The Ministry of Treasury of Colombia issued the Decree 1398 of 2020, by means of which real estate life annuity was created. This structured product shall be carried out be life insurance companies.

Real estate life annuity is an insurance by means of which the a owner of a real estate property, as annuitant, transfers bare ownership of such property to the insurance company, as premium, and the later grants the annuitant a monthly indexed annuity until its death of the death of the beneficiaries. The Government created two types of this product. The first one, the immediate real estate life annuity is the classic version previously referred herein. The second one, is the temporary fixed annuity with deferred real estate life annuity in which in exchange for the bare ownership of a property, at first the annuitant receives a fixed sum for a certain period of time and then the monthly annuity until the death of all annuitants. Therefore, in case of death during the fixed period, the owner or their heirs shall receive a fixed payment.

During the life annuity term the annuitants shall remain with the use of the property by means of a usufruct. Thus, all expenses arisen from public utilities and CAM shall be borne by the annuitant. As to the sale, the insurance company shall pay all expenses associated with the transfer and, from there, all taxes derived from the ownership of the property, such as property tax.

In addition, the Ministry of Treasury established the duties of the insurance companies regarding this product, such as professional recommendation, advice and perform their best efforts to obtain the best result within the deal.

See full text of Decree 1398 of 2020