How does a viager sale work?

The principle: a price converted into a bouquet and an annuity

A viager sale is a property sale in which part of the price is paid upfront, as a capital sum called the bouquet, and the balance as a life annuity paid to the seller until their death. The seller is known as the crédirentier (the annuitant), the buyer as the débirentier (the annuity payer). Ownership is transferred as soon as the notarial deed is signed, exactly as in an ordinary sale.

The life annuity regime is set by Articles 1968 to 1983 of the French Civil Code. The bouquet is optional and its amount freely negotiated: the higher it is, the lower the annuity. The annuity is then paid, usually monthly, whatever the seller's actual lifespan.

The element of chance, a condition of the contract's validity

The viager is an aleatory contract within the meaning of Article 1108, paragraph 2, of the French Civil Code: the parties agree to make the economic effects of the contract depend on an uncertain event, the seller's lifespan. Neither the buyer nor the seller knows, on the day of signing, which of them the transaction will ultimately benefit.

This element of chance is required on pain of nullity. The French Civil Code thus deprives of effect a contract concluded on the life of a person already deceased on the day of the contract (Article 1974) or who dies within twenty days of the contract from an illness they were already suffering from (Article 1975). The courts also annul the sale where the buyer knew, at signing, that the seller's health was beyond hope, since the element of chance is then missing.

Occupied viager: the right of use and habitation

In the vast majority of cases, the seller goes on living in the home: in the deed, they reserve a right of use and habitation, governed by Articles 625 to 636 of the French Civil Code. This right is strictly personal: it can be neither assigned nor rented out (Articles 631 and 634 of the French Civil Code), unlike a reserved usufruct, which is rarer and would allow the seller to let the property.

This occupancy justifies a discount on the property's value, known as the occupancy discount, which reduces both the bouquet and the annuity. In a free viager, by contrast, the buyer has full use of the property from the day of signing.

The stages of a viager sale

• Appraisal of the property's open market value, the starting point for the whole calculation.
• Negotiation of the bouquet, the annuity, the occupancy and the protective clauses (termination clause, indexation).
• Signing of the preliminary contract and then of the notarial deed, with registration at the French land registry.
• Payment of the bouquet on the day of the sale, then payment of the annuity at the agreed intervals.