Occupied viager or free viager: what are the differences?
In an occupied viager, the seller keeps a right of use and habitation: the price is reduced by an occupancy discount and expenses are shared between occupant and buyer. In a free viager, the buyer has immediate use of the property and bears all the expenses, in exchange for a higher annuity.
Two formulas, two logics
The occupied viager, by far the most common, lets the seller stay in their home: they reserve a right of use and habitation, more rarely a usufruct. The free viager hands the property over to the buyer immediately, who can live in it or rent it out from the day of signing. The choice depends first on the seller's plans: staying in their home while receiving extra income, or freeing up the property to maximize the bouquet and the annuity.
The key differences are as follows: enjoyment of the property stays with the seller in an occupied viager (right of use and habitation) and passes to the buyer at signing in a free viager; the occupancy discount applies only in the occupied viager; for a property of equal value, the annuity is lower when occupied and higher when free; routine maintenance falls to the occupying seller (Article 635 of the French Civil Code) in an occupied viager and to the buyer in a free viager; the major repairs of Article 606 fall to the buyer as owner in both cases; renting out is impossible for the seller (Articles 631 and 634) and possible for the buyer of a free viager.
| Criterion | Occupied viager | Vacant viager |
|---|---|---|
| Use of the property | Kept by the seller (right of use and occupation) | Passes to the buyer at signature |
| Discount on the value | Yes, an occupation discount | No |
| Annuity for an equal property value | Lower | Higher |
| Day-to-day upkeep | The seller in occupation (Article 635 of the Civil Code) | The buyer |
| Major repairs (Article 606) | The buyer, as owner | The buyer |
| Letting it out | Not open to the seller (Articles 631 and 634) | Open to the buyer |
Occupied and vacant viager: the key differences
The occupancy discount, key to the occupied viager
The occupancy discount represents the value of the right of use and habitation kept by the seller. It depends on their age and on the property's rental value: the younger the seller, the longer the expected occupancy and the larger the discount. The bouquet and the annuity are calculated on the occupied value, that is, the market value minus this discount.
The right of use and habitation is strictly personal: the seller may neither assign it nor rent out the property (Articles 631 and 634 of the French Civil Code). If they wish to keep the option of letting, they must instead reserve a usufruct, a formula that increases the discount and reduces the bouquet and the annuity accordingly.
Who pays what: expenses, repairs and taxes
In an occupied viager, unless the deed states otherwise, the allocation follows the rules of Articles 625 et seq. of the French Civil Code: the occupant who enjoys the whole home bears maintenance repairs and current charges, like a usufructuary (Article 635), while the major repairs defined in Article 606, such as rebuilding load-bearing walls or the roof, remain the responsibility of the buyer as owner.
The French property tax (taxe foncière) is assessed in the owner's name, therefore the buyer's, since the exception in Article 1400 of the French General Tax Code covers in particular the usufructuary and not the holder of a mere right of use and habitation; the deed may nevertheless shift its final cost to the occupying seller. The residence tax on second homes, where due, falls on the occupant. In a free viager, the buyer bears all the property's expenses and taxes.
Frequently asked questions
Can the seller of an occupied viager rent out the home?
No if they reserved a mere right of use and habitation, which can be neither assigned nor rented out (Articles 631 and 634 of the French Civil Code). Yes if they reserved a usufruct, which allows letting, but the discount applied to the price is then larger.
What happens if the seller moves into a care home?
The right of use and habitation does not lapse automatically. Deeds very often include an early release clause: if the seller leaves the premises for good, the annuity is increased by an agreed percentage to compensate for giving up the right.
Is the free viager a good rental investment?
It can be: the buyer collects rent from the day of signing while spreading the payment over time. In return, they bear a higher annuity, the longevity risk and all the owner's expenses.
Who pays the co-ownership charges in an occupied viager?
Unless the deed states otherwise, routine maintenance charges fall to the occupying seller and major works to the buyer, under Articles 635 and 606 of the French Civil Code. In practice, the deed of sale spells out this allocation item by item to avoid disputes.
Read next
- Code civil, articles 625, 631, 634 et 635 (Légifrance)
- Code civil, articles 605 et 606 (Légifrance)
- Code général des impôts, article 1400 (Légifrance)
- Code général des impôts, articles 669 et 762 bis (Légifrance)
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