERTY USING OWN FUNDS
CLIENTS WHO OWNED SEVERAL PROPERTIES NEEDED CASH FLOW TO SETTLE A TAX DEBT
Clients who owned two properties that were paid for:
• An apartment (main residence) located in Paris estimated at €1,200,000.
• A house (second home) located in Bordeaux estimated at €800,000.
The clients’ absolute priority and additional need:
• Tax emergency: the adjustment amounted to €200,000.
• Renovation work on their second home of €150,000.
The clients’ total requirement was thus €350,000.
The clients were waiting for a significant amount of money to come in within 18 months or less related to the sale of their company.
The clients had consulted their bank and also financial brokers seeking a loan but unfortunately it was refused due to the couple’s lack of income (despite the significant extent of the properties).
The clients wanted to find a solution to enable them to settle their tax debt and carry out the work on their second home without delay.
Intervention FONCIÈRE 1659
CLIENTS NEED : €350,000
MARKET VALUE OF THE SECOND HOME : €800,000
TURNKEY PURCHASE AT 62.50% OF MARKET VALUE :
€500,000
FONCIÈRE 1659 purchased the second home in a reverse repurchase at an inclusive price of €500,000 for a period of 18 months with an option for the clients to extend the buyback option for an additional 12-month period.
Upon signature at the notary’s office
Sums deducted directly from the sale price by the notary upon signature of the reverse repurchase deed:
NOTARIAL FEES OF 3% : €15,000
OCCUPANCY INDEMNITY OVER 18 MONTHS ENTIRELY PREPAID : €120,000
(On the basis of a monthly occupancy indemnity of €6,667)
Positive balance for the clients
The notary paid the clients a positive balance of €365,000. This amount enabled the tax debt to be paid and the renovation work to be carried out in their second home.
€365,000
OUTCOME ACHIEVED
The clients received the proceeds of the sale of their firm 15 months after the reverse repurchase was put in place.
PRICE OF THE REVERSE REPURCHASE : €500,000
The clients bought back their property at a price of €500,000 plus notary’s fees of around €5,000.
These figures are not set in stone.
They can vary according to the property’s quality, its geographical location, the client profile and tariffs in force.
SALE OF A PROPERTY
OWNER-CLIENTS NEEDED CASH FLOW TO START A NEW COMPANY
Clients owned a house in Lyon with a market value of €1,800,000 on which there was an outstanding mortgage balance of €260,000.
The property was up for sale, but few people were visiting the property.
The clients wanted to start a new business and needed €500,000.
The clients’ bank did not wish to assist them with this investment.
The clients wanted to find a solution which would enable them to get the funds to start their new business, finance their moving costs, reduce their monthly outgoings by paying off their current mortgage, and have time to sell their house at the market price.
Intervention FONCIÈRE 1659
CLIENTS NEED : €500,000
MARKET VALUE OF PROPERTY : €1,800,000
TURNKEY PURCHASE AT 65% OF MARKET VALUE :
€1,170,000
FONCIÈRE 1659 purchased the house in a reverse repurchase at an inclusive price of €1,170,000 for a period of 24 months with an option for the clients to extend the buyback option for an additional 12-month period.
Upon signature at the notary’s office
Sums deducted directly from the sale price by the notary upon signature of the reverse repurchase deed :
NOTARIAL FEES OF 3% : €35,100
OCCUPANCY INDEMNITY OVER 24 MONTHS ENTIRELY PREPAID : €374,400
(On the basis of a monthly occupancy indemnity of €15,600)
OUTSTANDING CAPITAL ON THE MORTGAGE : €260,000
Positive balance for the clients
The notary paid the clients a positive balance of €500,500. This amount enabled them to start the new business, move house and reduce their monthly outgoings whilst waiting for their house to sell.
€500,500
OUTCOME ACHIEVED
The clients sold their house after 21 months at a price of €1,750,000.
PRICE OF THE REVERSE REPURCHASE : €1,170,000
Upon the sale of the property, the notary in charge of the transaction repaid FONCIÈRE 1659 €1,170,000 and paid the clients the difference on the sale price – an amount of €580,000.
These figures are not set in stone.
They can vary according to the property’s quality, its geographical location, the client profile and tariffs in force.
TRANSFER OF A REVERSE REPURCHASE RIGHT TO A THIRD PARTY
OWNER-CLIENT NEEDED TO PAY INHERITANCE TAX
Client owned an apartment in Cannes with a market value of €350,000.
Following the death of her husband, the client found herself in a difficult financial situation and had to pay inheritance tax of €120,000.
The client had contacted her bank to finance the inheritance tax, but the application was refused because the client exceeded the permitted level of debt.
For personal reasons, the client did not want to sell her apartment to pay the inheritance tax.
Intervention FONCIÈRE 1659
CLIENT NEED : €120,000
MARKET VALUE OF PROPERTY : €350,000
TURNKEY PURCHASE AT 60% OF MARKET VALUE :
€210,000
FONCIÈRE 1659 purchased the apartment in a reverse repurchase at an inclusive price of €210,000 for a period of 18 months with an option for the client to extend the buyback option for an additional 12-month period.
Upon signature at the notary’s office
Sums deducted directly from the sale price by the notary upon signature of the reverse repurchase deed:
NOTARIAL FEES OF 3% : €6,300
OCCUPANCY INDEMNITY OVER 18 MONTHS ENTIRELY PREPAID : €50,400
(On the basis of a monthly occupancy indemnity of €2,800)
AMOUNT OF INHERITANCE TAX : €120,000
Positive balance for the client
The notary paid the client a positive balance of €33,300. This amount enabled consumer loans of €20,000 to be paid off and an amount of €13,300 to be put aside for a rainy day.
€33,300
Transfer of right to her son
After the intervention of FONCIÈRE 1659, the client reiterated her mortgage application to her bank; the application was once again refused for the same reason, despite her deposit.
Being very attached to her property, the client did not want to sell it.
By mutual agreement with her son, she transferred her reverse repurchase right to him.
He could then buy back the apartment that the client could continue to occupy without having to pay rent (agreed with her son)
OUTCOME ACHIEVED
The client transferred her reverse repurchase right to her son so that he could exercise the buyback option on the apartment.
PRICE OF THE REVERSE REPURCHASE : €210,000
The client’s son bought the apartment back for €210,000 plus notarial fees of around €2,100.
These figures are not set in stone.
They can vary according to the property’s quality, its geographical location, the client profile and tariffs in force.
CONTACT
Contact us using our form to tell us about your needs.
Our team will get back to you as soon as possible.
You can also contact us by phone at +33 (0)4 93 80 33 42
FONCIERE 1659
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