Reverse mortgage

In December 2015 the Italian Ministry of Economic Development signed a decree implementing the new reverse mortgage, a form of equity release financing.reverse mortgage

The reverse mortgage allows home owners over the age of 60 to convert part of the value of their property into cash using the property as security for the loan. The owner remains the legitimate owner and retains the right to live in the property. The reverse mortgage represents an alternative to selling the property. At the time of signing of the loan, a plan of repayments is established, just like any other form of personal loan.

Interests and related costs are refunded at the time of death of the borrower.

Should the owner decide not to repay the financed sum in advance, the heirs, who inherit the debt entered into by the deceased, have the following options:

  • Repay the debt to the bank and clear the mortgage from the
  • Selling the mortgaged property
  • Allow the lending bank to sell the property at market value according in order to repay the mortgage.

If the property is sold at market value, the heirs have the right to obtain the difference once the debt has been repaid. The bank cannot ask the heirs to repay the debt, in the case that  the bank fails to sell the property.

Another feature of the reverse mortgage regards interests, which can be refunded either at the time of expiry of the loan or at fixed deadlines. If the “refund upon expiry” formula is chosen, no sum is due to the bank during the loan. In this case, there is no insolvency regarding the financing.

The sum granted to the borrower is determined by:

  • the borrower’s age – the older the borrower is, the higher the percentage of equity release that will be granted
  • the value of the property used to secure the loan

If you wish more information on this topic, please contact us.

Rent-Free Property Agreement: an Overview

According to Italian law, a rent-free property agreement is applicable where a party lends an item they own to a borrower in order that the borrower may use the item for a given period of time or for a specific reason. The borrower then has the obligation to return the item to the lender at the end of the agreed period of use. As its name implies, a rent-free agreement is entered into for purposes other than financial gain. rent-free property agreement

The most common examples of rent-free property agreement pertain to a parent allowing a child to live rent-free in a property.

Interestingly, according to the Italian law, a rent-free property agreement is not restricted to housing. All sorts of items can be loaned rent-free to a third party. This might be a car or gardening equipment. In general, it is not necessary for the agreement between the parties to be in writing, an oral agreement is considered legally valid.

However, as far as homes or properties are concerned, a rent-free property agreement must be registered with the local Agenzia delle Entrate.

Once a rent-free tenancy agreement is registered, the 2016 Law of Stability has introduced a novelty with regarding tax: it is possible to benefit from a 50% discount on IMU and TASI so long as the following conditions are met:

  • The property must be considered as the main residence of the occupier benefitting from the rent-free agreement.
  • There must be first degree kinship relationship between the parties of the contract (typically parents and children)
  • The property owner must own only one other house
  • The two properties in question must be located in the same Municipality

For more information on rent-free agreements, please feel free to contact us.

Cross-Border Inheritance Law (Brussel IV)

Cross-Border Inheritance Law. How Does New EU Succession Legislation Impact You?

This article looks at the new EU Law 650/2012, also known as the Brussels IV Regulation, which came in to effect on 17th August 2015.

Although the UK, Denmark and Ireland have opted out of participating in Brussels IV, there are still implications for nationals of these countries who reside in a participating EU Member State or have a connection to a participating EU Member State, for example a holiday home.

Cross-Border Inheritance LawPrior to the introduction of Brussels IV, each EU jurisdiction applied its own rules to govern the devolution of individuals’ property. For individuals with assets in more than one country, various Connecting Factors were considered such as domicile, residence, nationality or habitual residence, in order to determine which country laws should apply to an individual’s estate. In addition, for some EU states, applicable succession law depended upon whether the assets were immovable (property and land) or movable (bank accounts, vehicles, furniture, jewellery and so on). The fact that each jurisdiction applied different Connecting Factors often led to costly, lengthy and complex conflicts of laws. Read more

Unclaimed Italian Properties: Overview

What does ‘Unclaimed Italian Properties’ mean? Between 1861 and 1985 over 29 million Italians emigrated to other countries. About 18 million permanently settled abroad, predominantly in the UK, USA, Canada, Australia and Argentina. In 2011, there were 4,115,235 Italian citizens living outside Italy and several tens of millions of descendants of Italians, who emigrated in the last two centuries.Unclaimed Italian Properties

When Italian emigrants went abroad, they often left property and land in Italy. It is a myth that this property was confiscated by the Italian State. The reality is that the property is still here in Italy, unclaimed, and the original owners, deceased many years ago, are still on the title deeds. There are many thousands of these properties and parcels of land across Italy and in many cases the descendants of emigrants living outside Italy could still claim them. Over the years, I have been contacted for help and advice by many descendants of Italian emigrants who want to find their ancestors’ property in Italy. In some cases, people come to me after spending considerable time, and substantial amounts of money. Read more

Prevention Is Better Than Cure… Seek Legal Experts

Prevention is always better than cure, therefore, always seek legal experts.

You’ve seen a few Italian properties online that you really like the look of. You want to book flights to Italy, organise rental car and accommodation to see the properties for yourself. But how do you know if the properties you’ve set your heart on seeing are legally safe and structurally sound? Before being advertised with a real estate agent, was a survey conducted? Have the legalities been checked?

Be sure to seek legal experts, before purchasing a property.

seek legal experts 

We can provide an independent and professional pre-purchase property background check service. That way, you can avoid problems such as buying a property with shared title deeds, other legal and financial complications, structural or planning permission issues. Knowing exactly where you stand before you view properties, you increase your chance of finding the right property first time and avoiding wasted trips and the expense of repeat visits and false starts.

We also provide a pre-sales property background check service for owners preparing to put Italian property on the real estate market. Having all the legal and structural details as part of your property sales package offers vendors a competitive advantage when promoting property for sale.

Please contact us if you would like assistance.

Italian Property Background Check

Our independent professional legal and structural advice will save you time and money before you buy or sell a property in Italy.

Ask about our pre-purchase and pre-sale services

Certificate of Habitability

Title Deeds / Legal Ownership

Bad debts

Land Registry

Planning Permission

Structural Survey

Geological Survey

Adverse Possession

First-time property purchases and Force Majeure

Frequently, property buyers in Italy decide to take advantage of tax reductions available for first-time property purchases, namely a registration tax of 2%, aFirst-time property purchases fixed cadastral tax of €50 and a fixed mortgage tax of €50. To benefit from fiscal reductions, purchasers must transfer their residence to the Municipality in which the property is located, within 18 months of signing the deed of sale. Missing the transfer deadline entails the loss of tax benefits and heavy fines unless there is an extraordinary event or circumstance that constitutes a force majeure. Examples of a force majeure event might be an earthquake, seaquake, flood, landslide. In general, any event deemed to be beyond man’s control, which renders the property uninhabitable. Read more

The right to back out if there is no certificate of habitability

The right to back out of signing the final deed of sale if there is no certificate of habitability

Last November the Italian Supreme Court of Cassation ruled that buyers can refuse to enter into the final deed of sale if the residential property they have promised to buy has no certificate of habitability (Court of Cassation., section II, 26th November 2015-8th February 2016, n. 2438).agibilità

The Certificate of Habitability certifies the suitability of a residential property as being fit for human habitation. It is issued by the competent municipal offices following verification that the building and its systems comply with health, safety and structural regulations. According to law, prior to issuing the certificate of habitability, the competent authorities should also verify that the building complies with planning permission.

Following purchase of a property in Italy, owners will need the certificate of habitability to get utilities and municipal services for their property. Read more

Inheritance Matters

Inheritance MattersInheritance matters. There is a gentle parody currently doing the rounds. Allegedly, the late lamented Italian novelist, philosopher and interpretive semiotician Umberto Eco has left a Will that neither his lawyers nor beneficiaries can decipher.

Obviously a Will should be accurate, concise and straightforward. Even if your life is highly complex, an experienced lawyer should be able to make sense of your legacies. Read more

Italian Real Estate Leaseback Scheme

Italian Real Estate Leaseback Scheme: buying a house in instalments

The 2016 Stability Law introduces a new real estate leaseback contract, which allows the purchase of a property without resorting to a mortgage.real estate leaseback

The real estate leaseback scheme is a financial product for those whose annual income does not exceed 55,000 Euro and are in a position to take advantage of first home benefits, in other words, people who do not already own another property.

The contract can only be entered into by individuals and banks or leasing companies. The bank or leasing company commits to buy, or to build, a property on behalf of a client, who then becomes the property lessee. The property is therefore owned by the lender, while the lessee has the right to use the property upon payment of an initial instalment and a monthly rent thereafter. Read more

Buy off plan property in Italy

Buy off plan property in Italy

Tips for purchasing off-plan properties

This article and tips were provided, by De Tullio Law Firm, to the British Consulate in 2011. Although the article pertains to a Calabrian case, information is relevant to all off-plan property purchases in Italy.

Buying homes in Calabria
The British Consulate in Naples has been contacted recently by a large number of British citizens who have bought holiday property in Calabria.  Many of these transactions have been completed to the satisfaction of the purchasers, but a significant number have run into difficulties with the lawyers involved or with the developers. The Consulate has drawn the matter to the attention of the Italian authorities who are investigating, but we strongly advise purchasers encountering problems of this sort to seek legal advice about obtaining redress.

For people thinking about purchasing property we offer the following tips:

  • Seek legal advice before signing a contract and paying any money up front:  afterwards it may be too late. Choose your own independent lawyer. We advise you not to use lawyers recommended by the developer or contractor in order to avoid possible conflict of interest.
  • Similarly, use  an independent Notary Public for the drawing up and signing of the contract. You are not obliged to use the one proposed by the developer or contractor and indeed, again for the same reason given above, we would advise against it.
  • Remember that only the Italian version of the contract is valid in an Italian court. So either commission the translation yourself from an independent translator or have any translation which has been provided for you checked over  for discrepancies by an independent qualified person.
  • The amount paid in deposit for an off-plan development should be up to around 10%. Seek legal advice if you are asked for more than that.
  • As the building  work progresses, the contractors should accompany any request for further payment with a list of the work done (‘stato avanzamento lavori’) which can be verified if necessary by an independent surveyor or architect before payment is made. This procedure should be indicated in the preliminary contract.

We are advised by lawyers that when you buy off plan you are entitled to receive a bank loan guarantee that should be annexed to the preliminary contract. In case of bankruptcy that bank loan guarantee will often represent the only protection of your investment. If you are obtaining bank loan guarantees, have a qualified professional check that they are legally compliant.

Please note, any statement made in this article is intended to be a general practical introductory explanation only and not formal legal advice. This firm accepts no liability or any responsibility for any statement made.

Contact us today. We can help.

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