Seller's Guide	TV Report

The right of use and residence

- The right to live personally in a property for one's entire life.
This is a restricted version of "usufruct", in the sense that the annuitant has the right to reside in the property, with his or her family, but without the right to make money from the property. Nonetheless, he or she has no extra charges to pay other than those of an ordinary tenant. The right of use is personal, non-transferable, and is automatically forfeited upon the death of the annuitant.

Obviously, this right of use does not have the same value as that of "full property rights" - it is worth considerably less because the use of the property's facilities for financial gain is not permitted.

Its value will clearly depend on how much longer the right of use and residence is reserved - this is based on the life expectancy of the annuity, and his or her age.

It is only upon the death of the annuitant that the buyer possesses the full property rights, and it is only at this moment that the property will be worth its full value.

The advantages of Life Annuity

More incomes

The annuity income is the main source of revenue resulting from the sale of a property in exchange for a life annuity. It is worth noting that this sum (paid monthly or quarterly) is based on an index - ie: it is recalculated every year to consider inflation.

Viagers Lapous carries out these re-evaluations, free of charge.

Less charges

The sale of an occupied property implies, from the moment the deed is signed, that the property ownership is transferred to the buyer. As a result, the seller no longer has to pay reparation charges, which are often high, or land tax.

More guarantees

Our contracts, drafted by Mr Herv¨¦ Lapous, with the greatest care, thanks to his thirty years of experience, will allow you to obtain the best guarantees possible concerning the payment of the annuity income. A mortgage registration of the highest calibre will be arranged for you, with a resolutive clause in place to assure your peace of mind. This will allow you, with the minimum of formalities possible, to cancel the sale in the event of non-payment.

Less taxes

In accordance with taxation laws, a general exemption is often possible for primary residences. Most people who take out a life annuity are able to take advantage of this situation.

Furthermore, those over 69 years of age benefit from a 70% tax reduction on their annuity income, which is a great advantage from a tax point of view.

Evolution across time of the value of empty property rights and usufruct

The value of the empty property rights gradually catches up with that of the full property rights as time passes, while the value of the usufruct progressively falls until it reaches zero on the day of the annuitant"s death. However, the relationship between the value of the empty property rights and that of the usufruct can vary greatly during the contract period. The same applies to the correlation with the full property value.

It is therefore difficult on any given day to calculate exactly how much the full property rights are worth, knowing that according to the INSEE statistics, the buyer will only fully own this property after a certain number of years, calculated according to the average life expectancy in France.

Of course, such a figure would be an estimate, as the annuitant may well live longer than the average lifespan, or indeed die young.

This is the risk of life annuities, as defined by article 1964 of the Civil Code.

For this survey, the specialist's role is to calculate the value of the annuity as fairly as possible

Conclusion

The addition of an indexation clause in the sale contract, as well as a resolutive clause in case of non-payment, is essential.

It is particularly important to pay attention to the way the contract is written, as it could be worded in several different ways, even though only one form of resolutive clause is valid. The specialist is responsible for adding the correct one to the contract.

NB: The resolutive clause is rarely implemented. In practice, if the buyer is unable to pay the annuity, an agreement is made, or the property is sold back to the original owner.