Buying in life is one of the old forms of purchase to acquire real estate. For someone looking to invest in this sector, buying a life annuity seems rather interesting. However, even if apparently it is a simple transaction, it is advisable to know the conditions before any purchase.
What is a lifelong purchase in real estate?
In the real estate sector the purchase in life is a recurring transaction, which allows someone to acquire a property such as an apartment or a house by paying the seller an annuity until the end of his life.
Generally only an elderly person makes the life sale of a property for more well-being with additional income. Indeed, in this transaction an elderly person (annuitant) who wishes additional income, transfers his property to a third party (annuitant) for a monthly or annual payment or as stipulated in the sales contract generally after a first initial payment (bouquet ), and until the end of his life. There are two forms of life annuity when buying real estate, the occupied life annuity where the annuitant continues to live and the free life annuity where the debtor can occupy without waiting because he is unoccupied.
The conditions of the sale are freely agreed by the buyer and the seller and as in all real estate transactions it is mandatory that the contract be made before a notary. Thus for the annuitant this purchase is a form of random investment with the aim of making a good deal, in case the annuitant does not live beyond the estimate on which the sale price is fixed.
Read also: Is buying a life annuity a good investment?
The conditions of the financial transaction in a life annuity purchase
When buying a property in life there are conditions for the price and the terms to be respected to make the payment. The fixing of the sale price depends on the value of the property but also on the age of the seller.
Similarly, the life annuity formula, occupied or unoccupied, strongly influences the sale price. Once the price is set, there are different payment options available to the buyer depending on the contract made before a notary. In the contract there can be only one annuitant to whom it is necessary to pour the price of the property in annuity after the payment of a bouquet which is not obligatory.
Similarly, it may be possible that the annuity to be paid concerns several annuitants, for example an elderly couple, in which case this annuity will be paid until the death of the last annuitant. However, in the contract there may be clauses that protect the seller in case of non-compliance with the clauses of the contract.
For example, if the buyer does not pay the rent, the seller can cancel the deed of sale without reimbursing the sums already collected. There may also be a clause allowing the seller to be able to buy back the property by paying capital to the buyer.
Read also: Calculation of life notary fees: the essentials to know
