The concept and types of rental agreement

Historically, an annuity contract is a construction that, up to the beginning of the twentieth century, made it possible to solve the problems of social security that did not exist then with the help of civil law. Today, rent retains its importance as an alternative and additional source of income, as a rule, for the maintenance of citizens. In this article, we consider the general provisions of the annuity contract, the types of annuity, its features, forms and legal nature.

Rent concept

An annuity contract should be understood as an agreement according to which the recipient of the annuity (first party) transfers the property to the payer (second party), and the payer agrees to periodically pay the rent in exchange for the received property complexes. The modern concept and types of annuity contract suggest that annuity is considered as a certain amount of cash or the recipient's content in another form. In accordance with the current civil law, we are talking about quite specific relationships. One of the most common examples here is when a disabled citizen (this may be a disabled person, a pensioner, and so on) provides another person who, as a rule, needs a living space, apartment, house or other real estate in exchange for life support and care. Currently, different types of annuity contracts may cover a wider range of situations. It is advisable to consider them in more detail.

Rental agreement in practice

In the process of studying the concept, types and contents of an annuity contract, it is important to pay attention to practical situations. Let's analyze a few of them:

• A non-profit organization (legal entity) may also be a recipient of permanent annuity. Translated from French, the recipient of the rent is a rentier (French rentier), that is, a person who lives on interest from the capital given on a loan. By the way, in the days of the USSR, this category of persons was considered as parasitic layers of bourgeois society. It is obvious that the named characteristic was exclusively ideological.

• The concept and types of annuity contract presuppose the existence of certain subjects of contractual obligations. Thus, the subject in this case can be not only a residential type of premises, but also any other property complexes. It can be industrial type buildings, bank deposits, cars, enterprises and so on. The legal nature, concept and types of annuity contract include the inclusion in the category under consideration of property rights, for example, claim rights from a real estate insurance contract. Nevertheless, this group cannot include intellectual property, protected information, as well as intangible goods due to the fact that they cannot be alienated.

• The circle of payers is not limited in any way. So, a legal person or even a state can act as a payer of rent, for example, through social security structures of citizens.

Signs of the contract. Historical aspect

Before considering the types of annuity contract (in the Republic of Belarus they are dictated by chapter 33 of the Civil Code “Annuity and life-long maintenance with a dependent”), it is advisable to determine its main features that are of a classification nature. It is worth noting that they are not considered to be fully established. One of the reasons is the relatively late emergence of legal regulation of the contract.It is accepted that the prototype of content on a lifelong basis came from one custom that has existed since the Middle Ages. It was then that monasteries accepted citizens for life in exchange for immovable and movable property complexes. It must be added that even money was considered a weighty argument for the opportunity to go to the monastery.

This issue was first resolved in the Civil Code of 1964, however, in a rather "shortcut" form, since 4 articles are completely meaningless. In any case, obligations similar to those indicated in modern types of annuity contracts exist in other legal cultures. For example, Vala (translated from Arabic - patronage, assistance) in Islamic law, which is a client-type contract. In accordance with its terms, a stranger whose heirs are unknown receives a guarantee and custody from another person. So, the patron takes responsibility (usually civil) for all claims that are brought against his client. Compensation in this case is the right of inheritance of the property complexes of the client after he dies.

The concept, types, forms of rental agreement

Next, we analyze the variety of types and forms of the contract of rent. The real contract comes into force after the transfer of property complexes, and not after its conclusion. The main reason here is that the consensual model would infringe on the current rights of the rent recipient too, as it would give the counterparty the right to demand the transfer of property complexes immediately after the conclusion of the contract. From an economic point of view, the recipient of rent in this case is the weaker side.

After the contract has entered into force and the property has been transferred, the recipient of the rent is vested only with rights, and the payer of rent is vested exclusively with obligations. We are talking about this type of annuity contract as unilaterally binding. Consider the rest.

Reimbursable contract

A significant type of annuity agreement in terms of maintenance is a reimbursable agreement. Among his subjects, it is important to note the following:

• The recipient of rental payments is required to transfer ownership of property complexes (immovable or movable) to the payer.

• The payer of rental payments is required to periodically pay a certain amount of cash or keep the recipient citizen in a different form. It must be added that rent can exist not only as an “additional pension” in the form of money - in-kind rent is also relevant at present. Imagine that the recipient of rental payments is a disabled person bedridden. Obviously, money itself does not have direct value for it, it does not carry any meaning. Thus, the payer of rent turns them into real services or goods. By the way, this situation often involves the transfer by the recipient of rents to the payer through a banking institution (for example, issuing a bank deposit or transferring funds in accordance with a trust deed). From the point of view of theory, the operation associated with the transfer of a fixed amount of cash in exchange for a series of payments of a periodic nature in a particular currency also makes sense. This is reminiscent of a SWAP facility of production value. In addition, in accordance with paragraph 1 of Article 556 of the Civil Code, "property that is alienated by payment of rent may be transferred by the recipient of the rent to the ownership of the payer of the rent for free or for a fee." In other words, there is another payment of an additional type, which may be provided for by the contract. Nevertheless, it cannot be regarded as an advance of a certain part of rent. This is indirectly proved by Article 566 of the Civil Code. In accordance with it, when acquiring property complexes for a fee, the risk of accidental death is transferred from the payer to the recipient of rental payments.This departure from the general principle is acceptable today in civil law quite rarely. That is why the conclusion suggests itself that the current Civil Code considers the payment of the buyback price as a payment for capital. Another confirmation is Article 570, which excludes the possibility of returning property complexes if they were acquired for a fee by the payer of rent.

Annuity contract and risk. Relevant species

In the process of studying the concept, types and elements of an annuity contract, it is advisable to indicate that we are talking about an aleatory (risky) transaction. However, there are several fairly serious excuses:

• Firstly, a permanent type of rent can be either exchange or risk, depending on the terms of the repurchase that the parties have identified in the relevant documents.

• Secondly, other types of annuity contract are life annuity and life maintenance with a dependent. It is important to note that they act as risky for the payer, because it is not known how long the recipient will live and, accordingly, what will be the ratio of the total amount of rent to the value of property complexes. It must be added that the possibility of losing or winning for the recipient is potential, since it is limited by the duration of his life.

Continuing, fixed-term and unlimited contracts

An annuity contract and its types presuppose the existence of a continuing agreement that provides for periodic repeated payments (ordinary in equal amounts). Otherwise, these payments are called annuities.

It is further advisable to consider a fixed-term or fixed-term contract relating to permanent rent. It is important to note that the term in this case is revealed not specifically through the initially known figure defined in the relevant documentation, but through the life of the annuity recipient. It must be borne in mind that the contract cannot be classified as a transaction concluded subject to cancellation, since it is not known whether this condition will occur or not. It is appropriate here to determine the period by indicating the event, which should occur inevitably in accordance with paragraph 2 of Article 191 of the current civil law. It should be noted that the unlimited or urgent type affects only the payer's obligation to make periodic payments or to keep the recipient in a different form (for example, in kind). As for the latter's obligation related to the transfer of ownership of property complexes, it is determined by an irrevocable and unconditional nature. So, after the termination of the annuity contract, the ownership right cannot be returned. That is why paragraph 2 of Article 556 of the Civil Code determines that in cases where the contract provides for the transfer of property complexes for a fee, the purchase and sale rules are used in the relations of the parties for transfer and payment, and in cases where such property complexes are transferred for free, the rules apply about the gift contract, since the other schedule is not established by law and does not contradict the meaning of the rent contract.

Alienation of property

It should be noted that together with the sale, donation and exchange, the lease is included in the category of property transfer contracts. The subject of such acts is the transfer of ownership. This group is included in a large-scale class of property-type contracts together with groups of contracts of a loan and lease nature.

Rent contract requirements

The types of a life annuity contract discussed above are drawn up in a manner appropriate to the seriousness of the event. Naturally, the form is currently subject to increased requirements. It is endowed with its own characteristics, since the annuity contract:

• Must be certified by a notary.

• Must pass the state registration procedure, if its subject is the alienation of real estate.

It must be added that failure to comply with the above requirements entails the invalidity of the transaction. Such a transaction shall be deemed null and void in accordance with paragraph 1 of Article 166.

Conclusion

We have fully disassembled the annuity contract and the main aspects that accompany it (varieties and forms, history of origin and legal nature). In addition, they presented several practical situations related to such an extensive topic. It is advisable to draw some conclusions and determine the main thoughts of the material. An annuity contract inherently represents the transfer of property complexes (this can be either movable or immovable property) to the property free of charge or for a certain fee, indicated in the relevant documents. In the latter case, the annuity payer agrees to make periodic payments in favor of the recipient or keep it in a different form (for example, keeping a disabled person in kind). Key types of rent:

• Permanent rental payments.

• Lifetime rental payments.

• Life-long maintenance with a dependent.

We have analyzed the items presented in full detail. In conclusion, it is worth noting that an annuity contract, regardless of its type, is concluded in writing. In addition, it is subject to notarization, and in a certain case - state registration. This situation suggests that the subject of the annuity contract is real estate.