Life annuity home sale (French viager)
The sale of a home for an upfront payment and a lifetime income paid to the seller until death: the buyer alone carries a longevity risk that nothing pools.
In a viager sale, the seller transfers a home in exchange for a lump sum paid at signing, the bouquet, and an income paid until death; most often the seller keeps living there (occupied viager), which lowers the price through a discount for the retained use. The contract turns an illiquid property into income, with no borrowing and no need to move out. Its price rests on the seller's life expectancy, read from a mortality table, and on a discount rate. French law requires a real uncertainty: a sale made to someone whose death was imminent and known can be voided. The difference from an insurer's annuity is decisive: the buyer is an individual who alone carries the longevity risk of a single life, with no pooling, so the gap between expectation and outcome can be enormous.
In 1965, André-François Raffray, a 47-year-old notary in Arles, bought Jeanne Calment's apartment as a viager, when she was 90, for an income of 2,500 francs a month. He died in December 1995, at 77, without ever living there; his widow kept paying until Jeanne Calment died on August 4, 1997, at age 122. The family paid more than twice the value of the apartment in all.
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