Buying Abroad with Family. A Guide

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Buying property abroad with family can be a good way to spread the burden

The Overseas Guides Company Ltd. has published a guide to buying abroad with family. As they say, “ a holiday home is perhaps the most life-enhancing thing you will ever buy. It helps you get to know and love another culture. It can be more relaxing than a package holiday to the tourist sites – a holiday whenever you want it, forever, and to pass on to your children. […]”

“A holiday home abroad has the power to keep families together. Siblings might fight like cats and dogs as children, but many find they appreciate each other’s company more as they get older. Every Christmas you promise to see each other more often, but by the summer you’ve drifted apart again. For older children who don’t want to go on the usual family holiday, for students who don’t come home as much anymore, a holiday home can be the glue that holds the family together. […]”

BUT:

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We’ve all heard about families that fall out over money. How can you protect yourself, your investment and your closest relationships?

You need legal protections that will endure down the generations. Read on for some great advice on this, from specialist lawyers. […]

“There are many ways to structure the legal aspects of ownership, and the one you choose will depend on your own family circumstances and preferences. Whoever pays the most might call the shots, for example, or the head of the family might retain control.”

“The crucial thing is that you do put in structures, and that you genuinely intend to follow them. Good fences make good neighbours, so all parties should work on the assumption that in the end you may fall out and end up in court arguing over the letter of the agreement, even if that is the last thing on your mind right now, in the excitement of buying. For example, is a loan really a loan or does one sibling “sort of” think it might be a gift? Is time being shared equally or does one of you really think they own it more than the others”?

“As years go by, memories fade and new family members come onto the scene, so it can save many problems down the line if you get everything in writing, and remember you have done so”.

Buying abroad with family. The three most important considerations from a legal point of view are ownership, payments and inheritance

We asked some trusted overseas lawyers for suggestions on legal structures for the deal. […]”

Giandomenico De Tullio of De Tullio Law Firm in Italy says that, one solution would be for the head of the family to buy the property: “In Italy it would be advisable to structure the investment in the following way: grandma and grandpa would purchase the ‘usufruct’ [lifetime right of use] assigning to their children the bare ownership. When the grandparents pass away, the children will acquire full ownership of the property without the need to manage the Italian succession procedure.”

Finally …

Read the full Guide to buying abroad with family Or get in touch with us at info@detulliolawfirm.com

COPYRIGHT & DISCLAIMER
First published in Great Britain in 2017 by: The Overseas Guides Company Ltd, 26-28 Hammersmith Grove, London, W6 7BA
Copyright © The Overseas Guides Company Ltd, 2017

 

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Preliminary Contract in Italy. Can I Back Out of It?

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You rather rushed into signing a preliminary contract on an Italian property

Now you need to back out of the preliminary contract.

You rushed into signing because you didn’t want to miss out on a great opportunity. It’s long been your dream to own a property in Italy. When you saw this penthouse apartment, you just had to have it.

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In hindsight and after viewing the apartment again, you realise it isn’t as big as you thought. When you first saw the place, you could see the potential to extend into the roof space. However, you now doubt that the municipality will grant permission to convert the space. Besides, you recognise that even if your planning application is accepted, the conversion is going to be prohibitively expensive.

The date for signing the deed of sale is looming. What can you do?

Can you back out of the preliminary contract?

Does the property have a certificate of habitability?

A recent judgment at the Court of Appeal of Milan, stated that if the seller does not deliver a certificate of habitability at the preliminary contract stage, the prospective purchaser may back out of the preliminary contract and, request the return of the deposit.

In other words, there will be no requirement for the prospective purchaser to complete on the sale. In addition, it may also be possible to seek compensation for damages. If, for example, there is proof that the purchaser has incurred expenses or lost out on other property prospects.

Finally …

Never rush into signing any paperwork relating to an Italian property purchase. Always seek independent legal advice before signing anything and, if you’ve already signed a preliminary contract but now want to or need to back out of it, get in touch with us. We have over 55 years expertise in Italian property law.

 

You may also like to read Preliminary Contracts in Italian Property Purchases.

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Buying a House in Italy Can Be A Nightmare

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When buying a house in Italy, before you sign any paperwork, seek professional advice

Buying a house in Italy is a serious investment and often the fulfilment of a dream. Italy’s unique real estate laws and local customs all lead to the recommendation of having the right team of advisors in place to make your experience successful.

A couple from Bristol found a house in the Abruzzo that they wanted to buy. The vendor’s real estate agent got them to sign a Proposta di Acquisto (reservation offer).

The estate agent passed the reservation offer to the vendor. The offer basically stipulated the price the couple was willing to pay for the property. It included the couple’s cheque for a €5000 deposit, made payable to the vendor. The vendor accepted the couple’s offer, took the cheque, and the deal became irrevocable. The estate agency also asked the couple for their brokerage fee of 3% of the purchase price, which they immediately paid.

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The couple then discovered that the charming outbuilding with self-contained accommodation had no planning permission. Getting the building regularised would entail fees for a geometra (surveyor) and tax to the local municipality. The outbuilding would be subject to a demolition order if the permit was not granted. The couple even faced the risk of prosecution for illegal construction. The vendor had no intention of remedying the situation and there was no recourse for the couple. The couple was stuck in a nightmare scenario and yet, the whole thing was easily avoidable.

Teamwork makes the dream work

As a foreigner buying a property in Italy, before you sign any paperwork which may be legally binding, make sure you have the right team of advisors working for you.

Choose your own geometra to assess the integrity of a building’s structure. Check whether planning permission exists and, if necessary, what the costs would be for putting things right. You may also want to ask a geometra about the geology of the location. How prevalent are natural hazards such as landslides or earthquakes?

Engage your own lawyer. Your independent legal advisor will examine titles, zoning matters and review all paperwork associated with buying a property. A lawyer can save you money by helping you negotiate the deal and will ensure your rights are protected.

Italian law requires that all property and land transactions complete through a notary. Notaries work for the Italian State to ensure that transactions happen in accordance with Italian law. They ensure that purchasers pay all the relevant fees and taxes and register the deed of sale. Choose your own notary.

Independence is key when buying property in Italy

We cannot emphasise enough the importance of seeking independent advice. Choose your own professionals. While the estate agent or vendor may recommend professionals with whom they cooperate, you should bear in mind that estate agents and vendors have a vested interest in selling the property to you.

Finally …

At De Tullio Law Firm, in addition to full conveyancing services, we offer a property background check. This is a  pre-purchase service, which identifies and prevents problems such as the ones encountered by the couple from Bristol.

Likewise,  for those looking to sell their Italian property, we can help you prepare a pre-sales package that includes all the paperwork potential buyers will be looking to gather prior to making a purchase decision.

For more comprehensive information about the Italian property purchasing process, you might like to read our guide. If you would like to discuss your situation or, if we can be of assistance, please get in touch.

 

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Your Overseas Home Events

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Your Overseas Home. Regular events that help people buy and move overseas safely

Your Overseas Home Property events help people buy and move abroad safely.

Property Guides and The Overseas Guides Company (OGC) regularly run these free events around the UK.

Kim Brown founded OGC. Kim’s parents had bought a home in Cyprus in 2004. However, without access to the right information and with some contacts who turned out to be untrustworthy, it sadly ended unhappily.

Seeing the impact on her parents, Kim determined not to let this happen to anyone else. She therefore decided to set up OGC to provide high-quality, carefully researched guidance for anyone buying their dream home abroad.

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Buying a property overseas can be stressful and daunting

With this in mind, the Your Overseas Home and Smart Currency Exchange teams have created these exclusive events to reduce the stress and risk for people interested in buying properties abroad. Buyers have the opportunity to :

– browse a selection of properties that might suit requirements.

– ask questions to property experts

– discuss budgets and tactics to reduce risks of purchasing in a foreign country

– attend useful seminars hosted by property, legal and currency experts.

Generally several countries are represented at these events, including Italy.

Your Overseas Home. The Italian team

Your Overseas Home events include leading Italian estate agents, currency, Italian law, finance and removals experts.

De Tullio Law Firm has participated at a number of Your Overseas Home events. Along with other Italian property experts, we respond to a wide range of questions and provide tailored guidance to make the purchase of Italian property as smooth as possible.

As well as seeing plenty of Italian homes, you have the time and opportunity to discuss your personal requirements and get advice on all aspects of buying a property in Italy.

Finally …

If you would like to attend the next Your Overseas Home event, we’ll keep you posted if you follow us on our  on Facebook and our other social media channels.

If you can’t get to a Your Overseas Home event but would like some expert guidance, why not get in touch with us?

 

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Holding Accounts in Italy. Property Completion funds

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Keep your property completion money safe

On 29th August 2017, Italian legislation saw the introduction of holding accounts. The legislation governing payment for the purchase of Italian residential and commercial real estate is part of the Italian Law of Competition.

The law aims to provide better protection to both property buyers and sellers.

Holding accounts are applicable to funds for the completion of the purchase of Italian property. Deposits connected with a reservation offer and preliminary contracts are not subject to this legislation.

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The buyer and/ vendor must request their chosen notary to use a holding account. In other words the notary doesn’t automatically use holding accounts.

In addition, the buyer can request the notary to keep funds in a bonded account. Again, the onus is on the buyer to specifically request that the notary use bonded holding accounts. As this may generate problems with the seller, we would recommend that the preliminary contract include a clause that all parties authorise the notary to hold completion funds in bonded holding accounts.

How do holding accounts work?

The buyer acquires legal ownership of the property at the signing of the deed of sale. However, by using a holding account, the notary will delay payment until after registration of the deed.

Following signature by all parties to the transaction, the notary has 30 days to register the deed of sale with the relevant land registry authorities.

Once registration of the deed takes place, the buyer can be certain that the purchase has been completed smoothly. Tranfer of funds to the vendor can then take place.

Keeping funds in holding accounts therefore provides protection to the buyer between signing the deed of sale and its registration.

Between signing and registering the deed, adverse entries pertaining to the property can come to light. Issues might include outstanding debts, mortgages, encumbrances, court applications for seizures and foreclosures.

The Law of Competition states that when purchasing property, all outstanding payments by the buyer to the seller should be kept in dedicated holding accounts belonging to a notary. This sum also includes any amounts the vendor may require to settle liabilities. For instance, the vendor may still be paying off a mortgage on the property. In this case, the buyer would pay the entire balance of payment for the property into the notary’s holding account. However, a part of this will serve to redeem and cancel the vendor’s mortgage lender once the purchase is complete.

Do all notaries have holding accounts?

The Law of Competition stipulates that a notary must have a holding account in which the notary can receive funds from clients for the delayed payment of real estate property.

A notary has no entitlement to any interest accruing to these holding accounts. Nor can a notary use funds for any other purpose than the payment of a particular property.

Furthermore, if a notary has debts, creditors can not foreclose on money deposited in holding accounts. Should the notary die, any funds in holding accounts do not constitute part of the notary’s estate. And in the event of death, funds do not form part of the notary’s matrimonial property regime.

Finally …

If you are looking for further information about the Italian property purchasing process, you might find our comprehensive guide helpful, or if you need independent legal advice,  please get in touch for a free consultation.

 

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Italian Tax. Buying A House in Italy

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Local property and service taxes


This article aims to provide an overview of rules pertaining to Italian property tax and legislation. We outline aspects of legislation and certain taxes which are part of the Italian Stability Law. These measures aim to lower tax burdens and bolster the Italian property market. 

While the government has announced the elimination of the local property and service taxes on principal residences in Italy and added the elimination of property and regional taxes on production and fixed machinery in the agricultural sector, those who own second and or holiday homes and real estate in Italy, will still pay local property and service taxes.

We recommend that you check your Italian property tax liabilities. If you need any assistance with your particular case, our legal and tax team are here to help. 

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Italian Tax on Property

Currently, cadastral values of Italian properties are still much lower than market values; appraisals in use date back some years. The declared cadastral value of a property on the deed of sale (Rogito) determines the calculation (base imponibile) of Stamp Duty, Land Registry and Cadastral taxes. VAT will apply to the property purchase price if you buy a property from a developer or a renovation company within 4 years following the end of building or renovation work.

Principal residences

Other than a luxury home or castle, if you purchase an Italian property to use as your principal residence:

– from a private seller or an entity that is not VAT registered and,

– you obtain Italian residency at the property within 18 months of signing the deed of sale and,

– you subsequently spend more than 6 months a year at that address,

stamp duty is 2% of the value of the property with € 1,000 as the minimum payment due. Land registry and Cadastral Taxes are €50 each.

If you buy your Italian property from a VAT Registered company, VAT is 4% of the declared property price. Stamp Duty, Land Registry and Cadastral Taxes are €200 each.

Second homes

If you buy a second home from a private owner or a company that is not VAT registered, Stamp duty will amount to 9% of the property purchase price, with €1,000 as a minimum payment. Land Registry and Cadastral taxes are €50 each.

If you purchase a second home from a VAT registered entity, VAT is set at a standard rate of 10% (22% for properties classed as luxury homes or castles) of the purchase price, and you will pay €200 each for Stamp Duty, Land Registry and Cadastral taxes.

To summarise Italian property taxes:

Italian Capital Gains Tax

There is no Capital Gains Tax liability if you purchased the property more than 5 years prior to resale.

Finally …

Italian property and related tax is quite complex. For over 55 years, De Tullio Law Firm has been providing international clients with independent legal advice. We offer services in all the major fields of Italian law with particular expertise in real estate, inheritance and family law matters. If you would like further clarifications regarding your situation, please contact us for a free consultation. We are here to help.

You may also like to watch our info videos about Italian property law.

Off-Plan Property in Italy. Preliminary Contract Checklist

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Investing in an off-plan property in Italy

Investing in an off-plan property in Italy entails a buyer commiting to buy a property from developer that has not yet been built or that is in the process of construction.

This type of investment hides a number of risks, the major one being that the developer goes into administration during construction of your property and you lose any money you have already invested.

Off-plan property in Italy. Checklist for preliminary contracts

Legislative decree 122/2005 introduced very strict rules concerning buying an off-plan property in Italy. Article 6 of the above mentioned legislative decree states that the preliminary contract for an off-plan property in Italy should contain key elements. A preliminary contract is a legally binding document. Before you sign one, make sure it contains all of the following items.

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A full description of the parties to the transaction

Not only the buyer but also the builder and/ or developer.

Property details

Identification details of the property including cadastral plot references.

Property description

A description of the property including outbuildings for the exclusive use of the buyer.

Building permits

Details relating to the building permit or application for a building permit. In addition, the law explicitly requires the mention of any issue associated with the building permit.

Technical specifications

All technical data relating to the building. The law requires a summary of technical specification in the preliminary contract. Full data must be in an attachment (capitolato). These specifications cannot be modified without the agreement of both parties.

Completion

Deadline date for when the construction will be complete.

Payments

Method of payment. Not only the total price but also a payment plan for deposits and installments. Buyers should only use bank transfers or other traceable methods of payment.

Bank guarantee

Full details of the bank guarantee. Buyers should receive the bank guarantee when they sign the preliminary contract. The guarantee should therefore be in place prior to, or at the latest upon signing the preliminary contract.

Loans

All mortgages or other types of loan for the development. Where a mortgage for the whole development is in the name of the construction company or developer, the company must divide it among all the buyers. Unless this is the case, the notary will not legally be able to sign the deed of sale.

Contractors

A full list of the contractors involved in the construction along with proof of their identities.

Checklist for preliminary contract attachments

As attachments to the preliminary contract buyers should also have the previously mentioned full technical specifications of the property. This should detail all the construction materials as well as listing all the agreed finishes and fittings. In addition, there should be a copy of the plan submitted to request building permits.

What if the preliminary contract lacks one of the elements set out in art. 6?

A preliminary contract not in compliance with the requirements of article 6 may be null and void because it breaches Italian legislation.

Since the above mentioned legal requirements are set out in order to protect the interests of the buyer, only the buyer can object to the validity of the preliminary contract.

Finally …

There are a number of risks involved in off-plan purchases. We have written several articles  about off-plan property purchases in Italy. You can use our search tool to find more on the subject of buying an off-plan property in Italy.

At De Tullio Law Firm, we are property law specialists. We operate throughout Italy. We would always recommend that you engage your own lawyer to ensure that you protect your interests. Before signing any off-plan property-related paperwork, including a preliminary contract, you should seek independent legal advice. If you are unsure about any aspect of your off-plan property purchase in Italy, we are here to help.

You may also like to watch our info videos about buying property in Italy.

Off-Plan Property in Italy. The Italian Law

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The main risk with off-plan property purchases in Italy

Another in our series on the important issue of off-plan property purchases in Italy. Use our useful search tool to find our other articles on off-plan property purchases.

Investing off-plan is where a purchaser makes a commitment to buy a property from a developer that has not yet been built or is in the process of being built.

This type of investment can hide any number of risks.

The main risk is that if the developer becomes insolvent, the buyer may well end up out of pocket.

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Guarantees for Italian off-plan property

Italian legislation provides a number of measures to protect buyers if the developer goes bankrupt. However, the onus is on the buyer to ensure that these protections are in place.

Guarantee on deposits

Law 122/2005 declares the obligation of the developer to offer a surety bond. This provides a guarantee to the buyer for deposits prior to the transfer of ownership of the property.

Furthermore, in accordance with art.1 of Law 122/2005, the developer must offer the surety bond at the latest when the preliminary contract.

All Italian off-plan property purchases must have a preliminary contract. A surety bond must be in place by the time buyers sign the preliminary contract. The developer must clearly reference the surety bond in the preliminary contract. If there is no mention of a surety bond, the preliminary contract is invalid unless, the buyer explicitly expresses that it should prevail.

According to article 2 of Law 122/2005 surety needs to be a bank, an insurance company or a financial broker authorised by the Bank of Italy. The surety bond guarantees the buyer repayment of all money paid as deposits.

In order to request an excussion of the guarantee, the buyer must first formally withdraw from the preliminary contract. A buyer’s written request to withdraw, together with evidence of deposit payments, is sufficient to activate the guarantee. Italian legislation stipulates that the surety provider should refund all deposits within 30 days.

Guarantee for building defects

According to art.3 of Law 122/2005 the surety bond also covers damages arising from building defects. This includes any damage the buyer discovers after signing the deed of sale.

Article 1699 of the Italian civil code covers building defects. The guarantee for defects has a statute of limitations of ten years from the finalisation of the building work in question.

Where the seller is a different legal entity from the developer of the property

The seller is legally required to request a copy of the surety bond from the developer and provide this to the buyer. This is part of the seller’s contractual obligations and must be referenced in the deed of sale.

Finally …

If you are considering investing in off-plan property in Italy, our advice is to engage your own independent legal adviser. Bear in mind that a lawyer recommended by a developer or seller may have a conflict of interests in this matter so we advise you to choose your own lawyer. If you need any help, we are here to help.

For more comprehensive information about the Italian property purchasing process, you might like to read our guide. You may also like to watch our info videos about Italian property law.

 

Off-Plan Properties in Italy. Advice

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This article was originally provided by De Tullio Law Firm to the British Consulate in 2011. While the article pertains to a Calabrian case, information is relevant to off-plan properties throughout Italy.

If you are looking for additional information about off-plan properties purchases in Italy, you will find a series of articles on the subject if you use our search tool about your legal position regarding delivery delays.

Buying off-plan homes in Calabria

A large number of British citizens who have bought holiday property in Calabria have recently contacted the British Consulate in Naples. 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.

Advice for anyone purchasing off-plan properties in Italy

Seek legal advice before signing a contract and paying any money upfront

Once you have signed a preliminary contract, it may be too late. Choose your own independent lawyer. We advise you not to use lawyers recommended by the developer or contractor so as to avoid possible conflicts of interest.

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Use an independent Notary Public

You do not have to use the notary proposed by the developer or contractor for the deed of sale. In fact, to avoid possible conflicts of interest, we would advise against this. Choose your own notary.

Remember that the Italian version of the contract will prevail in an Italian court

So, either commission the translation yourself from an independent translator or, get any translation you receive checked by an independent qualified person.

Deposit

The amount you pay as a deposit for an off-plan development should be up to around 10%. Seek legal advice if you are asked for more than that.

Stato avanzamento lavori

As the building work progresses, the developer should accompany any request for further payments with a list of the work done (‘stato avanzamento lavori’). Ask an independent surveyor or architect to check the list before you make any payment. The preliminary contract should include a payment plan.

Surety and guarantee

When you buy an off-plan property, you should receive a bank loan guarantee. This must be an annex to the preliminary contract. If the developer becomes insolvent, this bank loan guarantee will often represent the only protection you have for your investment. If you have already received a bank loan guarantee, have a qualified professional check that it complies with Italian law.

Finally …

At De Tullio Law Firm, we are Italian and cross border property law specialists. We operate throughout Italy. If you are considering investing in off-plan property in Italy, please get in touch with us for a free consultation. We are here to help.

Adverse Possession Usucapione of Italian Property

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What is Adverse possession (usucapione)?

Usucapione is similar to Adverse Possession. It is a legal situation which is connected with possession of a property. The possession of a property doesn’t happen by force or hostility.

Usucapione is a legal procedure which can give you ownership of a property in Italy without any specific title such as a deed of purchase or a will and without any agreement from the owner of the property.

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How does usucapione work?

The possession of whole or part of a property and or land must take place with public knowledge. Legally, after 10 or 20 years, depending on the circumstances, the possessor can obtain the legal title and become the legal owner of the property.

You can become the owner of a property belonging to someone else if you take possession of it and behave as if you own the property. At the same time, the real owner should have behaved as if they have no interest in the property. This could include implicitly allowing another party to use the property.  Typically this might be because the owner has moved abroad and neglected or not looked after the property.

Usucapione has the legal purpose of giving certainty to legal relationships. It privileges someone who, although they are not actually the owner, takes care of the property. The owner is therefore deemed as not looking after it and neglecting it completely.

It takes 20 years for a possessor to acquire Italian real estate assets in bad faith. This starts from the moment of possession. It takes 10 years to obtain possession of an Italian property in good faith. This period of time must be continuous with no interruption.

To convert the factual condition of possession into ownership, the possessor requires a court injunction declaring that usucapione has occurred. Parties may offer evidence in any way they like however, typically witnesses provide evidence of peaceful, uninterrupted possession over time.

Finally …

If you own property in Italy, which you have neglected for some time, it is advisable to consult a specialist Italian property attorney to prevent any risks connected with  usucapione or, if you would like to discuss a case, please contact us for a free consultation.

You may like to read more about Usucapione.