What is Viager?

375 reads · Last updated: December 5, 2024

A "viager" is a real estate transaction, popular in France, where the buyer makes a down payment and then a series of payments for as long as the seller is alive.

Definition

Life lease is a popular real estate transaction method in France where the buyer pays a deposit and then makes a series of payments during the seller's lifetime. This transaction allows the buyer to gain ownership of the property after the seller's death, while the seller can continue to live there during their lifetime.

Origin

Life lease originated in France as a unique real estate transaction method designed to provide elderly individuals with a way to access funds without moving out of their homes. It became popular in the mid-20th century, especially in urban areas of France.

Categories and Features

Life lease mainly falls into two categories: one where the buyer pays a large lump-sum deposit, and another where the buyer pays a smaller deposit and monthly rent. Its features include allowing the seller to continue living in the property until death, while the buyer gradually pays for the property. Advantages include providing the seller with a stable income source and potentially allowing the buyer to acquire the property at a lower price. Disadvantages include the uncertainty of the buyer's return on investment, which depends on the seller's lifespan.

Case Studies

A typical case involves a retired teacher in Paris who sold her apartment through a life lease. The buyer paid a 20% deposit and agreed to pay a monthly amount until her death. Another case involves a couple in Lyon who purchased a property this way and eventually acquired ownership at a total cost below market value after the seller's death.

Common Issues

Common issues for investors include how to assess the seller's lifespan to calculate the return on investment and whether the buyer will face financial pressure if the seller lives longer than expected. It is usually advised that buyers conduct detailed financial planning when signing the contract and consider potential long-term payments.

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