The LIFE ANNUITY is what we call an "ALEATORY CONTRACT". It is a particular contract because it pulls its essence of its randomness.
The financing of such an operation is made via the payment of a sum lump (called « bouquet ») payed by the buyer (with its own money), then the monthly annuities calculated on the total value of the property and the life expectancy of “crédirentiers”.
In summary, the LIFE ANNUITY is a contract which allows to finance by oneself, avoiding the banks and the financial institutions.
BUSY LIFE ANNUITY FREE OR FOR LIFE ?
The life annuity adapts itself to each people. He allows to find accommodation for some (vacant life annuities) or to make an investment for the others (vacant life annuity with perception of the rents or the occupied life annuity).
VACANT LIFE ANNUITY :
We talk about a "vacant life annuity" when the seller (also called “crédirentier”) does not live in the sold property or because the good is rented (we speak in this case about free life annuity by perception of the rents) or because he don’t want to keep the use of the property because he does not live in there.
In this type of sale, the buyer has immediately the keys. He can either occupy him personally or rent him to make revenues of it. Given that the life annuity is free, all the accommodation charges is the responsibility of the buyer in the same way as the local residence tax or of the land tax...
In summary this formula aims to people in search of a vacant property as well as investors wishing to rent the good.
Note that the demand is very strong for this type of life annuity while there are only few goods available on the market which are sold as vacant life annuity.
OCCUPIED LIFE ANNUITY :
This type of life annuity is the most common on the market (roughly 99% of the available goods).
The seller keep the right to live in the property throughout his whole life. That means people will live in their property until their death. Considered as a tenant, he’ll have to pay the “renting” expenses.
The buyer will have to pay other things like land tax (except household waste tax which is due by the “crédirentier”) and big works. He will have the enjoyment of the good only after the death of the “crédirentier”.
This formula corresponds to a clientele of investors looking to live in the property only after a certain number of years.
The calculations of life annuity are made from the "occupied" value that represents around 40 % below the real value of the good, considering the reserve of the right to use and live on the good for the “crédirentier”. Thus, lump sum and annuities are less important than a vacant life annuity, as well as the notary fees.