Lifetime maintenance agreement is a profitable way to buy an apartment or an unnecessary risk

Denis Ichitovkin. Visiting grandmother. 2006

It would seem that such a dream has no chance of becoming a reality, however, a life-long maintenance agreement provides such a unique opportunity, if, of course, it is concluded according to all the rules.

In the Civil Code of Russia, an agreement for life maintenance is an agreement concluded between two individuals, where the subject of the agreement becomes real estate – a house or an apartment. Thus, one of the parties, which is a disabled person for health reasons or by age (hereinafter – the alienator), transfers to the second party, which is the acquirer of real estate, the living space – an apartment, a house or part of them. In return for the living space, the acquirer of the property undertakes to provide the alienator with material life support in kind in the form of housing, care, food and necessary assistance. Of course, the monthly amount of money can act as material security, the size of which is negotiated separately..

The people often call all this with just one word – “to watch”. At first glance, a lifelong maintenance agreement is very beneficial for both parties – an elderly person receives material and physical assistance, avoids the fate of old people who are forced to move to a nursing home and comfortably live out his last years, surrounded by attention and care. And the recipient of the property gets an apartment or house, the cost of which far exceeds all the costs associated with caring for an elderly person.

The main problem remains – to find a grandmother or grandfather who would agree to conclude such an agreement. Interestingly, according to the Civil Code, any disabled person who has reached the age of majority, in particular a disabled person of groups 1, 2 and 3, regardless of age, can become an alienator in a life maintenance contract, but most often such transactions are concluded with senior citizens, which is quite understandable – to the recipient property would not want to wait too long for the desired living space.

Searching for lonely old people on the Internet is a useless activity, such people rarely advertise. Of course, you can turn to intermediaries who, in the event of a life-long maintenance agreement, take a percentage of the market value of housing, but this is the most expensive option associated with the risk of becoming a victim of fraud. The best way to find single retirees looking to conclude a life-long maintenance agreement in exchange for living space is through friends and acquaintances, as well as through organizations that deal with the problems of retirees – veterans’ unions, social security departments, and so on. But in this case, there is another risk – inquiries may raise suspicions among officials and an overly active citizen will be considered a fraud. It turns out that it is very difficult to do without personal connections in the search for lonely pensioners who are ready to become alienators..

Leonid Milovanov. An old woman with firewood (Lida Sysoeva). 2008

Despite the attractiveness of acquiring real estate by concluding a life-long maintenance agreement, such an agreement is often associated with risks, both for one and for the party..

And here there are two main aspects – legal risks associated with non-fulfillment of obligations and termination of the contract, as well as the human factor. After all, a contract of lifelong maintenance, concluded between people who most often did not even know before, implies their long, sometimes daily communication. It is good if the monthly rent is paid in cash and can even be sent by mail, and if the contract provides for daily care of an elderly, sick person, providing him with medical assistance, going to pharmacies, shops, cooking – conflicts in such a situation arise very easily and may lead one of the parties to simply change their minds to continue to comply with the terms of the agreement. So, when concluding a life-long maintenance contract with a dependent, you should not think that real estate will come easily – often such forced close relationships drag on for many years and take a lot of time and effort.

Regarding the legal aspect, I would like to note that both parties can be in the role of cheated by unscrupulous partners, therefore, it is necessary to carefully study all the features of this agreement and spell out the obligations of the parties in as much detail as possible.

For the elderly, it is extremely important that a contract of lifelong maintenance with a dependent was concluded, and not a contract of sale or a contract of permanent annuity with the right to buy out the property by the annuity payer. It is impossible to issue a donation for housing, since in this case all legal rights immediately pass to the recipient, and the pensioner may be on the street. And the will, according to which the apartment becomes the property of the person who provided material assistance after the death of the alienator, can easily be changed without the knowledge of the other party, so this way of signing the agreement is already risky for the recipient.

Only a life support contract with a dependent, concluded in accordance with all the requirements of the law, guarantees that, until the death of the alienator, the recipient of the property does not have the right to any real estate transactions – to evict the pensioner, sell housing, exchange it or use it as collateral when receiving a loan. That is, by concluding a life maintenance contract with a dependent, the alienator does not run the risk of being left without a living space – his only risk is that the recipient may approach his obligations in bad faith, however, in this case, the life maintenance contract may be terminated in court and the pensioner again stays alone with his own home.

In addition, it is important for the alienator that the market value of the apartment is indicated in the contract, as well as all the obligations of the recipient are clearly spelled out, since the amount of monthly maintenance may be lower than the homeowner originally expected.

Karl Bryullov. Dream of grandmother and granddaughter. 1829

The risk to the recipient of the property is usually much greater, and the risk begins already at the stage of signing the contract for life support. If in the future it is proved that at the time of signing the agreement the alienator was not legally capable, the agreement will be invalidated, and no one will return the money spent. So, before signing the contract, you must ask the pensioner to provide certificates confirming his legal capacity.

It is also worth carefully writing down all the obligations of the recipient and the amount of payments. Sometimes the alienator demands to pay him part of the cost of housing at a time, in which case the risk of becoming a victim of fraud increases many times. If a pensioner demands to immediately pay 30-40% of the cost of housing, and the rest – through monthly payments, you need to think about whether it is worth concluding an agreement on such conditions. In addition, the responsibilities of the recipient can include a fairly wide list of things, such as:

• provision of medical care, that is, payment for treatment, hospital stay, necessary medications – all this can result in a fairly substantial amount;
• provision of clothing and footwear;
• Three meals a day;
• cleaning an apartment or house;
• payment for utilities and communications;
• and even providing a cultural program such as visiting theaters or movies.

It is best if the contract for life support specifies the maximum monthly rent, which no party has the right to exceed. And in order to protect the alienator from deception, it is worth indicating the minimum amount below which the costs of the recipient of the property cannot fall.

It is necessary to remember about such nuances:

• the contract for life maintenance is considered concluded and ensures the rights of the parties only if it is certified by a public and not a private notary;
• if during the term of the contract the property is damaged or destroyed, this does not relieve the recipient of his obligations. That is, if a house or apartment is seriously damaged by fire, this will not relieve the recipient of the obligation to pay maintenance and take care of the pensioner;
• in case of termination of the contract in court, even if this is done at the initiative of the recipient, for example, if his financial situation has changed and he can no longer make payments and provide assistance, then his costs will not be compensated.

Thus, a lifelong maintenance agreement can be a great way to purchase housing on installments and at a fairly low price, but it is worth doing everything possible to hedge against possible risks. In particular, it is necessary to stipulate in advance all the details of the agreement that would suit both parties, as well as to fix the signing of the agreement with a state notary without fail.

In addition, the recipient should keep all receipts and receipts related to the costs of care and maintenance of the elderly person, as this will be the best proof of their fulfillment of obligations in the event of a termination case in court..

© Anna Sedykh, specially for rmnt.ru