# Viager Transactions Explained: Real Estate Deals for Secure Lifetime Income

## What Is a Viager?

In a viager [real estate](https://www.investopedia.com/terms/r/realestate.asp) transaction, the buyer makes a down payment and ongoing payments until the seller passes away.

Viagers are popular in France. In addition to the down payment and continued payments, the seller continues to live in the home until their death. After that, the buyer gains full ownership of the residence.

The mutual benefits of a viager are property acquisition at reduced rates for buyers and regular cash payments for sellers. The risk is if the seller lives longer than anticipated, in which case the buyer pays more via longer payments.

Viager agreements are often negotiated privately with a lawyer, leaving out banks and insurance companies.

In addition to the unique financial advantages for sellers (often new widows or widowers who need the regular source of income that the payments offer) and buyers (homes at reduced rates), viagers also offer tax breaks for sellers.

### Key Takeaways

*   A viager is a French real estate transaction where buyers pay sellers until they pass away, offering a potential financial advantage to each party.
*   In a viager deal, the seller continues to live in the home until their death, after which the buyer gains full ownership.
*   Sellers often benefit from regular cash payments and potential tax breaks, while buyers may acquire property at reduced rates.
*   Viager agreements do not typically involve banks or insurance companies, relying instead on private negotiations often facilitated by a lawyer.
*   The financial risk for buyers lies in the seller potentially living longer than expected, requiring more payments than anticipated.

## How Viager Contracts Benefit Buyers and Sellers

Essentially, a "viager" is a reverse [annuity](https://www.investopedia.com/terms/a/annuity.asp). For homebuyers, viagers are gambles, while for home sellers, they offer the security of regular cash installments. A viager is sometimes called a reverse annuity mortgage or a charitable remainder trust.

In a viager agreement, a person agrees to sell their property to a purchaser in exchange for a down payment, known in France as the "bouquet," and regular cash installments for the rest of their life. Additionally, the seller continues to live in the house for the remainder of their life. It is only when the seller dies that the purchaser is free to take over the property. In essence, the buyer in a viager is wagering on the remaining lifespan of the seller.

In France, two private parties often negotiate a viager with the help of a lawyer and without the participation of banks or insurance companies. The deal can potentially benefit both parties. For example, sellers receive significant tax breaks. What's more, cash payments are strongly guaranteed. If the buyer [defaults](https://www.investopedia.com/terms/d/default2.asp), the seller retains the down payment, all of the monthly payments up to that point, and ownership of the property. Sellers are often widows or widowers who are in need of a regular source of income after the death of a spouse.

For buyers, viagers offer the draw of a home purchase at reduced rates. Viager transactions use the home's occupied value, which is typically lower than the market value. Buyers don't pay interest on the property, and if the seller dies early, they save even more. The risk is if the seller lives longer than expected, the buyer will pay more. A typical viager buyer is middle-aged and aims to secure a home for retirement.

## Calculating the Value in a Viager Transaction

A viager's property value, called the occupied value, depends on the seller's age. A home owned by a 50-year-old has a higher occupied value than one owned by a 70-year-old. The down payment tends to land at about 30% of the occupied value. Cash installments are calculated using the seller's average life expectancy. Because of these guidelines, very old sellers would often be better off selling their homes outright and receiving the full market value.

## The Bottom Line

A viager is a unique real estate transaction used primarily in France, in which the buyer pays the seller a down payment followed by regular installments throughout the seller's lifetime.

For sellers, often widows or widowers, the appeal is gaining a steady income stream after losing a spouse. For buyers, the appeal is the potential financial advantage of purchasing properties at reduced rates—but with the risk of extended payments if the seller's lifespan exceeds expectations.

Viagers offer legal and financial protections for sellers, such as retaining all previous payments and ownership if the buyer defaults.

Viager transactions are more feasible and attractive for younger age groups, since cash installments are calculated based on the seller's average life expectancy. Older sellers might find more benefit in outright sales for full market value.