Off-Plan Properties in Italy: Delivery Delays

This article is part of a series about off-plan property in Italy. To read more on the topic, please use search tool to look for off-plan properties in Italy.  There are many legal aspects to consider when buying off-plan properties in Italy.  Significant delays in delivery of Italian off-plan properties is an aspect that investors report as being particularly irritating. We would always advise that you seek legal advice before investing. Developers and builders can be very persuasive, but whatever you do, don’t feel forced to sign anything without taking independent professional advice.  Late delivery penalty clauses Buyers often try to integrate a late delivery penalty clause in agreements. However, enforcing penalty clauses is not easy. Often the agreement will have been drafted by the developer or  builder. Where the developer or builder is a major company, penalty clauses are unlikely to have been mutually agreed between the company and the buyer. The agreement will therefore unilaterally favour the company.  If they are fortunate, buyers manage to insert a penalty clause which would be equal to the deposit in the Preliminary Agreement (Compromesso). This would of course be a relatively small sum and the buyer would still be contractually bound to wait for the developer or builder to deliver the property.  Express termination clause A more effective legal safeguard would be to integrate an express termination clause within the Compromesso. In effect, the termination of the agreement would automatically occur – whether or not the buyer notifies the seller of these intentions.  The length of delay in delivery of off-plan properties would be defined in the Compromesso. If this delay is exceeded, either the parties could negotiate an extension and a new Compromesso,  or the buyer could claim a refund of deposits and/or any other advance payments already made. Where this clause is not expressed in a Compromesso, the buyer can send the developer or builder a formal request to respect agreed terms and conditions within a certain time, which cannot be less than 15 days. In the formal request, the purchasing party should warn the vendor, that unless the latter respects terms and conditions, the agreement will be deemed as terminated. The Italian law calls this particular provision an, “essential term”. Unfortunately, sometimes, buyers sign a Compromesso which seems very unfair. This may happen because a buyer has been persuaded by a developer’s or vendor’s promises. Yet, when the informally-agreed delivery day arrives and buyers do not receive the keys to their property, the buyer discovers the law does not provide much protection. In a recent court case, where the “essential term” had not been complied with, the Court of Vicenza (judgement n.187/2016) ruled that: whenever a delay is considered unbearable, it is possible to undertake legal proceedings against the builder, or the building company, and to obtain a refund of any advance payments. Furthermore but, ONLY IN CASE OF PROVEN DAMAGE, the purchasing party can claim additional compensation. Either way, before taking legal actions to resolve the agreement and/or to make a claim for compensation for damages, an amicable settlement is always preferable and recommended; this is because legal action through the Italian courts could take 5 years or more whereas an amicable settlement could lead to a favourable outcome for both parties more quickly. Finally … You may be interested in reading more about the preliminary contracts in Italian off-plan property purchases and insurance. Or if you are thinking of buying off-plan and need advice, please get in touch. We are here to help.This article is part of a series about off-plan property in Italy. To read more on the topic, please use search tool to look for off-plan properties in Italy.

There are many legal aspects to consider when buying off-plan properties in Italy. 

Significant delays in delivery of Italian off-plan properties is an aspect that investors report as being particularly irritating.

We would always advise that you seek legal advice before investing. Developers and builders can be very persuasive, but whatever you do, don’t feel forced to sign anything without taking independent professional advice.

Late delivery penalty clauses

Buyers often try to integrate a late delivery penalty clause in agreements. However, enforcing penalty clauses is not easy. Often the agreement will have been drafted by the developer or  builder. Where the developer or builder is a major company, penalty clauses are unlikely to have been mutually agreed between the company and the buyer. The agreement will therefore unilaterally favour the company.

If they are fortunate, buyers manage to insert a penalty clause which would be equal to the deposit in the Preliminary Agreement (Compromesso). This would of course be a relatively small sum and the buyer would still be contractually bound to wait for the developer or builder to deliver the property.

Express termination clause

A more effective legal safeguard would be to integrate an express termination clause within the Compromesso. In effect, the termination of the agreement would automatically occur – whether or not the buyer notifies the seller of these intentions. 

The length of delay in delivery of off-plan properties would be defined in the Compromesso. If this delay is exceeded, either the parties could negotiate an extension and a new Compromesso,  or the buyer could claim a refund of deposits and/or any other advance payments already made.

Where this clause is not expressed in a Compromesso, the buyer can send the developer or builder a formal request to respect agreed terms and conditions within a certain time, which cannot be less than 15 days. In the formal request, the purchasing party should warn the vendor, that unless the latter respects terms and conditions, the agreement will be deemed as terminated. The Italian law calls this particular provision an, “essential term”.

Unfortunately, sometimes, buyers sign a Compromesso which seems very unfair. This may happen because a buyer has been persuaded by a developer’s or vendor’s promises. Yet, when the informally-agreed delivery day arrives and buyers do not receive the keys to their property, the buyer discovers the law does not provide much protection.

In a recent court case, where the “essential term” had not been complied with, the Court of Vicenza (judgement n.187/2016) ruled that: whenever a delay is considered unbearable, it is possible to undertake legal proceedings against the builder, or the building company, and to obtain a refund of any advance payments. Furthermore but, ONLY IN CASE OF PROVEN DAMAGE, the purchasing party can claim additional compensation.

Either way, before taking legal actions to resolve the agreement and/or to make a claim for compensation for damages, an amicable settlement is always preferable and recommended; this is because legal action through the Italian courts could take 5 years or more whereas an amicable settlement could lead to a favourable outcome for both parties more quickly.

Finally …

You may be interested in reading more about the preliminary contracts in Italian off-plan property purchases and insurance. Or if you are thinking of buying off-plan and need advice, please get in touch. We are here to help.

You may also be interested in Off-Plan Property in Italy: Insurance And Guarantee