Deed of Sale with Pacto de Retro


A deed of Sale with Pacto de Retro entitles the vendor a retro to repurchase or buy back the thing sold from the vendee a retro. The right of repurchase is subject to a resolutory condition, or an event that will extinguish the sale or give rise to the exercise of such right. There has to be a triggering mechanism in the deed of sale for the vendor to repurchase the thing sold. The repurchase is not automatic, and the failure by the vendor a retro to exercise the right despite notice of the occurrence of the condition will have consequences. There are instances however when a sale with pacto de retro is considered an equitable mortgage under the law, and in such cases the formalities required of a mortgage contract must be present for the right of repurchase to be exercisable.


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