Rescission Clause
Contractual provision allowing automatic cancellation of the sale in the event of non-payment of the annuity by the buyer.
Full definition
The rescission clause is a fundamental legal protection for the seller in a life annuity. It provides for the automatic cancellation of the sale if the buyer (annuity debtor) fails to meet their obligations, in particular the payment of the annuity.
In practice, the rescission clause is triggered after a formal notice that has remained without effect for a period set out in the contract (generally 1 to 3 months). The seller then recovers full ownership of their property, and the sums already paid (bouquet and annuities) remain theirs by way of damages.
This clause constitutes a major guarantee for the annuitant and must be included in the authentic deed of sale. It is almost systematically included in sales via life annuity in Luxembourg. Combined with the seller's lien, it ensures optimal protection against the risk of the buyer defaulting.
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Related terms
Seller's Lien
Legal guarantee giving the seller priority of payment over the property sold in the event of the buyer defaulting.
Annuity Debtor (Buyer)
The buyer of the property under a life annuity, the person who pays the bouquet and the life annuity to the seller.
Life Annuity (the pension)
Sum paid periodically (monthly or quarterly) to the seller until their death, calculated according to the value of the property and life expectancy.
Authentic Deed
Official document drawn up by a notary that formalises the sale via life annuity and gives it enforceable status.
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