A smaller one-off payment and then a lifelong annuity are offered for your house. At first glance that can seem like a normal sale with comfortable monthly instalments. But the decision is different: with a life annuity (Leibrente) the same fixed total sum with a defined end to the instalments is not necessarily already determined. You jointly assess ongoing payments, security and your future housing.
This article concerns Germany. It is an editorial decision aid and not a contract template, not an individual annuity valuation and not a recommendation for a specific annuitisation offer.
Understand the indeterminate period first
§ 759 Absatz 1 BGB provides that, in case of doubt, a life annuity must be paid for the creditor’s lifetime. [DAUER] For your offer it must therefore be clarified whose life the payment relates to and which additional agreements are actually envisaged.
A fixed purchase price debt paid in monthly instalments is a different starting point. There the total sum can be fixed while its payment is deferred. With a lifetime-dependent payment the editorial team must not simply choose a desired period and then describe its sum as a secure purchase price. Additional minimum terms or payments to other persons are only taken into account if they are actually included in the offer and have been appropriately assessed.
Two calculation cases show the changed question
In the completely fictitious model €200.000 at the start and €800 monthly are envisaged. Purely arithmetically ten years of monthly payments yield a further €96.000 and thus €296.000 in total. Twenty years yield a further €192.000 and thus €392.000 in total.
These are two freely chosen payment durations, not a prediction of a lifespan and not a recommendation for an annuity level. Interest, changes in the value of money, taxes, fees and a possible value of a remaining right of use are deliberately not calculated. The two simple totals therefore do not prove a fair price nor personal financial suitability.
But they make visible why a single optimistic sum can distort the comparison. A professional assessment must take account of the actual arrangement and the risks taken on. Your own calculation remains a preparation for this review.
Do not treat future housing needs as an aside
Should you continue to stay in the house or live elsewhere after the sale? This question helps determine how much money is actually required at which time. A remaining right of use is examined according to its concretely agreed scope; the general phrase “you can of course stay” does not replace a suitable arrangement.
Our practical recommendation is to describe the ordinary next few years and a changed housing need. What if you want to move later or can no longer use the house yourself? Which costs remain with you, which tasks does the other party take on? The article does not decide on personal care or a suitable form of housing. It helps to include this foreseeable financial interface in the contractual assignment.
Check for missed payments before being taken in by the pleasant monthly view
The ongoing payment should not be judged solely by the present affability of the buyer side. Ask how an agreed security is concretely envisaged and what would need to be done in a difficult course of events. What position would a security have alongside existing encumbrances? Which steps and costs would be expected in the event of non-payment?
An entry in the land register is not presented as a complete default guarantee without examination. Even a valuable house does not automatically make a monthly payment arise punctually. The concrete legal and economic assessment requires the complete offer and the actual circumstances.
Observe the form of the whole transaction
§ 761 BGB generally requires a life annuity promise to be made in writing, unless another form is prescribed. For the contract on the transfer or acquisition of land ownership § 311b Absatz 1 with its notarisation requirement is also decisive. [VERSPRECHEN] [GRUNDSTUECK] The monthly payment is therefore not simply outsourced into a private side agreement.
Give the notary the actual overall plan: one-off payment, annuity receipt, any continued occupation, cost allocation and desired security. Tax consequences and economic assessment will additionally be appropriately classified. A linguistically short agreement is not automatically simple financing.
The decision can then factually be to have the offer further specified, to prefer a different payment structure or not to pursue it further. Crucial is whether the concrete combination of consideration and future housing need is plausibly appropriate. A high possible sum after many assumed years alone does not answer this question.