Viager

Viager: Real Estate Deals for Secure Lifetime Income

What is a viager?

A viager is a real estate contract, common in France, in which a buyer purchases property from a seller by paying:
* an upfront lump sum (the “bouquet”), and
* ongoing periodic payments for the remainder of the seller’s life.

Under a typical viager, the seller continues to live in the home until their death; full ownership transfers to the buyer only after that point. The arrangement is often described as a reverse annuity because the seller receives lifetime income while the buyer wagers on the seller’s remaining lifespan.

How it works

• Buyer pays a bouquet at contract signing.
• Buyer makes regular lifetime payments to the seller.
• Seller retains the right to live in the property (occupancy) until death.
• If the buyer defaults, the seller generally keeps the bouquet, all payments received, and ownership of the property.

Viagers are commonly negotiated privately, typically with legal assistance rather than involving banks or insurers.

Benefits

For sellers:
* Steady lifetime income, which can be especially helpful for widows, widowers, or retirees.
* Potential tax advantages under local rules.
* Strong legal protections if the buyer defaults.

For buyers:
* Potentially lower effective purchase price because payments reflect the property’s occupied value rather than full market value.
* No interest costs as with a conventional mortgage.
* Possibility of acquiring a property at a discount if the seller dies relatively soon after the sale.

Calculating value

Key factors in valuation:
* Occupied value: the property’s value adjusted for the seller’s continued occupancy; typically lower than market value.
* Seller’s age: younger sellers yield a higher occupied value; older sellers a lower one.
* Bouquet size: often around 30% of the occupied value (varies by deal).
* Periodic payments: calculated using the seller’s life expectancy and the agreed valuation.

Because payments are life-dependent, very elderly sellers sometimes prefer an outright sale to receive the full market price immediately.

Risks and protections

Risks for buyers:
* If the seller outlives life-expectancy estimates, the buyer may pay substantially more than anticipated.
* The buyer does not gain full possession until the seller’s death in an occupied viager.

Protections for sellers:
* Retention of the bouquet and any payments already made if the buyer defaults.
* Contractual terms can include clauses to secure payment obligations.

When a viager makes sense

• For sellers who want guaranteed lifetime income and to remain in their home.
• For buyers willing to accept longevity risk in exchange for a lower purchase cost and no mortgage interest.
• For parties preferring a private, lawyer-mediated arrangement rather than bank financing.

Bottom line

A viager is a specialized property sale that converts home equity into a lifetime income stream for the seller while giving the buyer a potential discount and future ownership. It balances financial advantages and clear risks—principally the uncertainty of the seller’s lifespan—so it is best used when both parties understand valuation methods, legal protections, and the long-term commitments involved.