How to purchase Italian property by auction

Has it ever crossed your mind to purchase Italian property by auction?

purchase Italian property by auction

If you have never considered the opportunity to purchase Italian property by auction, you should know what a great deal it could be. It could turn out to be a brilliant opportunity to purchase a property for a convenient price. You could get a huge saving of up to 60 % off the offered selling price on the market.

This may be an advantageous path, but certainly not one free of pitfalls. Which makes it necessary to engage the services of a technical-legal advisor to carry out all the necessary evaluations, starting with the determination of the most likely market value of the property and concluding with thorough verification of all the legal, building, town-planning, cadastral and administrative aspects in order to reduce or, at least, contain the risks that may arise from the purchase, also in view of the absence, in forced sales, of a guarantee for defects.

But what is a property auction?

In general terms, a property auction can be defined as a competitive sale. It begins with the presentation of one or more bids with the transfer of ownership going to the highest bidder.

There are two kinds of property auctions.

1. Those for the disposal of public assets, which follows specific legal rules.

2. Those of a judicial nature, which applies whenever assets owned by a natural or legal person (known as the execution debtor) that were previously seized are subject to a forced sale. At this stage of the expropriation procedure, the sale is “forced” as it is managed by a third party (the executor judge or his/her delegate), whose objective is to liquidate the involved asset and to maximize the revenue from the sale in order to repay, in whole or in part, the creditors of the execution debtor who take part to the procedure on various grounds and guarantees.

How to participate in a real estate auction?

There are two types of auctions:

1) Sealed-bid auction

2) Open ascending-bid auction

In the first case, the participant will have to electronically submit their irrevocable and binding bids within 12:00 a.m. on the day prior to the opening of the envelopes through Portale delle Vendite Pubbliche – Public Sales Portal (now the predominant system) or in sealed envelopes that must meet a number of requirements specifically indicated in the auction notice and on the websites of the courts. The bids, under penalty of nullity, must always be accompanied by a deposit amounting to at least 10% of the offered price.

The sale by open ascending-bid auction, which is currently obsolete as it is arranged when it is considered possible to obtain a rather improbable figure, i.e., a price higher than half of the value of the property, is, in any case, a secondary and possible method, chosen in case of unsuccessful sealed-bid auction.

Participants must in this case publicly make at least one bid that is higher than the last declared price, and the auction closes when at least three minutes have elapsed since the last bid and without any further bids.

Important things to consider when purchasing Italian property by auction

Having said that, if you wish to take part in an auction, is certainly necessary getting legal support. This will help you to be informed and assisted in all the preparatory and subsequent phases of the forced sale, in particular with regard to the following information:

1. Starting price of the sale (the base price at which the asset is for sale).

2. Bid increment (minimum increase in the raise set by the executor judge).

3. Security deposit (minimum amount to pay in order to take part in the auction).

4. Date of the sale (when the auction takes place).

5. Availability of the property (state of the property: if it is vacant and/or subject to constraints of persons and/or things; the property may be occupied by virtue of a lease or a loan agreement and so on).

6. Town-planning- cadastral compliance of the property.

7. Place of the sale (auctions used to be in the courts or courts of appeal, but as of 2018 they are now mostly and preferably held online on dedicated online platforms; it is, therefore, necessary to register and access “Portale delle vendite pubbliche” of Ministry of Justice).

Finally…

At De Tullio Law Firm, we have over 55 years of experience managing all types of Italian property transactions. We have in-depth expertise in Italian and international legal systems and processes.

There are many potential pitfalls and legal ramifications to consider when buying Italian property at auction. We would always recommend that you seek independent professional advice before participating in an Italian property auction.

Buying Italian property at auction can be done safely but, it is definitely not for the faint-hearted. if you would like to discuss your situation, please get in touch.

 

Unauthorised Construction in Italy Is A Criminal Offence

Unauthorised construction in Italy is not uncommon

Unauthorised construction in Italy is a common issue that you might have encountered if you have bought, or are in the process of buying, an Italian property.

What constitutes unauthorised construction in Italy?

unauthorised construction in ItalyIn general terms, unauthorised construction occurs when someone makes changes to a property without obtaining legally required permission.

Depending on the seriousness of the offence, a range of sanctions is applicable. There are three categories of unauthorised construction offences in Italy.

1) Total violation

Work without a building permit or where the work is in total breach of permission. In other words, there is no permit or the building completely differs from the provisions of the permit.

2) Substantial violation

This is work that substantially diverges from the building permit. The work comprises significant qualitative and quantitative differences compared to the authorised project.

3) Partial violation

Here, work partially deviates from the building permit. That is to say, although the work has authorisation, it is not in accordance with the permit.

Unauthorised construction in Italy is a criminal offence

All of the above violations are criminal offences. As such, they are subject to criminal prosecution as well as sanctions. Building offences are punishable not only with administrative sanctions but may also involve arrest and a fine.

In some cases, where someone has unlawfully developed land not zoned for construction purposes, a judge may order the confiscation of the land and property. The land and property therefore become the property of the local municipality and owner receives neither compensation nor damages.

Article 44 of the Consolidated Law on Construction (Presidential Decree no. 380/2001) provides for fines ranging from a minimum of €10,328.00 to a maximum of €103,290.00 depending on the type of offence. In addition, offenders may receive a custodial sentence of up to two years.

Remedial action is possible

For example, you may have increased the volume of your property or carried out renovation work without following the legally required administrative procedure. Or, perhaps you have inherited a property along with zoning and cadastral discrepancies. In both cases legal remedies are available.

Regarding total and substantial violations of building permits you will need a, “Permesso di Costruire in sanatoria”. This may provide an amnesty (condono) which regularises the property. However, this remedy is not applicable to properties in heritage zones or on land in zones where property development is unlawful.

The process of obtaining a Permesso di Costruire in sanatoria is both complex and costly. It involves paying the municipality the normal fee to obtain a building permit to start a new construction project. In addition, penalty payments may amount to double the fee for a building permit. Precise amounts are set by the Italian Regions in accordance with the Consolidated Law on Construction.

A CILA offers a retroactive remedy for partial violations. CILA stands for Comunicazione Inizio Lavori Asseverata (Notice of commencement of certified works). It is a notice you must submit to the municipality prior to undertaking non-routine work on a property. For example, work that does not change the structure of the building but impacts internal layout.

If you submit a CILA once work has started or after the work has finished, this is a CILA “in sanatoria”. Because it is a communication after the event, it entails a fine. €1,000 if the work is already complete and a penalty of €333.33 euros if the work is still in progress.

Finally …

The Office for Italian Statistics (ISTAT), estimates that nationally, some 20% of Italian properties constitute unauthorised constructions. Even more in the southern regions of Italy. On top of these statistics, many properties partially violate legal requirements. For example, they comprise an unauthorised outbuilding or extension.

When you buy an Italian property, it is impossible to tell if there is any unauthorised construction work just from viewing it. To avoid issues such as finding your property is difficult to sell or even unsaleable later on, you should check municipal planning and zoning records and land registry files to ensure that the whole property has all the relevant consents.

The key to making your Italian property project as safe and smooth as possible is to appoint a legal team that speaks your language. De Tullio Law Firm has a thorough understanding of Italian property law and decades of experience managing Italian property transactions.

Get in touch with us: info@detulliolawfirm.com

You may also be interested in Italian Property: Who Is Liable for Defects in Building Work in Italy?