What are the risks of a viager and when can the sale be annulled?
A viager sale can be annulled if the seller dies within twenty days of the contract from an illness they already had, if the element of chance is missing or if the annuity is derisory. If payments stop, the termination clause lets the seller take the property back.
Nullity linked to the seller's death
The French Civil Code deprives of effect two contracts that lack any element of chance from the outset. An annuity created on the life of a person already deceased on the day of the contract produces no effect (Article 1974). The same applies where the seller dies within twenty days of the contract's date from an illness they were already suffering from at signing (Article 1975): nullity then applies even if the buyer was unaware of the illness.
A death within twenty days caused by an accident or by an illness that appeared after signing does not call the sale into question: Article 1975 requires the death to result from the illness the seller already had.
Missing element of chance and derisory price
Beyond the twenty days, the courts annul the sale where the element of chance was missing from the moment of signing, in particular where the buyer knew the seller's health was beyond hope. The legal basis today is Article 1169 of the French Civil Code, which renders void a contract for valuable consideration in which the agreed consideration is illusory or derisory.
The same provision grounds nullity for a derisory price: under settled case law, this is the case where the annuity is lower than the income the property yields or could yield, since the buyer then makes no real sacrifice. The action for nullity is time-barred after five years (Article 2224 of the French Civil Code).
Unpaid annuity: the seller's protections
Non-payment of the annuity does not, by itself, allow the sale to be rescinded: Article 1978 of the French Civil Code only entitles the annuitant to seize and sell the debtor's assets, with a sufficient sum set aside to keep the annuity paid. That is why viager deeds systematically include an express termination clause (Article 1225 of the French Civil Code): after a formal demand has gone unanswered, in practice a formal order to pay, the sale is rescinded and the seller takes the property back, most often keeping the bouquet and the payments already received as compensation, if the deed so provides.
The seller also benefits from the special statutory mortgage of the seller of real property (Article 2402 of the French Civil Code, formerly the seller's lien), registered when the sale is published, which entitles them to be paid in priority out of the property's price.
Other points to watch
- For the buyer: the longevity risk, since the annuity remains due however long the seller lives, with no possible revision.
- For the seller: the buyer's long-term solvency, to be checked before signing.
- For both: a rigorous appraisal of the market value and of the discount, and properly drafted indexation and termination clauses.
Frequently asked questions
Can the seller's heirs have the viager annulled?
Yes, in the cases provided by law: death within twenty days from a pre-existing illness (Article 1975 of the French Civil Code), a missing element of chance, or a derisory annuity (Article 1169). The action is time-barred five years from the day they learned of the facts allowing them to bring it (Article 2224).
Is the sale annulled if the seller dies in an accident shortly after signing?
No. Article 1975 of the French Civil Code covers only a death caused, within twenty days of the contract, by an illness the seller already had. An accident or an illness arising after signing leaves the contract valid, since the element of chance genuinely existed.
What can the seller do if the annuity is no longer paid?
Enforce the termination clause after a formal order to pay, in order to take the property back, or pursue forced recovery against the buyer's assets on the strength of their statutory seller's mortgage (Articles 1978 and 2402 of the French Civil Code).
Is a viager without a bouquet riskier?
Not legally: the bouquet is optional. Economically, the absence of a bouquet increases the share of the price exposed to the lifespan uncertainty and to the buyer's future solvency; the seller therefore has an interest in solid contractual guarantees.
Read next
- Code civil, articles 1974 et 1975 (Légifrance)
- Code civil, article 1169 (Légifrance)
- Code civil, articles 1225 et 1978 (Légifrance)
- Code civil, article 2402 (hypothèque légale du vendeur) (Légifrance)
- Code civil, article 2224 (prescription) (Légifrance)
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