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Culture : Life and Death and Real Estate in France : A practice called viager allows the elderly to sell their homes but retain lifelong use of them. The longer they live, the more the buyer has to pay.


PARIS — Although she came from a wealthy family, Hilda Astardjan was never very good at handling money.

"I was always a spendthrift," she recalled with a smile as she sat stroking a fat tabby cat in her comfortable Paris studio apartment. "My father always told me that someday I would end up in a poorhouse."

After a life spent happily frittering away her inheritance, she found herself more than a decade ago, at age 72, penniless in Paris with only her apartment to her name.

She feared that if she sold the apartment in Paris' fashionable Marais district, she would soon spend that money, too. Her father's prediction of penury seemed frighteningly possible.

Then, thanks to an unusual French real estate practice called viager, Astardjan got a new lease on life, based on the anticipation of her death.

Under the system of viager , a concept dating to the Middle Ages that has experienced renewed popularity in France, she was able to sell her apartment for a handsome price and continue living in it until she dies. As long as she lives, the buyer pays her a regular monthly sum that meets her living expenses.

Now 84 and going strong, Astardjan couldn't be happier with the arrangement she made in 1978.

"This thing has saved me," she said in a recent interview.

In addition to assuring her a steady income, parcelled out in monthly payments that help curb her spendthrift ways, viager allows her to continue living among friends in a familiar neighborhood.

"The concierge does my shopping for me," she said. "The two men who live downstairs fuss over me. The woman across the hall checks in on me . . . . I am exactly where I want to be."

Viager shares one of the aspects of so-called "reverse annuity" mortgages and charitable remainder trusts in the United States: It allows elderly people to benefit from the sale of their homes while retaining their lifetime use. But the U.S. instruments do not have the element of risk that is the key to viager.

For example, if a Parisian sells his property en viager and dies a month later, the buyer gets the property for the price of his modest down payment, never more than 30% of the sale price, without ever having made any of the healthy monthly payments that could have gone on for years. In other words, a buyer gains enormously from the untimely death of the seller.

On the other hand, if a seller lives on for 20 or 30 years, the buyer will have made payments totaling many times the property's worth. If the buyer misses making a payment, the property reverts to the seller, who can then sell it again. A defaulting buyer loses the down payment and all of the monthly payments.

Sometimes termed "speculation on death," viager is high stakes gambling on a person's life, played by both buyer and seller. That is why the practice is banned in some countries of Europe, including neighboring Switzerland, which has a law specifically forbidding sales en viager.

Viager thrives in Paris and Nice, the two cities where it is most widely practiced. Despite its sometimes macabre aspects--sellers occasionally feign illness and disability to increase sale prices--the system is embraced by the French government as an effective way to reduce dependence on social security programs.

According to Bruno Legasse, one of the leading Paris agents, a record 5,000 viager real estate transactions were conducted in Paris last year.

The viager formula is occasionally varied in cases of owners of more than one property who do not live in the one they are selling. In such cases, the buyer gets immediate occupancy but no title until the seller dies, and the seller gets certain tax benefits as well. But the vast majority of viager sales involve aging home and apartment owners who sell their properties on condition that they continue to live in them until death.

The advantage to the sellers, Legasse said, is that they not only retain the properties for their lifetimes, but are also able to supplement their retirement incomes with the down payments and "rent" paid to them by the buyers. Because monthly payments are indexed to the cost-of-living rate in France, the seller is guaranteed an income that keeps pace with inflation.

Legasse said that the advantage to buyers is that down payments and sale prices are usually considerably less than they would be in cases of regular real estate transactions.

The down payment, called a bouquet, is never more than one-third the sales price and usually much less--even zero in cases.

The sales price is figured on the same kind of actuarial tables used by insurance agents in calculating life insurance rates.

Here's how viager works in practice:

First, a fair market value is determined on the basis of a survey of recent sales of similar properties in the same neighborhoods.

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