Sale on Deferred Terms
Property sale with payment spread over a fixed, predetermined period, unlike the life annuity which depends on lifespan.
Full definition
The sale on deferred terms is a property transaction where the price is paid in several instalments over a period determined in advance (5, 10, 15 years, etc.). Unlike the life annuity, the payment period is fixed and does not depend on the seller's lifespan.
The seller receives an initial payment then fixed monthly instalments for the agreed period. They may retain occupancy of the property (occupied sale on deferred terms) or vacate it immediately (vacant sale on deferred terms). The payments stop on the scheduled date, whether the seller is alive or deceased.
The sale on deferred terms offers security to both parties: the seller knows exactly the total amount they will receive, and the buyer can precisely plan their financial commitment. It is suited to sellers who wish to pass on wealth to their heirs (the balance of the payments reverts to them in the event of death) or who prefer a limited transaction period. The total cost is generally higher than with a traditional life annuity.
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Related terms
Life Annuity
Property sale where payment is made in the form of an annuity paid to the seller until their death, with or without an initial bouquet.
Occupied Life Annuity
Sale via life annuity where the seller retains the right to live in the property (right of use and habitation or usufruct) until their death.
Vacant Life Annuity
Sale via life annuity where the buyer can occupy or let the property immediately after the purchase.
Bouquet
Capital sum paid to the seller on the day the deed of sale via life annuity is signed, generally between 20% and 40% of the property's value.
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