BANK LOANS TO THE ELDERLY

Bare ownership and mortgage loan annuity

One of the hottest current issues is definitely the intergenerational conflict. It is well known that in our society are the elderly who usually have more money, at the expense of younger  people, who are also very hard to earn money on their own, relying therefore on parents and grandparents. In times of crisis like these, though, even the elderly often find themselves short of cash: they don’t have a high pension, cannot ask for money to their penniless children or grandchildren, but at least they can enjoy a home property obtained with the work and sacrifices of a lifetime.

In our legal system it was already existing an instrument to grant financial liquidity to a senior: the sale of the bare ownership. Nothing scandalous, also has Lidia Ravera talk about in her novel of great success. The point is this: a sprightly ultra-septuagenarian lady who needs money may choose to sell her house, but to keep for herself the right to peacefully live in it for the rest of her life; in exchange at  her death the property will become the property of a third party, the buyer of the bare ownership; with this practice she immediately gets from the buyer a large sum of money. This means that the market value of the house is decreased by a predetermined ratio, in relation to age of the usufruct’s holder: more that person is elderly, greater will be the amount received, since it is estimated a shorter number of years before inevitable “passage away", with the result that the property will be then immediately habitable by the purchaser. This system is practiced, although it still remains little used.

From now, there's another new arrival, the entry into force of the implementing regulation of the "life annuity mortgage loans". Essentially people who have completed 60 years of age can get a loan by mortgaging their homes, and this implies the ability to live peacefully without thinking of having to repay the loan. When the inevitable "passage away" occurs, the loan will be paid by the heirs, if they wish to keep for themselves the house. Otherwise the bank will sale on auction the property to cover the loan. If the sixties in question is married or cohabiting, also the spouse must be at least 60 years and both must sign the document. The bank does not do anything until to the death of the older of the two - unless facts emerge that call into doubt the moment the bank can be satisfied - and when that happens the other must leave the house. The reason is obvious: here too, as with an usufruct, more senior is the person applying for the funding, more higher will be the sum, because lower is the waiting time. Who asks him at 60 years should be able to get only about 20%, while those at 90, could end up with 60% of market value.

In one way or another with these two systems the years of old age can be more serene, but the other side of the coin is the emotional suffering but also financial of their heirs. Now if you really want to get more money why not trying a different way and planting them in the Field of Miracles as Pinocchio in Collodi's novel? Unfortunately this is just a fairy tale.

(15th March 2016 - Avv. Roberto Nicolini)

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