3 California Real Estate Law & Practice § 76.11

Summary

A variation on the sale-leaseback transaction is the purchase and installment saleback. Under this arrangement, as under the sale-leaseback, property is sold by an owner who wishes to realize all or nearly all of its value while at the same time retaining its possession and control. In contrast to the sale-leaseback arrangement, however, the purchase and installment saleback gives the seller continuing control over the property through the mechanism of an installment sales contract. The seller becomes, not the lessee, but the buyer. The original sales price is typically between 80 percent and 90 percent of the fair market value of the property. Frequently, the agreement provides that the installment sale contract may not be liquidated during an initial “closed period” of approximately 15 years. Thereafter, the seller-installment purchaser may liquidate the contract by paying the buyer-installment seller the full amount of the balance then due under the contract.

The purchase and ...