As in any other type of real estate transaction, the notary is a key player in the context of a life annuity. He establishes the deeds, authenticates them, drafts the contracts and accompanies the various parties throughout the sales procedure. But how are notary fees calculated in the context of a life sale? The answers in this guide.
Little reminder : what is a life annuity?
Before looking at the rules for calculating notary fees, let’s quickly review what a life sale is and the different forms it can take.
The life annuity is a real estate sales contract in which the buyer (the annuitant), pays the owner (the annuitant) throughout his life, a monthly, quarterly or annual annuity. In some cases, the buyer can also pay an initial sum of money upon signing the deed of sale. This amount is called « bouquet ».
The amounts of the bouquet and the annuity are defined according to the market value of the property, the life expectancy of the seller, the rate of return on capital and the status of the property (vacant or occupied). This operation allows the seller to benefit from a lifetime annuity from the date of signature of the deed of sale. As for the buyer, he can potentially buy a good at a favorable price compared to its real value while staggering its payment.
The different formulas of life annuity
There are mainly two forms of life annuity:
the occupied life : in this type of contract, the seller assigns his property rights to the buyer upon signing the contract. However, he retains his right of use and habitation. Consequently, he continues to enjoy the good throughout his life. The buyer can therefore only occupy it on the death of the seller;
the free life : in this case, the buyer recovers the rights of use and habitation as soon as the contract is signed. He can therefore occupy the property immediately without having to wait for the death of the seller.
How to calculate notary fees according to the type of life annuity?
As part of a life annuity purchase, notary fees are the responsibility of the buyer and include, among other things, emoluments. The amount of the latter is defined according to the sale price of the property and a scale established by the National Office of Notaries of France.
It is thus:
3.9% if the value of the property is less than €6,500;
1.6% if the property is worth between €6,500 and €18,000;
1.08% for goods worth between €18,000 and €65,000;
0.8% for any property worth more than €65,000.
However, you should know that the calculation base varies according to the type of life annuity. The following cases are thus distinguished:
The calculation base for a free life annuity
In the case of a life annuity, it is the actual value of the property that determines the amount of notary fees.
The calculation base for a busy life annuity
For an occupied life annuity, the notary’s fees are not calculated on the basis of the market value of the property, because the seller continues to enjoy it. They are rather calculated according to the bare ownership of the property. In other words, the notary must take into account the market value deducted from the occupation value. The percentage of occupancy value is defined by the sales contract.
Here is an example to better understand. Let’s take a property worth €100,000 sold as an occupied life annuity, with an estimated occupancy value of 40% of the value of the property. Bare ownership therefore amounts to: €100,000 – €40,000 = €60,000. The notary fees will therefore be calculated on the basis of the 60,000 euros.
Note that the amount of the bouquet has no impact on the amount of notary fees.
What are the other components of notary fees?
In addition to variable fees, the amount of which depends on the type of life annuity, notary fees also include:
Fixed fees : these are fixed fees paid to the notary for all the administrative formalities for which he is responsible. Their amount is fixed according to the rates charged by the notary as well as the geographical area of the property. These fees are negotiable ;
Applicable VAT ;
Fees paid to the Public Treasury : they include registration fees, land registration tax and additional taxes;
disbursements : These are fees paid by the notary to various intermediaries (civil status, cadastre, state of conservation of mortgages, etc.) in connection with the sale file. They are therefore re-invoiced to you afterwards or are directly added to the fixed fees. Some notaries also require the buyer to set up a provision. This is regularized at the end of the sale operation. Any overpayment is reversed.
Note, finally, that it is possible to use a online simulator to have a fairly precise idea of the notary fees to be paid in the context of a life annuity. This type of online tool is simple, practical and fast.
Read also: Is buying a life annuity a good investment?