Friday, 12 May 2017

The Principle of Life Annuity and its Types

The sale of a real estate in life annuity is one of the possibilities that you have if you want to sell your home without going through a classic sale, the auction or the exchange of goods. A life annuity sale is a specific sales contract that depends on the life of the seller and each party takes risks.


The principle of life annuity sales is simple : 

  1. The seller of the property signs a contract of sale with a buyer also called a debtor.
  2. The buyer acquires the property by paying the seller a life annuity (monthly payment) until the latter dies.
  3. Depending on the contract, the buyer may also have to pay the seller a bouquet: that is to say the cash payment of a capital at the time of the deed of sale. In this case, the amount of the life annuity is less.

    If the debtor does not pay the life annuity, the seller is protected by an arsenal of measures, including the seizure and sale of all the property of the purchaser.

    Types of life annuity sales

    The contract must mention the chosen option.

    1 .Life annuity sale of an empty asset 

    1. The owner no longer occupies his dwelling.
    2. The amount of the annuity is much higher than in life annuity occupied.
    3. The purchaser assumes all the costs, expenses and work of the accommodation.

    2. Sale in a life annuity of a busy property: up to 20 to 30% discount of the sale price 

    1. The seller continues to occupy it or the property continues to be occupied by a member of his family: it is important to mention in the contract which pays what (maintenance costs, heavy work, housing tax, property taxes).
    2. The seller can continue to rent and have the usufruct: the buyer has to pay the heavy works and the seller the expenses of routine maintenance.
    In this case, the life annuity is much less important.


    What is the amount of life annuity sales?

    The amount of the life annuity depends on several parameters :
    1. The life expectancy of the seller: the more it is important, the more the rent decreases.
    2. The market value of the property (free or busy?).
    3. The rate of return.

    The calculation is made according to the age of the seller and according to precise scales, either:

    1. Schedule of Tax Services.
    2. Scale of Notaries.
    3. Or scale of the National Provident Fund.
    Read Also: Annuities and its Types, Buy Annuity

    To determine this amount:

    Step 1: Estimate or have the market value of your property, i.e. its selling price, estimated.
    Step 2: Choose between empty sales or busy sale.

    Note that this amount is not fixed: it is indexed each year on the cost of household consumption. In conclusion, the steps above would sure make you Sell Your Annuities without any form of stress or hassles.