The life annuity (in french : Viager) is a normal real sale, but with a particular mode of payment. In fact, the price is divided into a bouquet (initial payment) and a life and indexed annuity. This kind of transaction concerns someone who sell an apartment, while preserving the right to live in it. But the property can also be sold free. The contract is always written by a notary, because the property go to the purchaser, even if the seller keeps the use of housing.
For the seller, the life annuity ensures a regular income until the end of his days, while remaining in the place (except free life annuity). It is well adapted to the elderly who have few incomes and/or not heirs. For the purchaser, the life annuity is a mean to spread out the payment of the price in time, while betting on the life expectancy of the seller. This bet can appear shocking, but it is the imperative condition of the contract, the interest being that, if the seller dies before the term of his estimated life expectancy, the purchaser pays finally less than the real price.
The amount of the Viager is calculated with data established by insurance companies (about the seller’s age, his life expectancy, and the value of the yielded property). Obviously, a free life annuity is more expensive than an occupied life annuity. The contract is secured by guarantee or mortgage, in order to ensure the buyer can pay regularly. The sale contract contains avoidance clauses in the event of non-payment.