Sunday, April 1, 2012

The benefits of a long life when you sell ‘en viager’ in France - buyer most definately beware!

Whilst the concept of equity release is fairly new in France and the option is only just becoming  more widely available, property owners here have always been able to sell ‘en viager’

Selling a property ‘en viager‘  basically means that you transfer ownership of your property to a buyer (like an ordinary sale and purchase) but instead of paying the full price, the buyer simply pays an agreed annual rent to the seller while they remain in the property for the remainder of their life.  On the death of the seller the buyer takes posession of the property and of course benefits from its increased value.

In much the same way as an equity release scheme in the UK ‘en viager’ allows people, usually elderly to enjoy an additional income at a time when they may need it most.

Of course being France the process is highly contractual and the calculation of the agreed rent (in its most basic form - value of house divided by average life expectancy of the seller less any upfront capital payment agreed) is overseen by an appointed notaire and involves the obligatory forest of trees in terms of paperwork.

Of course for the buyer this scheme is primarily an investment  gamble and in the case of a premature death could turn out to be an incredible bargain. 

But of course the premis ‘buyer beware’ must be at its most relevant here ably demonstrated by the much publicised case of Jeanne Calment.  Mme Calment was a French woman credited with the longest recorded life span dying at the ripe old age of 122.  Of course such longevity is usually a cause for great celebration but not perhaps for the notaire who bought her appartment ‘en viager’ in 1965. Sadly he died two years before Mme Calment and ended up paying nearly twice the value of the property in the contracted agreed annual rent.

Some you win and some you lose!!!

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