Rights to Purchase, Rights of Usage…A La Vie Française
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Dear Parler Paris Reader,
I would never advise anyone to do what I have just done. It took about one-and-one-half years to accomplish this goal and there is yet much more work to be done to see the project through to completion, but there will certainly be no regrets.
Let me explain.
I first saw the small studio apartment on the fourth floor of stairwell “A” of my own building in the Marais when the “Syndic” (homeowner’s association manager) called in a small group of residents to meet there. Stairwell “A” is the only one of the four entrances with an elevator and a large skylight over the 5th floor bathes it in light.
The door to the apartment is particularly small and the ceilings in the hall lower than normal, but upon entering the apartment, I was at once enchanted. Three windows lead to a large terrace on the roof, a skylight fills the room with even more light, exposed beams stripe the ceiling, a small mezzanine houses some odds and ends and two archways, one with a staircase leading absolutely nowhere, provides endless charm. It hadn’t been touched in years, but it was neat and clean with no real sign of everyday living. Under my breath, I remarked, “I’d love to buy this place,” and the Syndic whispered back, “Don’t tell anyone!”
We were called there to discuss the terraces of this apartment and the one adjacent, both overlooking the street and rooftops of Le Marais. Neither had ever been written into the deeds nor assessed for charges by the “copropriété” (homeowner’s association), therefore the issue would be addressed at the upcoming yearly “assemblée générale” (meeting). At the meeting, knowing I wanted to buy the apartment, I said nothing listening to the discussion with anxiety. They could have voted to destroy the terraces, but the woman who owned the adjacent apartment pleaded and won the case, so they were left in tact.
Immediately following, I started the process to learn more about the apartment and how I could acquire it. The story is fascinating yet strangely typical: An elderly gentleman, now an invalid in his late 80s, sold the apartment in 1989 as a “viager” with the “droit d’usage” (rights of usage) till his death. A viager is a French real estate agreement where property is sold on a reverse annuity basis, also known as a Reverse Annuity Mortgage or Charitable Remainder Trust. “Investopedia” Says: For example a person would sell their property to a purchaser in exchange for a down payment and regular cash installm
ents for the rest of their life while continuing to live in the house. The only catch is that when the person dies the property is surrendered to the purchaser. The advantage of a viager agreement is it allows elderly people to benefit from the sale of their homes while retaining its use.
Shortly before I moved into the building in 1997, the man who had purchased it died(!), leaving it to his heirs along with taxes due. The heirs subsequently defaulted on the taxes and the property fell into the hands of the “State” (France).
The Syndic could tell me only sketchy information about the apartment — some of which I learned only Monday: the primary space is approximately 20m2, but there are two cellars, a small storage closet across the hall and a small room with a window further down the hall on the other side of the elevator, all included. The terrace is actually not part of the property, as it’s commonly owned by the homeowner’s association, but the access to it is only via the apartment and there is no easement. To date, I have not seen anything but the main apartment and that was one-and-one-half years ago.
The agency responsible for the property was the “DNID,” (Direction Nationale d’Interventions Domaniales). It was difficult to obtain information from them, but working via the Notaire (property attorney), was able to make formal offers to purchase the whole lot. Over the course of a year, three offers were made until my last and final offer was accepted — by my calculation about one-half of what the property is worth now (if it weren’t a viager).
The Notaire claims it was one of the most difficult cases with which he’s ever dealt. In the course of acquiring the Power of Attorney for him to sign on the State’s behalf, the resident gentleman didn’t respond to any of the letters or phone calls asking for access to the apartment in order to perform the necessary diagnostics required by law: the “Loi Carrez” (details about the exact size of the property — the surface of the property excluding anything with a lower head space than 1,80m and all rooms smaller than 8m2) and the content of lead, asbestos and termites. I am sure this is because he no longer actually lives there, leaving it virtually unused and unattended to most of the year.
I agreed to release the State from the responsibility to provide these documents and finally, after months of dealings with the DNID did we have the Power of Attorney and all necessary documents to sign the first contract — the “Promesse de Vente.”
Monday afternoon, with only me and the Notaire with whom we regularly work in his office on rue du Louvre, did we review the details and sign. It was then I learned there were more “pieces to the puzzle” than anticipated (yeah!) including rights of usage to the toilet on the hall (buildings this old had common toilets for use by the servants on these upper levels). The document states that the resident has no rights to rent the apartment and must reimburse me for a portion (about 2/3) of the copropriété charges. There are no back taxes owed, fortunately, but I have no rights to enter the flat without express permission from the resident.
My 10% deposit will be held in escrow by the Notaire and when it comes time to sign the final deed (“Acte de Vente”) in early September, the remaining balance, the taxes and Notaire fees will be due along with proof of homeowner’s insurance. The taxes and fees were calculated at 7.13% of the purchase price broken down as follows: 76.5% goes to the State, 17.87% to the Notaire and 5.63% to various other fees.
Friday I will visit our lender, Banque Patrimoine et Immobilier, who has agreed to provide a loan to cover 100% of the costs. When all this transpires, I’ll be the proud owner of a viager apartment. For now, it’s better than stocks, bonds or savings account, but as a vacation rental apartment it will be quite profitable. Naturally I hope to recover it as quickly as possible from the gentleman who has the rights of usage.
How will I do that? Stay tuned.
A la prochaine…
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“Rights to Purchase, Rights of Usage…A La Vie Française”
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