Culture : Life and Death and Real Estate in France : A practice called <i> viager</i> allows the elderly to sell their homes but retain lifelong use of them. The longer they live, the more the buyer has to pay.

PARIS — Although she came from a wealthy family, Hilda Astardjan was never very good at handling money.

“I was always a spendthrift,” she recalled with a smile as she sat stroking a fat tabby cat in her comfortable Paris studio apartment. “My father always told me that someday I would end up in a poorhouse.”

After a life spent happily frittering away her inheritance, she found herself more than a decade ago, at age 72, penniless in Paris with only her apartment to her name.

She feared that if she sold the apartment in Paris’ fashionable Marais district, she would soon spend that money, too. Her father’s prediction of penury seemed frighteningly possible.

Then, thanks to an unusual French real estate practice called viager, Astardjan got a new lease on life, based on the anticipation of her death.

Under the system of viager , a concept dating to the Middle Ages that has experienced renewed popularity in France, she was able to sell her apartment for a handsome price and continue living in it until she dies. As long as she lives, the buyer pays her a regular monthly sum that meets her living expenses.

Now 84 and going strong, Astardjan couldn’t be happier with the arrangement she made in 1978.

“This thing has saved me,” she said in a recent interview.

In addition to assuring her a steady income, parcelled out in monthly payments that help curb her spendthrift ways, viager allows her to continue living among friends in a familiar neighborhood.

“The concierge does my shopping for me,” she said. “The two men who live downstairs fuss over me. The woman across the hall checks in on me . . . . I am exactly where I want to be.”

Viager shares one of the aspects of so-called “reverse annuity” mortgages and charitable remainder trusts in the United States: It allows elderly people to benefit from the sale of their homes while retaining their lifetime use. But the U.S. instruments do not have the element of risk that is the key to viager.

For example, if a Parisian sells his property en viager and dies a month later, the buyer gets the property for the price of his modest down payment, never more than 30% of the sale price, without ever having made any of the healthy monthly payments that could have gone on for years. In other words, a buyer gains enormously from the untimely death of the seller.

On the other hand, if a seller lives on for 20 or 30 years, the buyer will have made payments totaling many times the property’s worth. If the buyer misses making a payment, the property reverts to the seller, who can then sell it again. A defaulting buyer loses the down payment and all of the monthly payments.

Sometimes termed “speculation on death,” viager is high stakes gambling on a person’s life, played by both buyer and seller. That is why the practice is banned in some countries of Europe, including neighboring Switzerland, which has a law specifically forbidding sales en viager.

Viager thrives in Paris and Nice, the two cities where it is most widely practiced. Despite its sometimes macabre aspects--sellers occasionally feign illness and disability to increase sale prices--the system is embraced by the French government as an effective way to reduce dependence on social security programs.

According to Bruno Legasse, one of the leading Paris agents, a record 5,000 viager real estate transactions were conducted in Paris last year.

The viager formula is occasionally varied in cases of owners of more than one property who do not live in the one they are selling. In such cases, the buyer gets immediate occupancy but no title until the seller dies, and the seller gets certain tax benefits as well. But the vast majority of viager sales involve aging home and apartment owners who sell their properties on condition that they continue to live in them until death.

The advantage to the sellers, Legasse said, is that they not only retain the properties for their lifetimes, but are also able to supplement their retirement incomes with the down payments and “rent” paid to them by the buyers. Because monthly payments are indexed to the cost-of-living rate in France, the seller is guaranteed an income that keeps pace with inflation.

Legasse said that the advantage to buyers is that down payments and sale prices are usually considerably less than they would be in cases of regular real estate transactions.

The down payment, called a bouquet, is never more than one-third the sales price and usually much less--even zero in cases.

The sales price is figured on the same kind of actuarial tables used by insurance agents in calculating life insurance rates.

Here’s how viager works in practice:

First, a fair market value is determined on the basis of a survey of recent sales of similar properties in the same neighborhoods.

Then, a viager price is established according to the age of the seller. The property of a 60-year-old seller is priced at 50% of its fair market value on the open market. In the case of a 70-year-old, the price is 60% of market value; for an 80-year-old, it’s 70%, and for a 90-year-old, it’s 80%.

Finally, monthly payments are based on the estimated life expectancy of the seller. In France, life expectancy at birth is 85 years for women and 81 years for men; actuarial tables show that persons reaching 80 will live an average of seven more years and that persons at 90 will live an average of four years more.

Playing the viager market is gambling that the seller will fall short of the statistical average.

A majority of sellers who employ the viager system are elderly people with no living heirs.

“The main reason for viager is that the people can’t make ends meet,” said Legasse.

However, a number of elderly sellers, Legasse said, are people who are angry with greedy children who pay little attention to them in their old age but still stand to inherit their property.

Most of the buyers of viager properties are professional people, often working abroad, who have large disposable incomes but limited capital. However, many are investors who play the viager market, just as speculators trade in commodity futures and stock options.

“I know bankers, businessmen and politicians who have made their fortunes thanks to viagers, “ said Legasse, whose own success in the business has allowed him to buy a vacation home in Florida and other properties. “I know politicians who have purchased 40 to 50 properties.”

Although there are plenty of stories about instant fortunes being made in the viager market, according to Legasse, the grim reaper is a remarkably consistent factor for investors. “In fact,” he said, “most people die when they are statistically expected to die.”

He named a French insurance company that has made a profit by selling policies to viager speculators, protecting them in cases of sellers who live far longer than their statistically calculated life spans.

Investors with the most to gain from the viager market, he said, are people with large incomes who have no immediate personal need for the properties they buy.

Among prominent French political figures who have dealt in the market was the late President Charles de Gaulle, who purchased his country home at Colombey-les-deux-Eglises en viager.

A more typical buyer is Colette Bouvard, 53, wife of French television anchorman and author Philippe Bouvard who bought Astardjan’s apartment in 1978. At the time, Colette Bouvard said she hoped the apartment would be available as a residence for her daughters while they attended the University of Paris. Since then, she has bought five other viager apartments. All of the sellers are still living.

“My daughters are now 35 and 36 years old, and not one of the apartments is free,” Bouvard said with resignation.

“You have to think of it as a lottery,” she added. “Sometimes you hit the good number with the big prize. Other times you have to wait.”

Considering the large sums of money sometimes at stake in transactions, it is not surprising that relations are often strained. No official cases are on record, but there are legends about buyers taking action to hasten the departure of sellers.

According to Legasse, the financial security that viager gives sellers often extends their lives, while the pressures of meeting high monthly payments have driven many a buyer to an early grave.

Stories of sellers who outlive their buyers or buyers who hit the viager jackpot are as common in the trade as horse gossip around racing stables.

“There’s the famous case of the owner of the Blue Bar in Cannes,” Bouvard recalled somewhat wistfully. “It was a bar that did great business but the owner wanted to retire. The owner was very fond of his maitre d’hotel and wanted to sell him the bar, but the guy didn’t have enough money. So he sold it to him en viager. Six months later the owner died and the property belonged to the maitre d’hotel. “

Buyers are sometimes known to carefully examine would-be sellers to estimate their possible life spans.

“I remember one couple that was thinking about buying my place,” said Astardjan. “I could hear them talking about how long they thought I might live. I thought it was amusing, but the bad side of this business is that these people are waiting for you to die so they can hop into your shoes.”

However, the good humored Astardjan, daughter of a Turkish-Armenian cotton merchant, said that she has had very good relations with Bouvard.

“She (Bouvard) took me out for a drink right after we signed the contract. She said she hoped I would go on and live a long happy life and that’s what I’ve done.”

Bouvard said she has generally tried to keep her distance from the aging viager sellers living in her properties.

“You know there are shady aspects on both sides,” Bouvard commented in an interview. “There are people who try to pass themselves off as much older and more frail than they actually are--as though they were nearly dying at the time of the sale. There are others who use makeup to try to fool the buyers.

“In my case, for example, I signed a viager with a man who had an air of great weakness and illness. Someone told me that he wasn’t for this world much longer because he drank and his health was very bad. But that was 10 years ago and he’s still kicking.”

The Deal: a Case Study in Viager PROPERTY: 2-bedroom apartment near Eiffel Tower SELLER: Age 65 MARKET VALUE: $100,000 DEPOSIT: $15,000 (15% of market value) MONTHLY PAYMENT: $236, increases 3.5% annually for cost of living TOTAL COST: Monthly payments + Deposit

If seller dies after: The buyer has paid: 1 year $17,832 5 years $30,187 10 years $48,223 15 years $69,645 20 years $95,088 25 years $125,306