Life buying or selling: What are the rules?

Life is the sale of real estate to a third party in exchange for a rent periodic (monthly, quarterly or annual). This annuity shall be accompanied by an amount paid in cash on signature of the bill of sale, on bouquet.

The buyer (called the debariter) pays to 1 or more sellers (the credirentier) a life annuity for life.

Upon the death of the creditor, the life-keeper ceases and the creditor enters into possession of the property without taking any action.

The seller's death must be unpredictable. Also, the buyer must not have been aware of a disease that the creditor was suffering from at the time of signing the bill of sale.

If the seller dies within 20 days of signing the bill of sale, theevent shall be considered as predictable and the sale is not valid. The cancelation of the sale may be requested by the heirs of the creditor before the court.

As with all sales of real estate, a authentic instrument of sale must be established by a notary.

The seller retains until death usufruct or a right of use of the property sold.

The usufruct allows him to live in the dwelling or to rent it and to collect the rents.

The right of use allows him to keep the personal use of the dwelling by living there without being able to rent it.

The dwelling can be occupied by the buyer from the death of the seller or the death of the last survivor when the contract concerns several sellers.

As soon as the sale is signed,buyer disposes freely of good to occupy or rent it and collect rents.

The price is generally made up of bouquet and a life annuity.

The bouquet cash on signature of the contract of sale is not not obligatory. It is freely fixed. In general, it represents 30% the total value of the property.

The life annuity may be paid to one or more natural persons (spouse or indivisaries). It may be monthly, quarterly or annual, payable at the beginning or at the end of each period.

When the annuity is paid to several sellers and one of them dies, it is either paid in full to the survivor (reversible annuity), or reduced proportionately (reducible annuity).

The total annuity value is uncertain, because it depends on the life of the seller. Its amount is estimated on the basis of several criteria, including:

• Creditor's age and life expectancy
• Value of the property
• Amount of the bouquet
• Rents that could be collected by the credit-holder if the dwelling were rented

The notary calculates the amount of the annuity according to scales. You can consult them with an insurance company or a notary.

The parties may insert in the bill of sale a indexing clause. This clause allows for the automatic revision of the amount of the annuity following, for example, the consumer price index published by theInsee: titleContent.

To ensure security of annuity payments, the creditor may, in particular, enter in the bill of sale the following elements:

• Termination clause which authorizes him to take back his property if several annuities are no longer paid by the debtor
• Penal clause by which he has the right to keep the bundle (if it has been paid), in case of termination of the contract of sale

The type of passenger, busy or free, determines the distribution of charges and taxes between the seller and the buyer.