Trusts in Italy: A Short Guide

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Understanding Trusts in Italy: A Legal Mechanism for Asset Management

A trust is a legal institution designed to separate certain assets from an individual’s personal holdings. This separation allows these assets to be entrusted to a trustee for a specific purpose, often in the interest of a beneficiary or to achieve a particular goal. Originating in Anglo-Saxon legal systems, trusts in Italy have significant differences compared to other legal frameworks. However, they gained recognition in Italy on January 1, 1992, with the ratification of the “Convention on the Law Applicable to Trusts and their Recognition,” adopted in The Hague on July 1, 1985 (law of October 16, 1989, no. 364).

Components of Trusts in Italy: Roles and Responsibilities

In a trust arrangement, three primary entities play crucial roles: the “settlor,” the “trustee,” and the “beneficiary.”

Settlor:

The settlor initiates the trust through a unilateral act, establishing its terms and conditions.

Trustee:

Often referred to as the “trustee,” this individual or entity receives the assets, assumes ownership, and manages them in the best interest of the beneficiaries.

Beneficiary:

The settlor designates the beneficiary who receives benefits from the trust’s assets as “income beneficiaries,” or ultimately inherits the assets as “capital beneficiaries” or “ultimate beneficiaries.”

The settlor or a third party names beneficiaries in the initial trust document or identifies them later. A settlor may specify a beneficiary by name or as belonging to a particular category. In some cases, settlors establish trusts without specific beneficiaries, known as “purpose trusts”. Settlors create these trusts to achieve specific charitable objectives.

Furthermore, a “protector” commonly oversees the trustee’s actions. The trust deed may require the protector to authorize certain trustee actions.

Safeguarding Assets: The Protective Role of Italian Trusts

In a trust arrangement, the segregation of assets shields them from potential creditor claims against the settlor, beneficiary, or trustee. By design, these assets become distinct from personal holdings, safeguarding them from individual financial liabilities. Only creditors specifically related to the trust can make claims against these assets.

Asset Protection and Trust Validity:

It’s crucial to understand that asset segregation is a consequence, not the primary purpose, of establishing a trust.

A valid trust must serve a recognized purpose deemed worthy of legal protection. Establishing a trust solely for asset protection reasons, without a legitimate purpose, does not meet the requirements for validity in the Italian legal system.

Trusts in Italy: Evolution of Legal Recognition

In recent years, Italy has witnessed various attempts to establish trusts solely for the purpose of shielding assets from creditors or gaining undue tax advantages. However, such trusts faced legal challenges, with numerous court rulings, including those from the Italian Supreme Court, declaring these trusts null and void or ineffective against creditors and tax authorities.

Consequently, a sense of skepticism toward trusts emerged within the Italian legal framework, viewing them as tools for evading debts or taxes.

The landscape shifted on January 1, 2017, with the enactment of Law no. 112 of June 22, 2016. This legislation expressly validated asset separation within trusts, marking a pivotal moment in the legal recognition of trusts in Italy.

Beyond its primary objective of enhancing assistance, care, and protection for individuals with severe disabilities, this law actively encourages trust establishment. Its explicit endorsement of trusts extends beyond its specific focus, dispelling any uncertainties regarding the legitimacy of this instrument within the Italian legal system.

Legal Considerations for Trusts in Italy

Despite the growing recognition of trusts in Italy, a specific regulatory framework within Italian legislation is still absent. Consequently, reliance on foreign laws becomes necessary for trust governance. The choice of applicable law holds significant implications for the functionality and validity of trusts in Italy.

Purposeful Establishment of Trusts

Understanding that trusts can only serve specific purposes, not shield assets from creditors, is vital. While asset separation naturally results from establishing a trust, it cannot solely motivate trust creation, nor can it defraud creditors or tax authorities.

Prospective trust settlors in Italy must carefully consider both the chosen law’s provisions and jurisprudence, along with the rules outlined in the Hague Convention of July 1, 1985. Additionally, they must ensure that the trust’s constitutive clauses align with Italian public order and tax regulations.

This scrutiny extends beyond trust regulation to assess the validity of the trust’s constitutive act itself, emphasizing the importance of thorough legal examination and compliance.

Deciphering Sham Trusts: Legal Implications and Standards

In the realm of trust regulation, the concept of a sham trust has evolved to tackle situations where the settlor maintains effective control over assets purportedly entrusted to a trustee, treating them as personal property. The law will consider such trusts null and void from the moment of their inception. Assets will revert to the ownership of the settlor

Mandates of the Hague Convention

The Hague Convention of July 1, 1985, explicitly mandates that for its application, assets within a trust must be under the trustee’s control, serving the interests of a beneficiary or a designated purpose (Article 2). In Italy, trust recognition hinges on the settlor effectively relinquishing control, with assets solely vested in the trustee.

While the settlor may retain certain rights or privileges, adherence to the Convention necessitates clear trustee control over the assets.

Furthermore, in many legal systems governing trusts, settlors may reserve significant powers in trust management. However, such clauses contradict the control requirement stipulated by the Hague Convention. It renders them incompatible with trusts established in Italy.

Once a trust’s constitutive act aligns with the applicable law and satisfies the Hague Convention’s rules, it must also comply with Italian public order regulations. For instance, trusts aiming to circumvent mandatory provisions of bankruptcy law or solely creating a separate estate from the settlor’s would be deemed null and void, the latter due to lack of consideration.


Scrutinizing Self-Declared Trusts: Legitimacy and Recognition

The viability of establishing a self-declared trust in Italy is subject to scrutiny. In this arrangement, the trustee and the settlor are one and the same.

Self-declared trusts are deemed legitimate in certain legal frameworks governing trusts. However, questions arise regarding their compliance with the recognition criteria outlined by the Hague Convention. In such trusts, the settlor retains complete control over the assets, albeit in the capacity of trustee. This departure from the Convention’s control requirement raises doubts about the recognition of self-declared trusts in Italy.

Case law further complicates matters by often deeming trusts illegitimate if the settlor retains control over the assets. This therefore casts doubts on the recognizability of self-declared trusts within the Italian legal system.

Tax Implications: Trusts and Revenue Agency Guidelines

It’s crucial to note that the Revenue Agency considers trusts where the settlor retains significant powers over asset administration or allocation (referred to as “interposed trusts”) as non-existent for tax purposes. Consequently, income derived from such trusts is taxed in the hands of the settlor.

Revenue Agency Guidelines:

The Revenue Agency has issued circulars providing guidance on the application of direct and indirect taxes to trusts (Circulars of August 6, 2007, No. 48, January 22, 2008, No. 3, and December 27, 2010, No. 61).

Transfer Tax:

The transfer of assets from the settlor to the trustee is subject to gift tax at a proportional rate (4%, 6%, or 8%), depending on the relationship between the settlor and the beneficiary. Additional mortgage and cadastral taxes (2% and 1%) apply to real estate transfers. However, exemptions for certain relatives and individuals with severe disabilities apply.

Exemptions for Individuals with Disabilities:

Trusts established for persons with severe disabilities benefit from exemptions from inheritance tax, gift tax, and mortgage and cadastral taxes on real estate transfers (Law No. 112 of June 22, 2016).

Income Tax Obligations:

Trusts are treated as taxpayers subject to corporate income tax, necessitating annual income tax return filings. Resident trusts require their own tax code and, if engaged in commercial activities, a VAT number.

The trustee fulfills all tax obligations of the trust. Income is attributed directly to beneficiaries in transparent trusts and taxed accordingly. Alternatively, income is taxed at the trust level in opaque trusts.

Safeguards and Limitations: Trusts and Creditor Rights

Trusts, being gratuitous acts, remain susceptible to ordinary and bankruptcy avoidance actions, prohibiting their use for defrauding creditors. Moreover, creditors harmed by a debtor’s actions that restrict disposal or transfer real or movable property registered in public records gratuitously can take legal action without requiring a prior declaratory judgment of the act’s ineffectiveness, provided they register the seizure within one year from the prejudicial act’s registration (Article 2929-bis of the Civil Code, introduced by Legislative Decree No. 83 of June 27, 2015).

Finally….

De Tullio Law Firm has over 55 years of expertise managing trusts and estate planning matters throughout Italy. Our firm is a full member of STEP, the world’s leading association for trust and estate practitioners.

If you need any advice regarding trusts in Italy, we are here to help. Please get in touch with us.

Move to Italy: Get Paid to Revitalize Local Communities

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Italy’s initiative offering 1 euro homes has captured global attention. Now, there’s another enticing opportunity: getting paid to move to Italy!

Calabria, aiming to combat depopulation and rejuvenate nine villages, has offered up to 28,000 euros to those who move to these areas.

Get Paid to Move to Italy: Terms and Conditions

To qualify, applicants must be under 40 years old. Additionally, they must commit to launching a small business and relocate to Calabria within 90 days of approval. This means officially changing their residence to the selected village.

This initiative has sparked interest both within Italy and abroad. Successful candidates can expect monthly payments ranging from 800 to 1000 euros for 2 to 3 years. Alternatively, they may receive a lump sum to start their own ventures.

Innovative Initiatives to Move to Puglia

In recent years, several towns in Puglia have implemented innovative measures to attract new residents and rejuvenate communities.

For instance, Candela, known for its natural beauty and historical charm, utilized funds from the National Recovery and Resilience Plan (PNRR) to implement effective revitalization strategies.

Get paid to Move to Italy

The Case of Candela: A Model for Success in Moving to Italy

Candela offers substantial financial incentives. These include grants ranging from 800 euros for single-person households to 5,000 euros for families with over 4 members moving to the area. These funds cover rental and renovation costs, making the move financially viable for new residents. Applicants must demonstrate residency and meet specific income criteria to qualify for these incentives, ensuring sustainable community growth.

If the cash incentive is not particularly appealing to convince people to move to the village in the province of Foggia, other options are being studied.

These include discounts on electricity bills, reduced fees for kindergarten enrollment, and reductions in waste and school canteen taxes.

All of this aims to repopulate a village that risks becoming another ghost town in the southern landscape. Southern Italy’s demographic vitality is declining, making it challenging to reclaim the lost essence of life.

The Role of the PNRR

The PNRR, the National Recovery and Resilience Plan, was introduced by Italy as part of the broader EU program for post-pandemic recovery.

The plan includes investments in various areas, such as urban regeneration and the recovery of historic villages. For Puglia, the PNRR has allocated funds for the revitalization of depopulated areas and support for local communities.

The case of Candela demonstrates how the strategic use of PNRR funds can turn challenges into opportunities.

In fact, thanks to these incentives, Puglia is experiencing a new era of growth and revival, offering a replicable model for other regions of Italy.

The adoption of such measures helps preserve cultural and historical heritage. It also ensures a prosperous and sustainable future for local communities.

Move to Italy and get paid

Finally …

At De Tullio Law Firm, we specialize in property, inheritance, residence, and family law matters in Italy.

Whether you’re considering moving to Italy under its incentivized programs or navigating legal matters related to property and residency, De Tullio Law Firm offers specialized expertise. Contact us today for a complimentary consultation. Let us guide you through the process. Together, we can ensure your move to Italy is smooth and successful.

 info@detulliolawfirm.com

Tel +39 080 483 1785

from the UK: 0800 012 6545

from the USA and Canada: 1-855-688-5546

The Times: Chaz and Lucy’s Italian move, with expert advice from Giandomenico De Tullio

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“We moved to a farmhouse in Puglia for la dolce vita” is how The Times headlines the story of Chaz Oldham and Lucy Akhurst. They, the couple in the photograph, are an English couple who have chosen to make their new home in the heart of Italy, a five-bedroom farmhouse in the hills with 20 acres of land, 15 minutes’ drive from the sea and 8 minutes from Alberobello, famous for its thousand Unesco-listed trulli. This is an area already well visited by foreign tourists, especially the French, Swiss and Germans.

Chaz and Lucy’s Italian move, with expert advice from Giandomenico De Tullio

The Times article tells you their story, the proximity to the world of cinema, the moves, the inspirations, the farm in Devon, the dream of France but falling in love with Italy, and the purchase of the house with a huge roof terrace with a 360-degree view, which convinced him to buy. What truly stands out, however, is the financial potential of such a decision.

 

A brief aside on the prices of apartments in the area where Chaz and Lucy bought: at the time of their purchase (2020) the average price per square metre was €1,836, while today it is €2,374 (source: The Times), which highlights the value of investing in property in this region. Real estate in Italy, particularly in sought-after areas like Puglia, is not only a lifestyle choice but a sound financial strategy. With property values steadily increasing, the potential return on investment is significant.

 

Then there was the application to the Municipality of Monopoli for a building and renovation permit (obtained in just over a year), the hiring of Puglia Pools to build the swimming pool, the renovation of a wing of the house which – in 2025 – is estimated to yield between €1,800 and €2,400 per week. This demonstrates how renovating and renting out properties in Italy can generate consistent income, making it a lucrative option for those looking to invest in the real estate market. Moreover, the cost of living in Italy, where they now live, is a fraction of the UK, while the produce is fresh and km0.

 

The rise in property prices, coupled with the attractive rental market, shows why investing in Italian real estate, especially in regions like Puglia, is an excellent opportunity. You can find more insights at the end of The Times article, where we also provide tips for British citizens looking to purchase property and apply for residency in Italy. You can read them there or take advantage of our free preliminary consultation in the language of your choice.

 

Click on this link to choose the time that suits you best or email us at info@detulliolawfirm.com.

 

Full text of The Times’ article here: https://www.thetimes.com/article/53afb046-b3ac-4422-b7b0-02231a555480.

 

Cultural Heritage in Italy: The Legal Landscape

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Dreaming of purchasing a property in Italy? The country’s magnificent buildings, historic cities, towns, and villages make the Italian real estate market particularly enticing. However, within the heart of these charming landscapes lie historical architectural treasures, subject to legal protections. In this article, we explore the role of legislation aimed at preserving Italy’s cultural heritage.Cultural Heritage in Italy

Understanding Italy’s Cultural Heritage Legislation

Cultural assets, encompassing movable or immovable properties, benefit from State protection due to their artistic, historical, or architectural significance. Since May 1st, 2004, Italian legislation governing this matter is the code of cultural heritage and landscape (Legislative Decree January 22, 2004, n. 42).

Italian Cultural Heritage: Limitations on Immovable Properties

The code imposes restrictions on the transfer of ownership or possession, particularly concerning immovable properties. These regulations vary depending on the owner of these assets.

Notification Requirements for Italian Cultural Heritage Properties

For immovable properties owned by individuals or companies to attain cultural asset status, they must be notified by the public administration. Such notifications, documented in property registers, can be challenging to verify, primarily post the enactment of Law No. 1089 on June 1st, 1939. It is therefore crucial to ascertain the property’s ownership history to verify the existence of notifications.




Cultural Heritage in Italy

Reporting Obligations for Transfers

Any transfer of ownership or possession of cultural assets mandates filing a report with the superintendent of the asset’s location. This report, due within 30 days of property purchase or inheritance acceptance, requires comprehensive details of the involved parties, asset particulars, and transfer conditions.

Penalties for Non-compliance with Italian Cultural Heritage Law

Failure to submit the report within the stipulated period constitutes a criminal offense, leading to severe penalties. These penalties include substantial fines ranging from €1,500 to over € 75,000 and potential incarceration for up to one year.

Italian Cultural Heritage Properties

Right of First Refusal

In consideration-based transfers like sale or exchange, the State or relevant local authorities hold the right of first refusal. This right must be exercised within 60 days from report receipt, conditionally suspending the transaction until then. However, there’s no right of first refusal in inheritance, donation, division, share transfer, merger, split, or mortgage creation scenarios.

Finalization of Ownership

If the right of first refusal remains unexercised after 60 days, ownership transfers to the buyer. However, if the report is filed after the 30-day legal period, the right of first refusal must be exercised within 180 days. Until this period expires, the asset remains with the vendor.

Finally …

At De Tullio Law Firm, our expertise lies in property and inheritance matters in Italy.

If you have any inquiries regarding the transfer of cultural assets, feel free to reach out to us. We are pleased to provide you with a complimentary preliminary consultation.

Schedule your consultation. 

 

Italian Real Estate: How to Avoiding Pitfalls when buying

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Buying Italian Real Estate should be exciting but, it can also be a complex process

The best way to protect your investment when buying Italian real estate is to engage an English-speaking Italian lawyer. Instructing an independent, English-speaking Italian lawyer could save you money and stress in the long run.

Choosing the right Italian lawyer is a very important decision. Make sure you instruct an independent English-speaking lawyer, who has experience advising international clients in relation to property purchases in Italy.

Your Italian property lawyer should:

Be independent. Make sure the lawyer is not connected in any way to the estate agent, developer or seller. An independent lawyer will exclusively look after your interests and not the interests of the estate agent or developer. You should find your own lawyer rather than taking recommendations from an estate agent or using a developer’s in-house lawyer.

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Speak English. Unless you are a fluent Italian speaker, your lawyer should be English-speaking. You need to know that when you ask a question, your lawyer can fully understand and answer in a way you fully understand. There is no point in paying for advice that you don’t understand.

Have Professional Indemnity Insurance. You should check that your lawyer has adequate insurance. Should any problems arise as a result of advice you receive, you can be certain you are covered.

Why should you instruct a lawyer if you are buying Italian real estate?

It is impossible to evaluate a property just from viewing it. By instructing a lawyer you will have a better understanding of the property and the Italian purchase process.

Your lawyer can:

Guide you through the Italian buying process and the obligations of each party.

Check the property title, carry out checks and searches on the property before you sign any paperwork, which may well have binding financial and legal implications.

Arrange structural and geological surveys.

Review the purchase contracts to ensure that everything is as it should be and that your position is protected.

Advise about any inheritance and tax issues that may affect you. This is particularly important in Italy which has rules of ‘forced heirship’.

Help you make a Will to cover your Italian property, which is advisable in planning the succession of your assets.

Assist with matters such as Italian residency, tax codes, setting up a bank account or utility contracts for a property following purchase.

What is the role of the notary who buying Italian real estate?

An Italian notary (Notaio) is a legal representation of the Italian Government. Whilst they are part of the legal profession, it is important to ensure that you do not confuse the role of your lawyer with that of a Notaio.

The role of the Notaio in Italy is to oversee the property transaction, to collect the appropriate tax on behalf of the Italian State and to register the property in the Italian Land Registry. Legally a Notaio must remain impartial in the property purchase. A Notaio cannot, therefore, act on behalf of the buyer or the seller. You should instruct your own independent Lawyer to advise you specifically in relation to your property purchase and related issues.

Do I need to give my Italian lawyer Power of Attorney?

If you are not going to be in Italy during the purchasing process, it is a good idea to provide your lawyer with a Procura Speciale – a Limited Power of Attorney. This is a legal document that gives another person authority to act on your behalf, for example, to sign a property purchase contract.

Conferring a Power of Attorney to another person gives significant power to act on your behalf. You should therefore be comfortable that you fully understand what you are agreeing to, that you are happy with the wording of the document and that your agent is competent and trustworthy.

Finally …

Buying Italian real estate is a complex matter. With our extensive knowledge and experience of Italian and international law, we provide expert conveyancing services throughout Italy. If you are purchasing an Italian property, get in touch with us for a free consultation.

 

Italian Property Law: Our Journey

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A Decade-Long Proposition

For a decade, Mario and Giovanna, our charming elderly Italian neighbors, wanted to sell us their property. The small farm includes several hectares of land, a farmhouse in decent shape, and outbuildings ranging from usable barns to near-ruins. Italian property law is a significant factor in the process, affecting both the vendors’ approach and our response.

The Appeal and the Sticking Point

While the idea of buying the adjacent property was always appealing, the asking price was just too high. Mario and Giovanna aimed to distribute the proceeds among their five grown children and cushion their final years. None of the children were interested in taking on the farm, as they all had their own properties and families elsewhere. We repeatedly turned down their offer due to the price. We suggested that a substantial reduction might pique our interest and made an offer, but they rejected it, holding out for more. Understanding Italian property law helped us navigate these negotiations, ensuring we were aware of our rights and obligations.

The Turning Point

Seven years ago, Mario and Giovanna decided they could no longer manage the farm. They moved into an apartment in town, returning to the farm to spend the summer. They preferred to avoid real estate agency fees and continued their quest for a private sale. After the pandemic, a local goat farmer made an offer, and we shared in their excitement and relief. However, the buyer needed a mortgage and couldn’t secure one, likely due to complications related to Italian property law. The situation dragged on for 18 months and eventually the sale fell through. They came back to us with a lower price, but it was still more than we wanted to pay. By then, Mario’s health was declining.

Unexpected News

One day, Giovanna called, asking us to visit them in their town apartment. We went, and inevitably, the property sale came up. We reiterated our previous offer, still shy of their expectations. Not long afterward, sadly, Mario died, and amidst the grief, the matter was set aside, unresolved.

We maintain regular contact with Giovanna. She has been a friend for many years. Our mutual affection has always been a constant. We visit her regularly for coffee and conversation. Occasionally, during these visits, the subject of the farm sale would resurface as she and her children navigated the labyrinthine Italian probate process under Italian property law.

Unexpectedly, in late December, a family delegation arrived at our house. They brought season’s greetings and the news that all the heirs, including Giovanna, had decided to accept our offer. Giovanna said Mario had always hoped we would buy the property, believing we would care for it properly.

Engaging Legal Expertise in Italian Property Law

Having made a verbal agreement to purchase the property, we immediately engaged De Tullio Law Firm, experts in Italian property law. The team initiated due diligence and contacted a surveyor and a notary.

The first thing they discovered was that according to property plans, one of the doors leading to the terrace should have been a window. This wasn’t a huge issue as post-purchase, we intend to renovate the house and we could fix that.

However, as the team looked into the paperwork, it became apparent that there were other issues with the property. All these matters explained why the goat farmer had encountered difficulties securing a mortgage.

Even minor irregularities with Italian town-planning and cadastral regulations, under Italian property law, can complicate sales and purchases, particularly when the buyer requires financing. Banks mandate full compliance with regulations.

Navigating Legal and Regulatory Challenges with Italian Property Law

Having lived in Italy for almost 20 years, we have seen expat property owners grappling with discrepancies when they come to sell properties at a later date. They often find their assets adversely affected in terms of resale value and marketability because of minor issues that were present when they first bought the properties. This underscores the importance of conducting thorough legal due diligence when purchasing a property. Italian property law is very complex. As soon as you know you want to buy a property in Italy, you should engage a property lawyer.

De Tullio Law Firm discovered a critical omission in the succession paperwork: not all buildings were accounted for in the sale. This discrepancy arose because Mario and Giovanna had failed to declare a collapsing outbuilding in the original title deed, drafted in the 1980s when they acquired the particular parcel of land from another neighbor of ours. This old outbuilding was erected prior to 1967.

Understanding Italian Property Law and Building Regulations

Italian buildings constructed before September 1967 were not subject to municipal authorization due to the absence of comprehensive national building regulations. The enactment of Law No. 765 in 1967 marked a pivotal shift in Italian property law, mandating building permits from municipal authorities and standardizing processes across Italy. Prior to this law, construction practices were governed by local customs and lacked formal oversight.

However, despite its derelict condition, the outbuilding must still be registered in both the land registry and the Nuovo Catasto Edilizio Urbano (NCEU). The latter serves as a registry for urban properties, and inclusion is a legal prerequisite for transactions such as sales or transfers of ownership under Italian property law.

In our case, updating the succession paperwork from the tax authority to include the outbuilding in the sale are imperative steps under Italian property law. Additionally, the vendors will need to rectify the original title deed to include the outbuilding. These measures will ensure legal compliance and clarity in the transaction.

Addressing Land Registry Discrepancies Under Italian Property Law

The land registry map of the property presents a concerning discrepancy: none of the buildings are accurately depicted. Rectifying this will entail updating the land registry.

Then, a neighbor has encroached on two of the land parcels included in the sale. Part of the neighbor’s house extends onto one parcel, while his garden spills over onto another.

The neighbor is a kind elderly gentleman, and we don’t want to risk boundary disputes either with him, or potentially with his heirs in the future, who might assert usucapione rights. Resolving this dilemma requires subdividing the land the neighbor is currently using as a garden and adjusting the boundary accordingly. Similarly, where the neighbor’s property encroaches onto land included in the sale, boundary lines must be redrawn.

While both sections of land will be gifted to the neighbor, the vendors must ensure that they and the neighbor have them legally registered to ensure clarity and avoid any future disputes under Italian property law.

Italian Property Law: Verifying the Internal Layout

It’s crucial to check the internal layout of the property. Although the vendors had provided their own plans, official municipal plans often differ.

The vendors had already mentioned a discrepancy with the door leading to the terrace. Would the vendors’ plans match the ones held by the local municipality’s technical department when reviewed? The team at De Tullio Law Firm investigated this using the services of a geometra.

After several weeks of waiting, the geometra received notification that the relevant file had been “misplaced” in the municipal archives. He applied to the provincial archives for a copy. Thankfully, apart from the issue with the extra door, the interior plans match the actual layout of the house.

Moving Forward with the Preliminary Contract

Despite these, and a few other issues, we asked De Tullio Law Firm to organize a preliminary contract. We wanted to secure the farm while protecting ourselves from purchasing a property that is not fully compliant with planning regulations under Italian property law.

After several iterations between the lawyers at De Tullio Law Firm and the notary, we now have a preliminary contract in place with conditions precedent that specify the remedial work required before completion, with the costs to be borne by the vendors. The deadline for completion is December 31st, providing the vendors a realistic amount of time to address all the discrepancies.

Finally …

De Tullio Law Firm extends our gratitude to our clients for sharing their journey to purchase their neighbor’s farm. Italian property law is indeed complex, and seeking legal advice is crucial to safeguard your interests and resolve issues before buying property in Italy. As this case demonstrates, what initially appeared to be a straightforward transaction revealed a number of discrepancies, highlighting the importance of due diligence.

The Office for Italian Statistics (ISTAT), estimates that approximately 20% of Italian properties are illegally built. Additionally, Italy currently faces a significant backlog of over 4 million retroactive planning applications for illegal constructions. Some estimates suggest this number could be multiplied by at least five when including properties with minor irregularities.

Despite the challenges in this case, all the issues are resolvable. We anticipate that the signing will take place by the December deadline. This case underscores the critical role of thorough legal checks in property transactions, ensuring a smooth and compliant acquisition process.

At De Tullio Law Firm, we offer personalized advice and support. With over 55 years of experience handling clients’ Italian and cross-border property, residency, family, and inheritance matters, we are right beside you.

Book a FREE CONSULTATION with one of our lawyers here.

Squatters In Italy: The Legal Framework

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The Issue of Squatters in Italy

In Italy, the phenomenon of squatters is a complex and controversial issue. It intertwines themes of law, social policy, and public order.

Squatters are individuals who take possession of properties without the legal consent of the owner.

Obviously, this phenomenon raises significant questions about balancing the protection of private property and the right to housing. These are two fundamental principles enshrined in the Italian Constitution.

squatters right

Italian Legislation and Relevant Articles

Italian legislation addresses the issue of squatters primarily through the Criminal Code and specific laws regarding leases and illegal occupation.

  1. Criminal Code, Article 633: This article punishes anyone  who arbitrarily invades another person’s land or buildings, whether public or private, with a view to occupying them or deriving any other benefit from them, shall be punished, on complaint by the offender, by imprisonment for between one and three years and a fine of between EUR 103 and EUR 1,032.
  2. Law 27 July 1978, No. 392 (Fair Rent Act): Although not directly addressing illegal occupation, this law regulates the relationship between landlord and tenant, providing the legal framework within which property rentals must occur.

eviction of squatters

Eviction Procedures for Squatters in Italy

When someone illegally occupies an Italian property, the owner can request the authorities’ intervention to reclaim possession, although the process is not as simple as it might seem.

The standard procedure includes filing a police report, where the owner must report the illegal occupation to the competent authorities.

This report initiates criminal proceedings against the squatters and is followed by an eviction request filed by the owner with the court.

The judge, upon evaluating the situation, may issue an eviction order.

However, if minors or vulnerable individuals are involved, the situation becomes more complicated.

Dealing with Squatters in Italy: Legal Assistance

As previously mentioned, handling an illegal occupation can pose complexity and stress for both the property owner and the involved parties.

Therefore, we highly recommend property owners to seek legal assistance from a lawyer specializing in real estate.

Because of the complexity and the lengthy nature of the procedure, only a lawyer specialized in this field can provide support at various stages of the process and give their clients peace of mind.

  1. Legal Advice: Assessment of the situation and suggestions on legal actions to protect property owner rights.
  2. Drafting the Report: Assistance in drafting the report for the competent authorities, ensuring inclusion of all necessary elements.
  3. Filing the Eviction Request: Preparation and filing of the eviction request with the court, gathering the necessary evidence to support the case.
  4. Court Representation: Legal representation during hearings to ensure the process follows procedures and respect of the property owner’s rights.
  5. Execution of the Eviction Order: Coordination with the bailiff and, if necessary, with law enforcement to ensure effective execution of the eviction order.

housing right

The Right to Housing

Balancing the protection of private property and the right to housing stands as one of the most controversial aspects.

The Italian Constitution, in Article 47, enshrines the right to housing and advocates for policies facilitating access to housing.

However, finding this balance requires respecting private property.

Therefore, legislators and policymakers must address the root causes of the issue, rather than just mitigating its effects. This ensures a fairer and more inclusive society where everyone respects and protects each other’s rights.

Safeguarding Your Italian Property: Tips for Foreign Buyers Against Illegal Occupation

Foreign buyers can adopt various practical measures to prevent the illegal occupation of their properties:

Installation of Security Systems: Installing alarm systems, surveillance cameras, and reinforced doors can deter attempts at occupation. These systems can also provide evidence in case of invasion.

Professional Property Management: Entrusting property management to a local real estate agency or a reliable caretaker can ensure that the house is regularly checked and any occupation attempts are immediately reported to the competent authorities.

Neighbours and Local Community: Establishing good relationships with neighbours and engaging with the local community can enhance vigilance over the property. Neighbours can promptly alert the owner or authorities in case of suspicious movements.

Finally …

At De Tullio Law Firm, we specialize in property, inheritance, residence, and family law matters in Italy. Whether you’re considering purchasing a property anywhere in Italy or have inquiries about these legal areas, don’t hesitate to contact us. We offer a complimentary preliminary consultation to address your concerns and provide expert guidance.

Schedule your consultation. 

 info@detulliolawfirm.com

Tel +39 080 483 1785

from the UK: 0800 012 6545

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Rental Contracts in Italy

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Italian rental contracts

Renting a property in Italy entails navigating a complex landscape of legal obligations and procedural steps to establish a fair and transparent relationship between landlords and tenants. Consequently, a comprehensive understanding of the Italian rental contract process is indispensable, whether for residential or commercial purposes.

This guide aims to provide a detailed overview of the various types of rental contracts available, their distinct characteristics, essential legal requirements, as well as the rights and responsibilities they entail for both parties. Additionally, it explores effective methods for resolving disputes, ensuring that all aspects of the rental process in Italy are approached with clarity and compliance.

Types of Rental Contracts in Italy

Italy offers several types of rental contracts:

Free Market Contract:

These are the most common type of rental contracts in Italy. They typically last four years with the possibility of automatic renewal for a further four years.

The rent and other contractual terms are freely negotiable between the landlord and tenant.

Agreed Rental Contract:

These contracts last three years with a two-year extension. Homeowners and tenant associations set the rents, often resulting in lower rates than free market contracts.

Transitional Contract: 

These contracts meet short-term rental needs, ranging from 1 to 18 months.
Additionally, they are non-renewable and require a stated reason due to their short-term nature.

Student Tenancy Contract:

These contracts cater specifically to university students and last from six months to three years, aligning with their study schedules.

 

rental contract

Rental Contracts in Italy: Characteristics

A typical rental contract in Italy should include the following:

1. Parties Involved:
Clearly identifies the landlord and tenant(s) including full personal information.

2. Property Description:
Provides a detailed description of the rental property, including the furniture and accessories.

3. Duration:
Specifies the start and end dates of the rental period and any renewal terms.

4. Rent and Payment Terms:
Agrees on the rent amount, payment frequency (usually monthly), and accepted payment methods.

5. Security Deposit:
Typically, this is equivalent to two months’ rent, held as security against damage or unpaid rent.

6. Maintenance Responsibilities:
Clearly defines maintenance and repair responsibilities, distinguishing between minor and major repairs.

7. Termination Conditions:
Outlines the conditions under which either party may terminate the rental contract, including notice periods and penalties for early termination.

Legal Requirements for Rental Contracts in Italy

Several legal requirements must be met to validate rental contracts in Italy. First, all rental contracts must be in writing and signed by both parties. Additionally, contracts lasting more than 30 days must be registered with the Inland Revenue (Agenzia delle Entrate) within 30 days of signing, with the registration fee typically shared between the landlord and tenant.

Moreover, landlords are obligated to declare rental income and pay applicable taxes, while tenants may benefit from tax deductions on rental payments under specific conditions.

In terms of rights and responsibilities, both landlords and tenants have distinct obligations under Italian law. Landlords must ensure the property is habitable, meeting safety standards, and they must perform major repairs and maintenance. They must also respect the tenant’s right to privacy and peaceful enjoyment of the property.

Tenants, on the other hand, are responsible for paying rent and agreed fees punctually, maintaining the property in good condition, and undertaking minor repairs as needed. It is essential for tenants to comply with the terms of the contract and refrain from using the property for unauthorized purposes. These legal frameworks help establish clear guidelines and promote a harmonious rental relationship in Italy.

rental dispute

Dispute Resolution

Resolving disputes between landlords and tenants regarding Italian rental contracts involves various channels, each tailored to different circumstances and preferences.

Negotiation

Initially, parties can engage in negotiation, where landlords and tenants directly discuss and resolve issues. For example, they might negotiate adjustments to the rent to account for maintenance responsibilities or agree on a revised schedule for property inspections.

Mediation

Mediation offers a structured approach with the assistance of a neutral third party. This process helps clarify misunderstandings and facilitates compromises that satisfy both parties. An example includes using a mediator to resolve disagreements over the interpretation of lease terms regarding property usage or responsibilities for repairs.

Legal Action

If informal methods fail to yield a resolution, parties can pursue legal action through the local Rent Tribunal. This step becomes necessary when there is a significant disagreement over lease termination conditions or disputes regarding security deposit refunds. The Rent Tribunal serves as a formal venue where both parties can present their cases, and decisions are made based on Italian rental laws and regulations.

These options ensure that disputes are addressed promptly and fairly, thereby promoting a harmonious landlord-tenant relationship and upholding legal standards in the rental process in Italy.

Finally …

We understand that renting a property in Italy can be confusing and involves legal risks. If you plan to rent an Italian property, always seek legal advice beforehand.

With over 55 years of experience in Italian property law, at De Tullio Law Firm we are specialists in negotiating rental contracts, drafting bilingual versions tailored to your needs and facilitating communication between property owners and tenants. Additionally, we offer comprehensive support in managing legal obligations and effectively resolving disputes.

Moreover, if you are considering letting your Italian property, we offer comprehensive services to ensure a secure and smooth process.

If you need further clarification regarding property rental or letting, or wish to discuss your situation, please contact us for a free consultation. We are here to help.


You may also like to read about buy to rent in Italy.

Buying a House in Umbria: A Guide

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Are you considering buying a house in Umbria? In this article, we’ll look into the this region of Italy. From its cultural richness to its stunning landscapes, we’ll explore what makes Umbria a true gem. Additionally, we’ll offer valuable insights into its real estate market and guide you through the property acquisition process.

Buying property in Umbria

Buying a House in Umbria: Discovering this Italian Region

Located in the heart of Italy, Umbria exudes enormous charm. Its rolling hills, medieval villages, and vibrant cultural legacy define its allure. Aptly dubbed the “Green Heart of Italy,” with its lush vineyards and olive orchards. In essence, Umbria offers an idyllic retreat for nature lovers and those in search of tranquillity.

Buying a house in UmbriaHistorical cities like Perugia and Assisi abound with artistic and architectural treasures, echoing the region’s rich significance in Italian history. With its clifftop location, Orvieto offers breathtaking panoramic views and is home to a magnificent Gothic cathedral. Gubbio captivates with its impeccably preserved medieval ambiance, labyrinthine cobblestone streets, and a palatial legacy tracing back to the 14th century. Moreover, the delectable local cuisine and vibrant traditional festivals make Umbria an irresistible destination for those seeking to invest in a home in the heart of Italy.

Buying a house in Umbria

However, Umbria’s appeal extends beyond its geography. Its real estate market, with prices averaging lower than in neighboring regions like Tuscany, is enticing investors. Amidst rising tourism and slightly declining property prices, many are opting to invest in Umbria’s real estate market. Renowned tourist destinations like Spoleto, Terni, and Todi further bolster its attractiveness, drawing thousands of visitors annually.

While investing in Umbria for a buy-to-let vacation home, bed & breakfast, or guesthouse can be a profitable venture, the region’s property market and procedures are unique. It’s therefore essential to understand these nuances before signing any paperwork.


Buying a House in Umbria: Legal Compliance

If you’ve come across a property you like in Umbria it’s essential to verify if its present condition aligns with its legal status as documented in the land registry and that it complies with urban planning permits.

Ensuring the continuity of property titles and confirming the absence of third-party rights are also crucial steps. Take the time to thoroughly assess these aspects to ensure everything meets your expectations and requirements.

Be cautious! Despite assurances from the real estate agent or seller, the property may be non-compliant.

Unlike other Italian regions, in Umbria, vendors aren’t obligated to provide buyers with a compliance report. Yet, this document is crucial for ensuring the property’s legal integrity, certifying urban and cadastral compliance. Known as “Relazione di rispondenza edilizia e conformità catastale” in Italian, it should be produced and signed by an authorized individual in the technical department at the local municipality.

Therefore, the risks of buying a non-compliant house are automatically higher in Umbria. It is common for the property’s actual condition, as recorded in the land registry, not to match that approved within urban planning permits.

Due to economic and administrative reasons, work is often carried out without permission in Italy. Identifying lack of permits and defects within a house can be difficult without first conducting a thorough analysis of property-related documentation.

Buyer’s Responsibilities in Umbria

Upon acquiring the property, the buyer assumes financial, civil, and criminal liability for any non-compliances. Obtaining retroactive permission to rectify issues may prove difficult or impractical. Even if it is possible, securing retroactive permissions can be time-consuming and expensive. Additionally, minor compliance issues could hinder obtaining new building permits or engaging in rental activities.

Precautions Regarding Access and Easements

In some cases, access to the desired property may involve traversing a path situated on a neighbor’s land. In such instances, meticulous contract drafting is vital to secure the transfer of rights-of-way. Additionally, parts of the land for sale might be utilized by others. To ensure a secure purchase in Umbria, it’s crucial to identify all access rights and easements to fully comprehend their terms before committing to any agreements.

Seismic Risks in Umbria

Umbria, being in a seismic region of Italy, poses risks like earthquakes and landslides. Before buying property in Umbria, it’s crucial to assess these risks. It’s wise to engage a surveyor for a full geological and structural evaluation of the property to ensure occupant safety.

Finally …

While real estate agents and sellers aren’t obliged to ensure property compliance or provide compliance reports, notaries conduct basic checks. However, by law, the responsibility for legal verification rests with the potential buyer. Conducting due diligence when buying a house in Umbria is crucial to avoid assuming liability for pre-existing defects.

Conducting due diligence can be a complex and time-consuming process, requiring a deep understanding of Italian law and administrative procedures. It’s common practice to enlist the services of a specialized real estate lawyer to manage this task on your behalf. A lawyer will oversee the entire procedure, including verifying documentation (urban, cadastral, zoning, mortgage, energy, habitability, etc.), drafting necessary contracts, handling administrative formalities, and accompanying you to the notary on the day of signing the deed.

The notary, an official of the Italian State is responsible for overseeing property transactions among other duties. By law, notaries must remain impartial in property transactions. They cannot provide legal advice to any of the parties involved. Therefore, a notary cannot substitute a lawyer in representing the buyer’s interests.

Buying a house in Umbria can yield significant rewards, yet it necessitates meticulous attention and adherence to legal protocols. Drawing upon more than 55 years of expertise across Italy, De Tullio Law Firm can guide you through the entire process. Our team of expert lawyers offers tailored advice, guaranteeing a secure and legally compliant investment. Book a free call today to embark on your path to owning a home in the captivating Umbria region.

You may also be interested in our guide to buying property in Puglia.

Property in Umbria