What is the occupied life annuity?
A buyer (annuitant) who buys a house or an apartment in an occupied life annuity does not have the right to use the acquired property. He can't live there either. It is an agreement that settles the two sides for different reasons. The life annuity can take two forms:
- Retention of the right of use only (the most common form)
- Conservation of right of use and usufruct
In the first case, the law prohibits the seller from renting his property, even if he leaves his accommodation and leaves for a retirement home. The legal framework relating to the right of use and habitation (DUH) in France appears in several articles of the Civil Code (starting from article 625). In the second case, we speak of bare ownership. The annuitant retains the usufruct. Thus, he is authorized to use his property (usus) and to receive income (fructus) if he decides to rent it out.
Good to know: Sellers who keep the usufruct of their property receive rents between 20% and 30% lower.
What are the advantages of the life annuity for the seller (annuitant)?
The busy life annuity allows the seller to continue to use his property and occupy it while earning money. It gives him the security he is looking for, since he receives life annuities until his death while continuing to live in his home.
What are the advantages of the life annuity for the buyer (annuitant)?
For the buyer, the life annuity occupied has a triple advantage:
Financial, because this form of real estate transaction automatically leads to a fall in the price of the property called a discount. This discount compensates for the right of use (and sometimes of usufruct) assigned to the seller. The amount of this reduction is calculated on the basis of several criteria such as the rental price and the seller's life expectancy. In addition, the notary fees are lower than during an ordinary sale in a life annuity, since these fees are calculated only after deduction.
Tax, because the purchase of a property in an occupied life gives right to a mortgage at zero rate.
Decision-making, because the seller is free to resell his property when he wishes.
For the buyer, the life annuity is a great way to build real estate, or luxury real estate. It is intended for investors who are not looking for a primary residence immediately but who wish, in the long term, to afford a second home or to engage in rental investment.
What are the disadvantages of the life annuity for the seller?
The amount of life annuities he receives is lower than in the case of a free life annuity. The difference is due to the occupancy price of the property (the seller can continue to live in the accommodation sold), which is calculated according to his age and deducted from the sale price. If the deed of sale does not provide for the retention of the usufruct, he cannot earn income by renting his property. Another detail far from negligible: it is the seller to pay the housing tax and current charges.
What are the disadvantages of the life annuity for the buyer?
By definition, the occupied life annuity allows the seller to continue to occupy his property. The purchaser cannot therefore use it until his death. It is up to the buyer to pay the property tax, as well as the major works.
How are the charges calculated?
The occupied life annuity is a particular real estate transaction which must take into account several aspects beyond the trends of the real estate market. It is of course necessary to estimate the sale price of the good concerned. It is also necessary to determine the occupancy price of the property by the buyer, which is mainly calculated on the basis of his life expectancy.
When these two amounts are fixed, place the payment terms. The buyer most often makes a personal contribution which is reflected in the act of sale, the bouquet. It is also advisable to calculate the sums which will be paid to the seller every month, the life annuities.
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