Buying A Property in Italy. Insider Tips from Our Clients

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In a recent survey, we asked clients what top tips they would offer to others buying a property in Italy. What would they recommend in order to ensure that Italian property purchases run smoothly? Here is a selection of replies, which we hope might be helpful if you are planning to buy real estate in Italy.

“Notaries and solicitors are not the same. The former works for the Italian State. The latter works for you …

Once the vendor has accepted your offer, it’s crucial to have the right people on your side.

We thought that because under Italian law you have to use a public notary, a ‘notaio’, we were protected from a legal point of view. However, we learnt that an Italian notary is not at all the same as having a solicitor. While a notary handles the conveyancing, they can’t give you any legal advice. In fact, Notaries are government employees. They are responsible for collecting all the relevant taxes you pay at completion.

In Italy, the vendor and buyer often share a ‘notaio’ but I’d advise you to appoint your own. Despite what anyone tells you, I’d recommend you consult a solicitor to advise you on matters such as price negotiations, checks and searches on the property, inheritance and how to structure your purchase and tax issues.

Choose the solicitor yourself, not someone the vendor or estate agent recommends. And, make sure the solicitor speaks your language and has experience of dealing with Italian property purchases and all the associated legal, estate planning and tax aspects”.

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“It’s not just about buying a property in Italy. Don’t ignore inheritance planning!

Under Italian law you have to leave a portion of your estate to your children (or your parents if you have no children), you can’t just leave all your property to whoever you want, whether that is your spouse or the local dog rescue centre.

Of course, there are ways around this, but they have legal and tax implications so it is important to seek professional advice if for any reason you don’t want to leave your Italian home to what are known as, “forced heirs”.

There are several ways to structure property transactions in Italy, which is great. However, you can’t change the ownership structure later on, so it’s important to consider the options before you buy. There are also inheritance tax implications so, again, getting professional advice before you sign anything is crucial”.

“You have to be smart with your cash.

Firstly, make sure you get your offer right. It’s surprising how many people who have an accurate idea of prices where they live will make an offer in Italy based on what they feel is right rather than market knowledge. It’s easy to research prices across Italy online on various property portals and agency websites. Your estate agent can advise you too. They also have a good idea of the price the vendor would be willing to accept.

We wanted complete peace of mind and preferred to have someone working purely on our behalf, so we asked De Tullio Law Firm to help us and they did an excellent job. They advised us all the way through our Italian real estate buying experience. They saved us a great deal of money negotiating a price for the property and sound legal advice. In addition, they helped put us in touch with foreign exchange specialists and helped us look in to taking out an Italian mortgage. We decided not to go down that route in the end but, it would have been an option”.

“Make sure your estate agent is qualified.

Italy has a well-regulated estate agency system. Buying a property in Italy is therefore pretty safe. Plus, it is easy to make sure your agent is one of the good guys. Check that your estate agent has professional insurance and is registered with their local chamber of commerce. Still, it’s a huge thing to sign legal documents if like us, your Italian is not great.

From personal experience, it’s a good idea to have a lawyer look over paperwork before you sign anything. Take care who you give your money to. Never give it directly to the seller – only to the notaio or to your estate agent so long as they are insured to take such payments. And never be tempted to pay ‘under the table’ to avoid taxes on the purchase by declaring a lower sale price. Even if you get away with it at the time, you will have to pay higher capital gains taxes when you come to sell as the difference between the price you paid (or declared you’d paid) and the price you sell at will be higher”.

“Although surveys are not common in Italy, that doesn’t mean you don’t have to have one.

We’re glad we had a survey done. When we were buying a property in Italy, our surveyor found quite a few structural issues and planning permission issues. Things that we couldn’t see just from viewing the property. We were able to use the issues to negotiate on the price of our house.

Make sure you choose an independent surveyor. Someone who understands the peculiarities of Italian buildings. Get a complete survey covering structural, zoning, building permits, termites, lead paint, asbestos, natural and industrial risks, gas/electrical/water installations, septic tanks and energy efficiency ratings. Because we were planning to renovate our property, we also asked a builder to look over the property”.

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“Renovations can be a great opportunity, but they can turn in to a money pit.

If you are looking for a renovation project in Italy, it is important to understand the likely costs and timescales involved, to avoid them spiralling out of control. Get at least a couple of quotes from builders before you sign for the property, and make a realistic plan for how you will proceed – will you use an architect and, or geometra, a project manager, Italian builders and artisans, or do the work yourself?

Planning permission is also key; get your lawyer to insert a condition into the preliminary sales contract (compromesso) stating that the purchase is subject to planning consents. We have renovated a couple of buildings in Italy, but wouldn’t have undertaken the projects without seeking legal advice beforehand”.

“Choose a reputable developer if you decide to buy an off-plan property in Italy.

Looks great on paper? A chance to design certain elements of your home? That’s what we thought but, buying an off-plan property in Italy is not for the faint-hearted. There have been so many stories of things going very wrong with off-plan real estate.

If you are thinking of buying off-plan, having your own lawyer is a must. Italian law is very complex and Italian legalese is a completely different language. It is crucial to establish that the developer is reputable before you sign any papers or hand over any money – do the developers have a bank guarantee for example? Bear in mind that in Italy developers won’t get funding from a bank until a certain amount of properties have been signed up, so check how far the development has progressed (has planning permission been approved or building work started?).

Never sign anything until you have taken legal advice and never ever hand over all the money at the start of the process, even if a developer is pressuring you. You should only make payments in stages. A final payment is only due once the property is complete.”

“On top of the asking price, you need to budget for additional costs.

This is really important to think about. Notary and estate agent fees can easily add up to 15% of the price of your property. Notary fees include various Italian State taxes like stamp duty as well as their actual fees, set on a sliding scale according to the value of the real estate. Estate agency fees are at the agency’s discretion. If you have a mortgage, don’t forget to account for mortgage fees as well. In addition, think about costs such as solicitor’s fees and surveys. Also think long term about property taxes, maintenance and running costs”.

“Do your homework before buying a property in Italy …

Read specialist magazines, consult websites – take care they are reputable though. Online advice can be a little misleading or even incorrect. Go to Italian property exhibitions and talk to experts there. Make sure you understand what you are taking on – not just the buying process and costs involved, but everything else. How will you get to your property? What are the running costs, including property taxes, utilities bills and service charges if you are buying an apartment?

Italy is a great place in which to buy a property – as long as you take care with your research beforehand and use reputable and registered professionals to help you”.

Finally …

If you are thinking of or in the process of buying a property in Italy and have a question,  please get in touch for a free consultation.

 

You may also be interested in How to get a mortgage in Italy

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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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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Italian inheritance lawyers. What is their role?

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What are Italian inheritance lawyers?

Specialist Italian inheritance lawyers assist with the execution of wills and the complex legal procedures relating to Italian inheritance issues.

How can Italian inheritance lawyers help?

Engaging the services of a specialist inheritance lawyer in Italy simplifies the administration of an estate. This includes gathering all the documentation relating to property, assets and/or land. It speeds up the whole inheritance process, from identification and location of beneficiaries entitled to the estate to tax payments and distribution of assets.

An Italian inheritance lawyer can help draft certified translations of documents, appoint a local notary and manage all required procedures with the relevant Italian authorities to ensure that assets are transferred to the names of the entitled beneficiaries.

Get Your FREE Guide to Planning Your Inheritance in Italy

Our PDF guide explains the ins and outs of preparing your inheritance under Italian law

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Furthermore, an Italian inheritance lawyer can advise whether there are any claims or rights on assets and/or properties according to Italian Inheritance law. A lawyer can conduct searches for properties, titles, deeds and records, obtain an appraisal or a survey of a property with the support of qualified professionals to appraise the value of the deceased’s estate and determine whether there are any debts and liabilities.

Moreover, they can provide advice regarding the procedures for accepting or renouncing an inheritance and the options available to beneficiaries according to Italian law.

A lawyer will provide legal support if you need to:

– obtain a copy of a public will;

– challenge a will drafted in conflict with Italian legislation in the Italian Courts;

– manage the whole administration process;

– register an inherited property in the name of the heir(s) or;

– if the heir(s) choose to sell inherited properties and or assets.

Italian Inheritance fiscal and financial matters

Italian inheritance lawyers can also help determine taxation connected with an inheritance.

In effect, Italian inheritance tax applies to the entire net value of the deceased’s estate. This therefore includes both movable and immovable assets.

Immovable assets include houses, shops, buildings, agricultural or building land.

Movable assets could for example include, boats, jewellery, works of art, bank and post office current accounts, money, investments such as shares, bonds, trust funds. In addition, companies and shareholdings in companies are taxable. However, there are exceptions to this.

Basic estate tax in Italy, “Imposta sulle Successioni” equates to 8% of the estate. However, estate tax rates depend on the relationship of the beneficiary to the deceased.

Where an estate includes bank accounts connected to an inheritance case, an Italian inheritance lawyer can help release accounts.

In addition, a lawyer can ensure the correct distribution of funds to beneficiaries.

Finally …

For more detailed guidance about Italian inheritance, you might find our Guide helpful.

At De Tullio Law Firm, we have over 55 years of expertise managing cross border succession and estate planning matters. Our multilingual team is present throughout Italy. Our firm is also a full member of STEP, the world’s leading association for trust and estate practitioners.

If you would like to discuss a case with us, please contact us for a free consultation.

You may also like our inheritance video guides.

Married Couples And Registered Partners in Italy

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Regime patrimoniale coniugale

This article deals with the issue of the choice of law ruling the economic relationship between foreign married couples and registered partners in Italy.

Italian law no. 218 of 1995 contains an amendment reforming international private law determining applicable law to matrimonial regimes in Italy.

Regarding the economic relationship between married couples, if they have the same nationality, the national law of the two partners is applicable.

Where spouses have two different nationalities, the law of the State where the marriage took place is applicable.

In Italy, couples may choose between two matrimonial regimes: regime of community of assets “comunità dei beni” and separation of assets “separazione dei beni”.

Couples can make a notarised agreement when they marry or at a later stage to determine which regime is applicable. However, in the absence of a choice, Italian family law provides that the community of assets regime is the default.

Italian property purchases: foreign married couples and registered partners in Italy

Non-Italian couples may make an agreement when they purchase a property in Italy – should they wish the ownership of the property to be in the name of only one spouse.

Decisions regarding matrimonial regimes can play a key role in the event of divorce or death. They can therefore have important and far-reaching consequences.

Pursuant to article 159 of the Italian Civil Code, in the absence of a notarised agreement between spouses, the default matrimonial regime will be that of community of assets.

Married couples and registered partners. Who owns what in a community of assets?

A community of assets regime means that both partners own certain assets jointly. These include:

– Purchases made ​​by the spouses together or separately during their marriage.

– Businesses opened and managed by both spouses after their marriage.

– Profits generated by a business belonging to either spouse.

Certain items of personal property are not included in the Italian community of assets regime:

– Goods belonging to each spouse prior to their marriage.

– Property acquired during the marriage through a personal gift or inheritance.

– Personal items used by spouses.

– Goods or finances obtained as compensation for damages.

A community of assets regime means a property belongs to a couple in equal parts …

Whereas, if the couple opts for a separation of assets regime, it is possible to register a property in the name of just one spouse or partner.

In order to do this, a couple can choose a separation of assets regime at the time of, or after their marriage. This means foreign nationals married elsewhere, but resident in Italy can decide, at any time during their marriage or registered partnership, to elect to have their economic relationship governed by Italian law.

If foreign married couples resident in Italy decide to regulate their economic affairs according to Italian law, they will have to do it through a written agreement in the form of a public deed in the presence of an Italian public notary.

Finally …

Before purchasing a property in Italy, it is worth considering your economic relationship. Each case depends on personal circumstances.

Buying an Italian property represents a major investment for most people. To ensure you protect your investment, you should therefore always seek independent legal advice. Why not get in touch with us to discuss your situation?

You may also be interested in Cross Border Property rules: Marriages & Partnerships.

You may also like to watch our info videos.

 

European Certificate of Succession

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What is Brussels IV?

Since August 2015, a major step to facilitate cross-border successions has been the adoption of EU Regulations which make it easier for people to handle the legal aspects of an international succession. Regulation (EU) No 650/2012, also known as, “Brussels IV”. Amongst other things, Brussels IV introduces a European Certificate of Succession (ECS).

Heirs, legatees, executors of Wills and administrators of the estate can use an ECS to prove their status and exercise their rights or powers in other EU Member States.

Each EU Member State has nominated relevant authorities to issue ECS. It is valid in all EU Member States without the need for any additional procedures. The ECS is also valid in the issuing country.

Get Your FREE Guide to Planning Your Inheritance in Italy

Our PDF guide explains the ins and outs of preparing your inheritance under Italian law

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How can you request a European Certificate of Succession in Italy?

To qualify for an ECS in Italy, the deceased must have been habitually resident in Italy or had Italian citizenship at the time of death.

in Italy, heirs, legatees, executors of Wills and administrators of the estate can obtain a European Certificate of Succession from an Italian notary public. Regardless of where the deceased’s assets are in Italy, you can request an ECS from any Italian notary public.

A European Certificate of Succession for Cross border inheritance

One of the key concepts of Brussels IV is that one law should apply to the entire estate administration, no matter where assets are located.

This means, for example, that if Italian law applies to an inheritance including assets held in Italy and France, Italian inheritance law would override French inheritance law. The French authorities could use an ECS to communicate what they have established. This would then allow the Italian authorities to deal with the administration of assets.

What happens if the deceased was habitually resident in a non-EU country? For instance, if the deceased lived in the UK but had assets in Italy? In this case, an Italian notary may ask you to provide an ECS from the UK. Because non-EU countries are not party to Brussels IV, this is not however an option. That said, there are acceptable alternatives. In this particular example, the preferred option would be a certificate of English law. You should ask a lawyer familiar with cross border estate administration to draft and sign the certificate.

Finally …

At De Tullio Law Firm, we have over 55 years of expertise managing cross border succession and estate planning matters throughout Italy. Our firm is also a full member of STEP, the world’s leading association for trust and estate practitioners.

Please contact us if you have any cross border inheritance questions or if would like to discuss your situation.

 

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Avvocato – Frequently Asked Questions

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What does avvocato mean?

The Italian word, avvocato, has three main equivalent terms in English: lawyer, solicitor, attorney.

How long does it take to become an avvocato?

What is an Avvocato?

Left: Giandomenico De Tullio. Managing Partner. Right Giovanni De Tullio. Founding Partner. De Tullio Law Firm.

The path to becoming an avvocato in Italy involves several years of study and internships.

Firstly, future lawyers need to complete a Bachelor’s Degree in law, (Laurea in Scienze Giuridiche), which takes three years.

Secondly, to proceed along the path towards practising law, students require a two-year post-graduate degree (Laurea Specialistica in Giurisprudenza) or, a further five-year Master’s Degree (Laurea a ciclo unico Magistrale in Giurisprudenza).

Thirdly, after attaining the aforementioned qualifications, an avvocato needs to complete a two-year internship at an established law firm.

Finally, in order to practice law, an avvocato must pass the Italian Bar Exam. After registering with the Italian Law Society (Consiglio dell’Ordine degli Avvocati), Italian lawyers can practice Italian law wherever they choose in Italy.

What is an Italian attorney’s scope of legal practice?

The legal competencies of a qualified avvocato are wide-ranging. They comprise all areas of the law: civil, criminal, labour, bankruptcy, financial, administrative, inheritance and succession cases. In addition an avvocato handles court trials and appeals.

Is an Italian avvocato subject to a code of conduct?

A strict ethical code of conduct governs an Italian avvocato and the performance of their duties. Firstly, Italian attorneys must base their conduct on respect for integrity, dignity and decorum. Failure to comply with this ethical code of conduct leads to disciplinary proceedings.

The legal profession demands honesty and integrity. It is not permissible for an Italian attorney to start a legal action or take part in a proceeding, which may be construed as acting in bad faith.

Secondly, the Italian legal code of conduct safeguards the client. An Italian avvocato has a duty of care and loyalty towards a client. An Italian attorney behaving contrary to clients’ interests, or taking on a case that they are not competent to conduct, would be a breach of this code of conduct.

Does client confidentiality exist in the Italian legal profession?

Yes. Another fundamental duty for an Italian attorney is confidentiality. On the one hand this regards the provision of services to a client. On the other hand it pertains to any information given to a lawyer by the client, or which becomes known to the lawyer. Confidentiality remains valid for information about former clients, or where the attorney, despite knowing the details of a case, does not agree to take on a case.

The relationship between an Italian attorney and a client is fundamentally based on trust; an attorney must defend a client’s interests as well as possible within the framework of legal representation and in compliance with the law and the ethical principles of the legal code of conduct.

Finally …

At De Tullio Law Firm, we have extensive knowledge and experience of Italian and international law. For over 55 years, we have been providing expert legal services throughout Italy. Whatever your legal need in Italy, get in touch with us for a free consultation.

You may also be interested in De Tullio Law Firm: celebrating 55 years in practice.

 

Italian Inheritance. Why draft an Italian Will?

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If the deceased was resident in Italy at the time of death, Italian Inheritance law applies to the deceased’s worldwide assets. Whereas if the deceased lived outside Italy, Italian inheritance law is only applicable to assets in Italy.

Are international wills valid for an Italian inheritance?

Generally speaking, Italy recognises the validity of international wills. However, it is advisable for non-Italian nationals who own assets in Italy to draft an Italian will.

Why should you have an Italian will?

Firstly, having an Italian will minimises misunderstandings and/or conflicts amongst heirs. Secondly, it facilitates legislative, linguistic and jurisdictional matters with the Italian authorities. Thirdly, having an Italian will can reduce estate tax and lastly, it simplifies the whole inheritance procedure.

Get Your FREE Guide to Planning Your Inheritance in Italy

Our PDF guide explains the ins and outs of preparing your inheritance under Italian law

Download now

Where can I get help drafting an Italian will?

If a foreign national decides to dispose of Italian assets by means of a will in Italy, an Italian attorney, will be able to advise on all aspects of Italian Inheritance Law.  It is a good idea to engage the services of an Italian attorney familiar with both the Italian and the testator’s national jurisdictions.

Italian inheritance law stipulates that the testator must leave a certain portion of assets to immediate family members. This is known as, “Forced Heirship”. Forced heirs are the decedent’s spouse and/or children, or other parties to whom a testator cannot legally deny a portion of assets.

It is important to follow the Italian inheritance procedure accurately. Engaging the services of a qualified and experienced Italian lawyer is therefore highly advisable.

In order to draft a will in Italy, the testator must be at least 18 years old, of sound mind and the legal owner of the assets in the will.

How does the Italian inheritance process work?

Following the death of a testator, the first step is to have the will published. As with all major events in life, an Italian notary needs to do this. Next, a testator’s heirs or executors can proceed with Italian Probate. This involves making an declaration of succession “Denuncia di Successione” in Italian.

Probate must take place within 12 months of a testator’s death. The declaration of succession lists all the relevant assets for the Italian tax authorities who calculate estate tax. Italian estate tax rates are based on heirs’ relationship to the testator and the value of inherited assets.

Once estate tax has been paid, the procedure culminates with the transfer of inherited property in the Land Registry, “Voltura” in Italian.

Finally …

A new EU Law 650/2012, also known as the Brussels IV Regulation came into effect on 17th August 2015. Brussels IV contains a provision for individuals to make an election in their wills for the country of their nationality, or where individuals have multiple nationalities any one of their nationalities, to apply to the devolution of their estate.

Interestingly, there are also potential benefits for non-EU nationals. However, again, appropriate action in the form of a choice of law clause in a will is necessary.
Nominating a country law needs careful consideration. You should take into account matters such as foreign matrimonial regimes, usufruct, tax consequences, joint ownership structures and other foreign proprietary rights with respect to your estate.

Because each case is different, you should seek professional support and advice.

At De Tullio Law Firm, we have over 55 years of expertise managing cross border succession and estate planning matters throughout Italy. Our firm is also a full member of STEP, the world’s leading association for trust and estate practitioners.

Please contact us if you have any questions about estate planning or if would like to discuss your situation.

You may also be interested in How to write a Will

European Mortgage Credit Directive. The Italian Perspective

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The European Mortgage Credit Directive creates a single mortgage market across the EU

In a previous article, we addressed the possibility of non-Italian nationals obtaining a mortgage to purchase an Italian property. This article explores the main provisions in the European Mortgage Credit Directive (EMCD). This came into force across all EU Member States in 2016.

During the global financial crisis of 2008, the EU launched a process to draw up prudential measures aimed at containing risk in real estate credit agreements. The  majority of sub-prime mortgage problems occurred outside the EU. Nevertheless, consumers within the EU hold significant levels of debt related to residential property. 

The EU process resulted in the introduction of the EMCD. The purpose of which is to create a single, harmonised residential mortgage credit market across the EU with a high level of consumer protection.

The European Mortgage Credit Directive is part of Italian legislation

Italy’s Council of Ministers through Legislative Decree no. 72 of 21st April, 2016 approved the EMCD, (2014/17/EU) known as Direttiva Mutui in Italian. The Directive then became a national law on 20th May, 2016 and has been in force since 4th June, 2016.

In Italy, Bankitalia, ensures enforcement and application of the EMCD.

The EMCD applies to credit agreements entered into with consumers that are secured by a mortgage, or equivalent security, on residential property. It is also applicable to credit agreements for the acquisition or a retention of property rights on buildings or land. Italian law defines a consumer as, ‘a natural person acting outside their trade, business or profession’.

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The European Mortgage Credit Directive impacts EU and non-EU residents alike

For example, a UK consumer takes out a Euro mortgage to buy property in Italy. However, their main income is derived in Pounds Sterling. 

In the first instance, because of the risks attached to borrowing in a foreign currency, the EMCD therefore provides for measures to ensure that consumers are aware of the risk they are taking.

If a credit agreement relates to a foreign currency loan, EU Member States must ensure that the consumer has the right to convert the credit agreement into an alternative currency. This will be subject to specific conditions. Additionally, EU Member States must ensure that there are other arrangements in place in order to limit exchange rate risks to the consumer.

Main provisions of the European Mortgage Credit Directive 

Standardised Information

The EMCD stipulates that information must be provided to consumers at the pre-contractual stage.

In Italy lenders provide pre-contractual information in a prescribed form, the European Standardised Information Sheet (ESIS), or Prospetto informativo europeo standardizzato (PIES)” in Italian. This is to assist consumers in comparing lenders and their products. Furthermore, additional information must be attached to the PIES. This includes the identity, status, capacity and remuneration of any credit intermediary involved in the application.

Creditworthiness

Lenders must conduct a rigorous assessment of the proposed borrower’s creditworthiness prior to granting credit. In Italy, this includes an assessment of the borrower’s income, expenses, financial and economic circumstances. In accordance with Central Individual Credit Register (CICR) regulations, Italy grants cross-border access to its creditworthiness databases. Lenders in EU Member States use these databases to assess a consumer’s ability to comply with the financial obligations for the duration of a credit agreement.

Code of conduct

Lenders and their intermediaries must act honestly, fairly, transparently and professionally. They must take into account the rights and interest of consumers.

Bankitalia has an obligation to protect these consumer rights. It ensures that Italian lenders and their intermediaries have an appropriate level of knowledge and competence regarding their credit products.

Once authorised in italy, a credit intermediary gains passporting rights to operate in any EU Member State.

Forbearance on foreclosures

EU Member States must adopt measures encouraging creditors to exercise reasonable forbearance before the initiation of arrears and foreclosure proceedings.

The aim is to encourage creditors to deal proactively with any emerging credit risk. In effect, this means ensuring that creditors have adequate measures in place so that they can exercise reasonable forbearance. Thus they can make reasonable attempts to resolve the situation through other means before initiating foreclosure proceedings.

Italian legislation prohibits foreclosure on a main residence. This is subject to the condition that this home is the only property the debtor owns. However, this is not applicable to luxury homes, such as a castle or villa.

The EMCD provides discretion about applying certain provisions

In Italy, prior to the conclusion of a credit agreement, the consumer has the right to a cooling-off period of at least seven days. This is in order to allow for comparison of different loan offers on the market. In addition, the cooling-off period aims to provide enough time to evaluate implications and make an informed decision. During this period of reflection and comparison, the offer remains binding on the lender. The consumer may accept the offer at any time.

While the EMCD permits consumers to repay their loan before the term expires, EU Member States may impose restrictions on rights to early repayment. Creditors may make a charge for early repayment to cover any losses directly arising from the repayment. In Italy, however,  in accordance with Bersani’s Decree, Law No. 40, 2nd April, 2007, a consumer cannot be charged for early repayment.

Finally …

If you are seeking a mortgage or loan for an Italian property investment, we would recommend you seek independent legal advice to ensure you receive fair treatment and protection.

De Tullio Law Firm specialises in Italian and international property law. If you need advice or help with matters related to a mortgage for Italian real estate property, please contact us for a free consultation.

 

You may also be interested in How to get a mortgage in Italy

Executor in Italian Succession

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What is the role of an executor in Italian succession?


Only a testator may appoint an executor in a will. An executor in an Italian succession procedure is responsible for managing your last wishes and the administration of your estate. Your appointed executor should agree to undertake to manage your estate with all reasonable care.

In Italy, an executor manages all succession procedures in accordance with Italian legislation

First, the executor must take possession of all the assets included in your estate. Then the executor manages the distribution of assets and bequests to heirs in accordance with your will. If you appoint an executor, your heirs may neither manage nor dispose of your assets autonomously.

Appointing an executor is highly recommended in complex personal or patrimonial frameworks. For example, an estate involving cross-border assets. Similarly, if estate transfer is to heirs living outside of Italy or who are not Italian nationals or the testator feels may have vested or conflicts of interest. Another example would be if an heir is legally incapacitated or under the age of 18.

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According to Italian law, an executor has the power to manage the deceased’s estate. As previously mentioned, this involves taking possession of the assets and distributing them among heirs forced and nominated heirs as applicable. Where a court claim or dispute arises, the executor actively and passively represents the deceased. In addition, the executor is responsible for obtaining relevant legal consents where heirs are minors, absent, legally incapacitated or legal entities.

Once the Italian succession procedure is complete, the executor must render detailed accounts. An executor is personally liable to pay any damages to heirs or legatees in case of mismanagement.

Is it possible to take a “DIY” approach to Italian estate administration?

Of course, you don’t need to appoint an executor in your will. Your heirs can manage the whole Italian succession procedure themselves. That said, the death of a relative or friend is a very stressful and emotional time. If the estate involves any complexity such as property in Italy, this can lead to misunderstandings or conflicts among heirs.

If you are making or reviewing your will, appointing an experienced estate lawyer as your executor protects your heirs from misunderstandings. In addition, it will reduce costs deriving from procedural mistakes and inheritance tax calculations.

Likewise if you are an executor of an Italian estate, a lawyer will be able to help with the Italian succession procedure. Engaging a specialist Italian inheritance lawyer will facilitate the whole process. It can save money and headaches with paperwork or red tape and prevents procedural mistakes and omissions. Plus if a costly error does happen, your lawyer is jointly liable.

Finally …

At De Tullio Law Firm, we have over 55 years of expertise managing cross border succession and estate planning matters throughout Italy. Our firm is also a full member of STEP, the world’s leading association for trust and estate practitioners.

Please contact us if you have any questions about your Italian estate planning.