A life annuity sale involves a contract which stipulates the rights and requirements of the respective contracting parties limited to the duration of the life of one or several of the parties to the sale agreement. The DEBIRENTIER (purchaser) pays the CREDIRENTIER (seller) part of the value of the property, this is called the BOUQUET (a kind of part-payment), then will proceed to pay a sum which is called “RENTE viagère” every month, trimester or year for the duration of the CREDIRENTIERS (sellers’) life or lives.
The annuity will be paid “on the life of one or several persons” also called the credirentier whose death or deaths will end the payments and finalise the contract. The “viager” is therefore an “indefinite” contract or a contract without defined end.
ADVANTAGES OF THE “VIAGER”
Life annuity sales offer advantages for the CREDIRENTIER (seller):
- The CREDIRENTIER (seller) is ensured a regular income in addition to a retirement pension while maintaining the use of the property (or not) throughout their life.
- The CREDIRENTIER (seller) may at all times modify the contract from occupied to unoccupied, therefore increasing the annuity amount paid in compensation for releasing the property.
- In an occupied annuity sale, the CREDIRENTIER (seller) benefits from reduced body corporate expenses and is no longer liable to pay property tax or building renovations voted by the co-proprietors .
- The CREDIRENTIER (seller) benefits from a considerable tax rebate on the amount of the annuity declared. This portion can vary depending on the age of the crédirentier at the time of signature of the contract and can reach a 70% rebate.
Life annuity sales also offer advantages for the DEBIRENTIER (purchaser):
- Becoming a property owner without needing to pay large amounts of money at the time of sale.
- To purchase real estate without requiring a bank loan.
In the case of occupied life annuity, the DEBIRENTIER pays lower administrative fees, calculated on the value of the occupation and can hope for added value at the time of release and sale of the property.
IMPORTANT GUARANTEES FOR THE CREDIRENTIER (seller)
The payment of the annuity is guaranteed by:
The seller’s right (guaranteed or secured by the mortgage) which allows him to rescind the contracted sale should the payments fail.
The “action résolutoire de plein droit” allows the crédirentier to reclaim the property.
When a penalty clause is stipulated, the crédirentier retains the annuities already paid, as well as a share, or even the entirety, of the “bouquet” (a kind of part-payment).
To discourage late payments, it is possible to provide for a late payment rate interest.
A legally binding copy (“copie executoir”) of the contract is held by the CREDIRENTIER, so as allow him to take legal action against the DEBIRENTIER for payment if necessary.
LIFE ANNUITY SALE
Life annuity sale is a standard form of sale with specific terms and conditions, it must comply with specific regulations, formalities and requirements.
The annuity is determined by the financial value of the property, whether it is occupied or not, as well as the age of the crédirentiers (sellers). To determine this, an an average is taken of the values according to several financial scales.
The CREDITRENTIER may retain the “usufruit” or the exclusive right of use and occupation of the property, although this must be taken into account in the calculation of the annuity contract.
The CREDIRENTIER may request the payment of a “bouquet” (first payment or kind of part-payment) and the balance is converted into the annuity payments which will be paid monthly, quarterly or annually.
To alleviate the effects of monetary erosion or inflation, it is highly advisable to index the annuity.
VANEAU VIAGER, CUSTOMISED AFTER SALE GUIDANCE
Vaneau Viager has over 30 years of experience in the sale of life annuity real estate and will guide you through the terms and conditions of sales using our agencies:
Calculation of the annual annuity indexation
Calculation of adjustments to annuities, should the CREDIRENTIER wish to convert the annuity contract from occupied to unoccupied.
Calculation of the annual distribution of the expenses between the débirentier and the crédirentier for real estate in co-owned buildings.
Determination of the share of renovation expenses between the débirentier and the crédirentier,
Advice concerning the follow-up of the annuity sale by entrusting Vaneau Viager to manage the property.
DO YOU WISH TO PURCHASE OR SELL ANNUITY REAL ESTATE ?
Contact Vaneau Viager to successfully complete your real estate project.
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