Buying a house in Italy: Taxes

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Renovating a Property in Italy – Avoid Common Mistakes

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Renovating a Property in Italy – How To Avoid Common Mistakes

Buying and renovating a Property in Italy is one of the most common scenario in our country. Be sure to avoid any pitfalls.

 Renovating a Property in ItalyBuying a Property in Italy

Spring has arrived so it would be timely to discuss a common issue I encounter every year; foreign buyers being seduced by an inexpensive house and an idyllic location. Buying and renovating a property in Italy is an all-too‐common scenario in the Bel Paese. It is also an all‐too‐common scenario for these projects to end in heartache. Unfortunately, I usually don’t get to meet these buyers until they have spent far more than they expected and need to fix the problems they are experiencing. If you are thinking of taking on a house renovation project in Italy this year, taking on an Italian lawyer at the outset will save you time, money and anguish.
What are some of the common mistakes buyers make and how can they avoid them? Read more

Changing layout of internal spaces does not require building permission

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Emphyteusis

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Emphyteusis

How does Emphyteusis apply?

Introduction
A recent topic of discussion is that of ‘Emphyteusis’, a regime which has its roots in Roman Law. It formed part of the feudal system and is connected with the agricultural economy. Farmers were offered the possibility to cultivate land thereby sustaining themselves. In return, farmers paid an annual ground rent either in money and or in kind.

Ownership is divided into two categories:
– Dominium Directum – the right of the (dominus) landlord.
– Dominium Utile – use without ownership as a (emphyteuta) tenant.

The closest Common Law legal term to Emphyteusis would be a, ‘leasehold’. The landlord retains the ownership of property; the tenant has the right to use it for a contractually agreed period of time. However, in an Emphyteutical contractual arrangement, the tenant must also maintain and improve the estate.

Emphyteusis can affect both land and urban buildings, even villas and apartments. During the period of Emphyteusis, if land is involved, the tenant has the right to alter the surface of the land. He may plough up pastures to cultivate a crop or plant trees. Where buildings are concerned, the tenant may alter these, provided alterations do not cause any deterioration thereof. Thus, if the tenant would like to build further or to add further to the already existing structures, he may do so.

The contract between the ‘landlord’ and the ‘tenant’ must be a written agreement, payments are recurring and the duty to pay such rent only ceases if the estate is destroyed, either by human causes or through natural events.

Duration and obligations
Emphyteusis can be perpetual or limited to a minimum of 20 years. In both cases, the tenant is entitled to the same rights as the landlord.

The tenant can sub-let the property, receive compensation for the improvements made and even retain the property until full payment of his credit is rightfully received. These things as well as those mentioned above do not need the consent of the landlord.

If the Emphyteusis has a duration of 20 years, the tenant can not transfer rights with a contract. The right of pre-emption does not apply to the tenant in the same way it does to farmers i.e. the tenant in an Empyteutical contract arrangement does not have right of first refusal to purchase land.

The tenant has a very broad right to disposing of the property held under perpetual Emphyteusis; he may dispose of the emphyteutical property by means of a deed in compliance with Italian Civil Code. This can either be an act inter vivos, i.e. made during the tenant’s lifetime, or causa mortis, i.e. made after his death, in this case, by means of a Will.

Redemption of Emphyteusis
A tenant can acquire full ownership of Emphyteutical property through the payment of a price corresponding to fifteen (15) times the annual rent. A tenant can make use of this redemption right at any time.

This redemption right prevails as an equivalent right accorded to the landlord in case of breach of contract by the tenant, known as the “devolution” (devoluzione).

Redemption may be settled:
Out of court, by means of an agreement between the landlord and tenant. Settlement must be reflected in a deed drafted by a public notary;
in court, if the landlord and tenant cannot reach an agreement out of court.

In conclusion
A tenant must increase the productivity, the usefulness or the value of the estate, rural or urban. This obligation lasts for the duration of the term of Emphyteusis and can be regulated with a written agreement. Payment of rent must be made to the landlord on an annual basis.

The landlord has the right to request the end of the Emphyteusis due to a breach of contract by the tenant. The landlord is obliged to refund any improvements the tenant has made, in a manner which is proportional to the increase of value of the estate when this is delivered back to the landlord.

Acquiring, redeeming or disposing of property subject to Emphyteusis can present challenges. It is advisable that you appoint legal representation to guide you through the process.

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.

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Stability law 2016

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How Can An English-­Speaking Italian Property Lawyer Advise with The Purchase of A Property in Italy?

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I am quite surprised when I hear people say that consulting an Italian lawyer when buying property in Italy is unnecessary, even a waste of money. Buying a home anywhere, including Italy, is probably one of the largest and most significant purchases you will make in your life.

It involves the law of Italian real estate property, which is complex and raises special issues of practice, and problems not present in other transactions and or jurisdictions. An Italian real estate attorney is a trained legal specialist, experienced at dealing with these problems.

Briefly, in the typical Italian home purchase, the buyer enters into a brokerage contract with a real estate agent, usually in writing. Negotiations with the vendor are conducted through the broker, who most often acts as an intermediary. Once an informal agreement is reached, buyer and seller enter into a formal written contract for the sale, the purchase agreement. The buyer pays deposits. Ownership is ascertained, titles, deeds and other due diligence needs to be undertaken. Finally, the property is transferred from the seller to the buyer, and the seller receives the purchase price stipulated in for in the contract. This seems simple, but without a solicitor on your side, the consequences may be more disastrous than purchasing a car that turns out to be a lemon, or a stock investment that was unwise. For more detailed information, please consult our Guide to Buying Property in Italy – available on our homepage: http://www.detulliolawfirm.com

I would always recommend that you consult an English-­‐speaking lawyer in Italy – usually there will be no fees for an initial consultation and no obligation to engage his or her services. An Italian counsel specialised in Italian property law will be able to offer you advice about your prospective transaction and help you avoid some common problems with the purchase, or sale, of a home. For example, a buyer may sign a brokerage agreement with a real estate agent that does not deal with a number of legal problems. This happens quite often; realtors often use standard forms, expecting that they will cover all circumstances or will be easily customisable for unusual circumstances.

In the absence of an agreement to the contrary, the buyer may become liable to pay a brokerage commission even if a sale does not occur, or to pay more than one brokerage commission. A lawyer can explain the effect of seeking property through multiple estate agents. He or she can negotiate the realtor’s rights if the buyer withdraws the property from the market, or can’t deliver good marketable title.

Even if a lawyer is not needed during the course of negotiations, the buyer and seller each may have to consult with a lawyer to answer important questions, such as the tax consequences of a cross-­‐border transaction.

The purchase agreement is the single most important document in the transaction. Although standard printed forms are useful, it can be helpful to consult a lawyer for explanation and clarification of the form and for making any changes and additions to reflect the buyer’s wishes. There are many issues that may need to be addressed in the purchase agreement; below are some common examples:

• If the property has been altered or there has been an addition to the property, was it done lawfully?
• If the buyer has plans to change the property, can what is planned for the property be done lawfully?
• What happens if a buyer has an engineer or architect inspect the property and termites, asbestos, radon, or lead-­‐based paint is found?
• What if the property is found to contain hazardous waste?
• What are the legal consequences if the closing does not take place, and what happens to the down payment? This question raises related questions: Will the down payment be held in escrow by a lawyer in accordance with appropriately worded escrow instructions?
Again, it is important to remember that printed contract forms are generally inadequate to incorporate the real understanding of the buyer and seller without significant changes. After a purchase agreement has been signed, it is necessary to establish the state of the seller’s title to the property to the buyer’s, and occasionally to a mortgage lender’s, satisfaction.

An Italian property lawyer can help execute the title search and explain the title and determine whether the legal description is correct and whether there are problems with co-­‐owners or prior owners. He or she can also explain the effect of easements and agreements or restrictions imposed by a prior owner, and whether there are any legal restrictions which will impair your ability to sell the property later on.

The title search does not tell the buyer anything about existing and prospective plans in the area. Having your own Italian legal advisor will enable you to obtain this type of information more accurately, thoroughly and easily than trying to do it yourself.

The closing is the most important event in the purchase and sale transaction. When you purchase a property in Italy you must do so through a notary. A notary is a government official but they are independent and their main task is to ensure that all documents are genuine and all legal issues regarding a property are dealt with properly. There is no choice about this, a notary must be involved in the transaction.

Although the role of notary is to ensure that the transaction meets all legal requirements, this does not mean that the notary is acting on the buyer’s behalf to ensure the buyer gets the best deal. Furthermore, contrary to what many people believe, the notary cannot guarantee the absence of legal issues such as works and features built unlawfully (abusivi). While a notary will check planning permission for example, a notary will not make a site inspection of the property to ensure the absence of illegal works. An Italian property lawyer will work on your behalf to guarantee that your property conforms to Italian building legislation and regulations.

Having your own Italian attorney is helpful in explaining the nature, amount, and fairness of closing costs. The deed is signed, and an attorney can assure that these documents are appropriately executed and explained to the buyer. The notary will in fact require the presence of a translator at closing if it is deemed that the buyers are not fluent Italian speakers. So having an English-speaking Italian legal advisor makes sense since buyers benefit not only from translation ability, but also legal know-how and expertise.

The closing process can be confusing and crowded. Those present at the closing often include the buyer/s and seller/s, their respective attorneys, and the real estate broker. There may be last minute disputes about delivering possession and personal property or the adjustment of various costs. If you are the only person there without a lawyer, your rights may be at risk.
Perhaps the most important reason to be represented by an attorney is conflicting interests of the parties. Throughout the process, the buyer’s and seller’s interests can be at odds with each other, and even with those of professionals involved in the sale. The broker generally serves the seller. Both seller and estate agent want to see the deal go through, since that is how they will get paid. Neither can provide legal counsel. The respective lawyers for the buyer and seller will serve only their own clients’ best interests.

Seeking the advice of a lawyer is a very good idea from the time you decide to buy a home until the actual closing.

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.

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Usucapion

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Usucapion

‘Limitation of actions’

Usucapion (usucapione) is a legal procedure which can give you ownership of a property in Italy without need of any specific title such as a deed of purchase or a Will and without any agreement with the owner of the property. Usucapione pictures one legal situation which is connected with possession of a property which must be without violence. This possession must take place, with public knowledge. After a number of years which can be 10 or 20 depending on the circumstances, you can obtain the legal title and become the legal owner of this property; this happens even if you aware the owner of the property is someone else.Usucapion

You become owner of a property belonging to someone else if you possess the asset i.e. you make use of it somehow for a period of time and if you behave, during this time, as if you were the owner of this property.

On the other hand, the true owner should have behaved by not showing any interest in this property, letting the property be implicitly used by another party; typically someone moving abroad, not taking care of this property and neglecting it.

What is the purpose of this? Usucapion has the legal purpose of giving certainty to legal relationships giving a privilege to someone not being the owner, who nevertheless takes care of it. In relation to the owner not taking care of it and neglecting it completely.

20 years for real estate assets, acquired in bad faith. This starts from the moment of possession. While this becomes 10 years if you obtain possession in good faith. This period of time must be continuous with no interruptions, in order to convert this factual condition (possession) into ownership it is necessary to obtain a court decision to declare that usucapione occurred. It is a ‘factual’ condition and must be recognized in court. You can give evidence in any way but this typically takes place through witnesses. The peaceful possession taking place throughout time without interruptions can give title of ownership of a property. However it is necessary to obtain a court decision declaring usucapione is taking place.

Therefore if you own property in Italy which you have neglected for sometime it is advisable to consult an attorney to prevent the risks connected with usucapione.

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.

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How to buy off plan in Italy?

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How to buy off plan in Italy?

Investing in off-plan properties in Italy

Investing off-plan is where a purchaser makes a commitment to buy from a property from developer that has not yet been built or is in the process of being built. This type of investment hides a number of risks, the major one being that the builder goes bankrupt and the buyer loses his money.

Italian legislation provides a number of protections for the buyers of such a type of properties. Law 122/2005 declares the obligation of the builder to offer a surety bond. This is to guarantee the buyer for the money deposited prior to the transfer of ownership of the property, in case of bankruptcy or default.

According to art.1 of Law 122/2005 the builder is obliged to offer such a surety bond at the latest at the moment of the signing of the preliminary contract required in off-plan transactions. In absence of such a surety bond the preliminary contract will be considered void unless the buyer explicitly wants it to produce its effect. The surety has to be clearly mentioned in the preliminary contract.

According to article 2 of Law 122/2005 the surety needs to be a Bank, an Insurance Company or a Financial Broker authorized by the Bank of Italy. The surety bond guarantees the buyer repayment of the money paid as deposit.

In order to request the excussion(1) of the guarantee the buyer has to formally withdrawal from the Preliminary Contract. A written request of withdraw from the buyer, together with evidence of payments, will be sufficient to activate the guarantee. The surety will be obliged by the law to pay the money back within 30 days.

According to art.3 of Law 122/2005 the surety bond will also cover damages arising as a consequence of building defects of the property, even when discovered after the signing of the Deed of Sale. The building defects of the property covered by art.3 are listed in art. 1699 of the Italian civil code. The guarantee for such defects lasts ten years from the finalization of the building works in question. In the case that the seller is a different legal entity from the builder of the property, he is obliged to request from the builder a copy of the surety bond and give it to the buyer.  This is part of his contractual obligations in reference with the Deed of Sale.

If you are considering to invest in an off-plan property in Italy our advice is to contact an independent separate legal adviser. Such would not be the case when the lawyer is recommended by the Developer or the Real Estate Agent.

Avv. Giandomenico De Tullio

(1) The process or proceedings whereby a creditor must proceeds against a principal debtor before proceeding against a surety or subsidiary debtor

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.

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Translating Legal Documents from English to Italian

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Translating Legal Documents from English to Italian

Legal translations in Italian real estate transactions

All binding legal documents relating to an Italian real estate transaction must be written in Italian, independent of the nationality of the parties. Italian legal writing is highly technical, ritualistic and often archaic due to close links with Roman Law. Ultimately it can appear to be obscure for people lacking a solid legal background in Italian law. On top of that, the profound differences between legal systems, more specifically between the English/American system based on Common Law and the Italian one based on Civil Law adds to the confusion.

As a matter of fact there are juridical concepts in Roman Law that simply do not exist in Common Law and vice versa. There are concepts bearing the same name in the two systems but with different meanings. As a consequence, an accurate understanding of the legal systems and the legal processes involved is essential for translators or interpreters involved in such important transactions. In reality a deep knowledge of the specialist  terminology is required as well as knowledge of the legal concepts implied. This is why a legal document should never be signed without the assistance of a bilingual qualified lawyer who can explain in English the full scope of your commitment.

Many real estate agents use printed contracts with an English translation, yet such translations are rarely faithful and can often mislead the buyer. It’s important to underline that in the case of litigation the Italian version will always prevail.

In the most crucial phase of the transaction, when signing the Deed of Sale in front of the public notary, the Italian law requires the presence of an interpreter if the buyer is not fluent in Italian. Our advice is to make sure that such an interpreter is duly qualified not only under a strictly linguistic point of view, but also in terms of legal background.

Another crucial aspect to bear in mind is the independence of the interpreter. This would exclude a bilingual real estate agent, an English speaking relative or friend of the seller or an Italian English teacher.

Explaining to you the Deed or Sale that you are about to sign is a very delicate task and you want to make sure you are putting your trust in the right professional. Please remember that the Italian version of the Deed will prevail so it is essential that there is an expert and independent explanation of the legal implications that are involved.

Your independent legal adviser has the right qualifications to assist you throughout the real estate transaction and will always make sure you have a full understanding of the documents you are requested to sign and the legal consequences implied.

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.

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Buying property off the plan

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Buying property off the plan

Insurance policy for off-plan properties

According to article 4 of the legislative decree 122/2005 the construction company is obliged to deliver to the buyer, at the moment of the transfer of ownership, an insurance policy as guarantee for eventual serious construction defects affecting the property. Such insurance has a cover of 10 years. A good piece of advice is requesting the Notary to make explicit reference to the insurance policy in the Deed of Sale. This article is aimed at explaining what type of defects would be covered under this guarantee.

The notion of a “serious construction defect” has developed substantially throughout the time thanks in large part to jurisprudence. Originally such a notion only included defects involving prejudice to the safety and stability of the property. At present this notion has a larger meaning. It includes all the defects that could provoke a significant decrement to the normal use of the property. As a consequence the guarantee will cover all the damages that might have an impact on the regular use of the property.

If the construction defect has an impact on the regular use of the property, it could also concern secondary elements of the construction. The use of poor or inadequate materials can be considered as a serious defect, if this jeopardizes habitation and implies maintenance works. A good example of serious defect can be the case of  detachment of tiles in some areas of the apartment. Another example can be the case of  bad sealing of the roof with consequential water infiltrations. All of these examples clearly explain that the notion of “serious construction defects” is rather large.

The law limits the right to receive such insurance policy to buyers who are private individuals. According to a more restrictive interpretation the buyer should also be defined as a “consumer”; this means that he should be entitled to the policy only if he bought the property for personal use. The consequence is that any entrepreneurial or professional use of the property would exclude such right.

The party having the obligation to offer the insurance policy is the construction company, therefore the buyer should not only claim this right but also be aware of the responsibility of the contractor concerning defects in construction works.

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.

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