Short answer. Yes. A seller who validly exercises a right of repurchase takes the property back free of the mortgages and other charges the buyer placed on it. The one thing he must respect is a lease the buyer granted in good faith and in keeping with the custom of the place.
What the law says
The vendor who recovers the thing sold shall receive it free from all charges or mortgages constituted by the vendee, but he shall respect the leases which the latter may have executed in good faith, and in accordance with the custom of the place where the land is situated.
Civil Code, Article 1618 — Property Returned Free of Charges. Read the full provision →
Redemption wipes out the buyer's mortgages
Article 1618 of the Civil Code is blunt about it: the seller who recovers the thing shall receive it free from all charges or mortgages constituted by the vendee. If you sold land with a right to buy it back and the buyer mortgaged it to a bank in the meantime, redeeming the property does not saddle you with that loan. The reason lies in what the buyer actually owned. His title was always liable to be undone by your redemption, so every charge he created rested on that same fragile footing and falls with it. He could not give a lender more security than he himself held.
Leases are the exception the article carves out
You do not get the property back empty of every arrangement. The article requires you to respect the leases which the latter may have executed in good faith, and in accordance with the custom of the place where the land is situated. Two conditions sit inside that phrase. The lease must have been granted honestly, not manufactured to burden the property once redemption loomed; and its terms must fit local practice for that kind of land, rather than being unusually long or unusually cheap. A lease that fails either test is not one the returning owner has to honour.
What the rule does not cover
The article clears away charges the buyer created. It does nothing about liens that already burdened the property when you sold it, or ones that arise from the land itself, such as unpaid real property taxes. It also assumes a valid and timely redemption: the right must have been reserved, exercised within the period the law allows, and accompanied by the return of the price and the payments the law requires. Nor does it settle everything with the buyer's lender. Third parties who registered their interests may still have to be dealt with, which is why the redemption and its effects are normally recorded on the title.
Before you rely on it
Two practical cautions. First, many arrangements written as a sale with right of repurchase are, in substance, loans secured by the property; where that is so, the transaction is treated as an equitable mortgage and a different set of rules applies to how the lender may recover. Second, the redemption period is short and unforgiving, and letting it lapse converts the buyer's conditional ownership into an absolute one. Get the certified true copy of the title and its annotations early, keep proof of your tender of the redemption price, and have the documents reviewed before the period runs out rather than after.