A viager is the sale of a house or apartment to a buyer who, in return, agrees to pay the seller an annuity for the rest of his or her life. It is therefore a real estate transaction between two parties:
- the seller, also known as the creditor;
- the buyer, also known as the debtor.
Life annuities are a great opportunity for buyers and sellers with a medium- to long-term vision. A life annuity can be a very good deal, provided you understand what’s involved. However, it’s essential to understand the implications and ensure that the terms of the contract are fair to both parties. The seller increases his income by retaining the right to live in the property, and the buyer becomes the owner, getting a good deal without having to take out a bank loan.
A few special features
At the time of the transaction, an amount equivalent to approximately 20% to 30% of the property’s market value must be paid to the seller. The complete transfer of the rights of enjoyment and the end of the annuity payments will only take place after the death of the seller. This is the very principle of life annuity sales.
To sell your property as a life annuity, you must be at least 70 years old. For the buyer, it is preferable to be at least 20 years younger than the seller.
This method of selling allows the seller to enrich his or her quality of life right up to the end, while remaining in his or her own home. It should be emphasized that the seller always retains the freedom to decide whether or not to proceed with a life annuity sale.
The buyer makes a secure investment in real estate, a market where prices are often high. He commits his capital with a medium-term perspective, resulting in an advantageous acquisition and a secure home.
Things to consider
Life expectancy : Estimating the seller’s life expectancy is crucial to assessing the profitability of the transaction.
Property value : The market value of the property must be correctly assessed to establish a fair annuity.
Risks : For the buyer, the main risk is that the seller may live much longer than expected, thus increasing the total cost of the acquisition.
Types of life annuity
Occupied life annuity : The seller continues to occupy the property until his or her death. The annuity is generally lower than in a free life annuity.
Free life annuity : The buyer can occupy or rent the property as soon as he/she buys it, as the seller releases the property immediately.
Defining the life annuity bouquet
The bouquet du viager is a sum of money agreed between buyer and seller. The amount is calculated according to the seller’s age, assets and the value of the property. Generally speaking, the bouquet represents around 30% of the value of the property. We invite you to consult the questions and answers on this subject on the Ville de Genève website. The remainder of the sale price corresponds to the life annuity, paid monthly or quarterly. The higher the bouquet, the lower the annuity.
At Les Régisseurs, we accompany you from the beginning of the procedure right through to the signing of the sales contract, so that you can sell or buy a life annuity with complete peace of mind. Life annuities are an interesting solution both for sellers looking for financial security and for buyers wishing to invest in real estate in a different way. If you’d like to find out more about this subject, don’t hesitate to watch the RTS 19h30 program in January 2023.
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