The Italian Rent to Buy Scheme. Information And FAQ

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Introducing the Italian rent to buy scheme

In September 2014, the Italian parliament introduced measures to revitalise the property real estate sector. Measures include an Italian rent to buy scheme as part of the Sblocca Italia – Unlock Italy – decree (Article 23 of Legislative Decree 133/2014).

The Italian rent to buy scheme has two main aims. Firstly to help people purchase a property and secondly to support builders and developers sell property stock.

The Italian rent to buy scheme is similar to the UK model

It allows a promissory purchaser to immediately start living in a property as a tenant and provides the option to purchase the property at a later date.

As a tenant, the promissory purchaser pays a regular rent. In effect, this postpones the purchase of the property until a specified future date. Purchase should take place no more than 10 years from the start of the rent to buy contract. Rental payments reduce the overall property price.

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Decree 133/2014 addresses and resolves problems that stemmed from the lack of specific legislation in this domain. Notably, the decree provides for the legal transcription of a rent to buy contract in the land registry for the duration of the contract.

Essentially, the land registry transcription counts as a full and proper reservation of the purchase of the property. Consequently, the owner of the property cannot sell it to anyone else for the duration of the contract.

No mortgages or easements or any other prejudicial rights can be held on the property. Creditors of the property owner / vendor will neither be able to register a mortgage on the property, nor foreclose on it.

As soon as a rent to buy contract is in the land registry, this guarantees that the property is reserved for the promissory purchaser. Any other transcription or registration will be unenforceable against it.

Frequently asked questions about the Italian rent to buy scheme

What is a rent to buy contract?

The contract combines a rental contract and a preliminary contract of sale for a specific property. This means that from the outset of the contract, the owner/vendor gives the promissory purchaser the right to buy the property. The promissory purchaser is able to live, as a tenant, in the property and pays a regular rent. After a contractually agreed period of time, but not more than 10 years, the promissory purchaser may decide to buy the property. The owner must deduct rent paid during the term of the rent to buy contract.

Example: Consider the sale of a villa for €100,000. The monthly rent is €1,000 per calendar month. A part of this rental payment, €500, is the rent payment for living in the property, as if it were a normal rent. The remaining €500, counts toward the purchase of the property. In effect, this portion of the monthly rent constitutes a down payment on the sales price.  If the term of the rent to buy contract is 5 years and at that point, the promissory purchaser decides to buy the property, rather than pay €100,000, the promissory purchaser pays the outstanding EUR 70,000. This is because €30,000 has already been paid as part of the rent to buy scheme.

Is the promissory purchaser obliged to buy the property at the end of the rent to buy contract?

The law provides for an option to buy the property. However, there is no obligation. Obviously the parties may agree that the tenant must purchase, but that contract would not be subject to rent to buy legislation. It is merely a private arrangement.

How long does a rent to buy contract last?

The parties to the rent to buy contract establish the period within which the tenant may decide to buy the property. According to legislation,  this must be within 10 years from the start of the rent to buy contract.

What are the benefits of a rent to buy contract for property vendors?

The main advantage is the ability to find a larger number of potential buyers.

What are the risks of a rent to buy contract for property vendors?

There are a couple of risks. Firstly, a tenant may decide not to buy the property. In this case, however, the owner can retain part or all of the rent payments. These should be a sum greater than a normal rental income.

The other risk is that the tenant doesn’t abide by contractual terms, becomes insolvent or causes significant damage to the property. This may mean the property owner has to go to court to evict the promissory purchaser, regain possession of the and free the property from contractual obligations in order to sell it to others.

What does an eviction order entail in terms of time and cost?

The procedure is not strictly-speaking an eviction, but the release of a property. Generally, this is a much shorter and less costly process. Just how long the release of a property takes very much depends on individual courts.

In order to use a property release procedure, the rent to buy contract must contain legally compliant and watertight clauses. You should always seek independent legal advice in structuring the entire rent to buy contract. It is crucial to ensure that you cover everything.

Are there any measures in place to safeguard the owner /vendor?

It is imperative that the rent payments are higher than a normal rent contract. In the event that the sale does not conclude, the retainer payment that the property owner retains serves as compensation.

Commitment to retainer conditions also serves as an indication of the promissory purchaser’s commitment to conclude the transaction at term.

What protection does rent to buy provide for promissory purchasers?

The law provides for the transcription of an Italian rent to buy contract in the land registry. In the same way a deed of sale is managed. A notary – an official of the Italian State –  must oversee the rent to buy contractual process. The contract must be legally compliant. The transcription in the land registry guarantees that the promissory purchaser has agreed to buy a property free of mortgages, liens, foreclosures, or any other detrimental matters, which might arise following the transcription of the rent to buy contract. The land registry transcription is valid for a maximum term of 10 years.

This protection holds even if the property vendor / owner is declared bankrupt during the term of the rent to buy contract.

What type of property can be included in rent to buy contracts?

Rent to buy contracts are valid for any type of property. This includes apartments, houses, farms, garages, vineyards, shops, offices, factories, land.

Are rent to buy contracts also applicable to buildings under construction?

Yes. Rent to buy contracts are applicable to buildings under construction. For contractual purposes, any pre-existing mortgage on the construction must be repaid. If after careful consideration and having taken independent advice, the promissory purchaser wishes to assume a pre-existing mortgage, it is however possible to provide a clause to that effect.

For building and development companies, rent to buy contracts can represent an interesting way to finance mortgage payments for property construction.

Regarding rent to buy contracts for buildings under construction, does the promissory purchaser lose money if the builder or developer goes into administration?

No. The buy to rent contract continues even if the property vendor / owner is declared bankrupt. So long as there is a price agreement in the rent to buy contract and the property is the main residence of the promissory purchaser or close relatives, the owner / vendor’s insolvency will not impact the sale.

Can the promissory purchaser confer a power of attorney to sign the rent to buy contract?

Yes. Legislation provides the right to confer a power of attorney on a third party to sign the rent to buy contract, and the final deed of sale, where applicable, on the promissory purchaser’s behalf.

You should be extremely careful about who you chose for your power of attorney. You are delegating the management of your legal and financial affairs to someone else. Hence, it is extremely important that you entrust these matters to a reliable and competent person, preferably a professional. Appointing anyone who does not have enough experience or who has a vested interest is highly inadvisable.

What taxes are applicable with a rent to buy contract?

Tax depends on whether the owner / vendor of the property is a private individual or a company. Direct tax is chargeable to the owner / vendor and indirect tax is levied on the promissory purchaser.

As a rule of thumb, for the duration of the rent to buy contract, as with any Italain rent contract, tax related to the property ownership is borne by the vendor / owner.

The promissory purchaser pays costs pertaining to the transcription of the contract in the land registry. And, where applicable, the promissory purchaser is liable for any subsequent costs, expenses and tax liabilities and/or costs associated with completion of the property sale.

For tax calculation purposes, each rent to buy contract requires case by case assessment regarding advantages and/or disadvantages. This is another reason to involve an independent professional from the outset when considering a rent to buy scheme in Italy.

Finally …

If you do not find your question relating to the Italian rent to buy scheme here, please contact us and we will be happy to answer it for you.

At De Tullio Law Firm, we specialise in Italian and cross border legal matters. If you are buying any type of property anywhere in Italy and you need advice or you would like to discuss your purchase, please get in touch with us. We are here to help.

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

Italian Holiday Home. Planning for The Future

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Italy is a popular country for second or holiday home ownership. Think long term.

If you are buying or already own a property in Italy, do you want to keep your Italian holiday home in the family for future generations?

It is advisable, ideally as part of your overall estate plan, to look at how best to manage this.

Failing to take the right steps to ensure a home’s future ownership can lead to family upsets and disputes after your death.

Do your children want to inherit the Italian holiday home?

However, in wanting to pass on the holiday home, many overlook a critical step: finding out whether family members actually want it.

For heirs, an Italian holiday home may present practical issues. How far they’ll have to travel to visit the home, whether their income can support regular travel, maintenance, taxes, and other associated costs.

Then there’s another factor: your Italian holiday home may constitute a major part of your children’s inheritance. Some of your children might actually prefer, or need, a more liquid asset.

Keeping the property in the family

If your children would like to keep the property in the family, the simplest method is to leave the property outright in your will to the children, or family members, you wish to inherit it. Your estate plan would include provisions that transfer the deed to your heirs, and each of your heirs will own an equal portion.

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However, what’s simple for you, may bring complexities for your heirs. In some cases, inheriting a home can cause resentment. Equal ownership means all the owners would have a say in every decision concerning the home. This includes matters such as when each can use it, whether to rent it out or sell it and for what price. Then there are projects required to keep the property in good order. Each owner bears an equal responsibility to pay for all the running costs associated with the home.

Day-to-day management issues

If the house is rented out, who screens tenants, collects the rent, and calls an electrician or a plumber when there are problems? And, sooner or later, decisions will have to be made about major maintenance and repairs. What happens if the property needs a new roof for example? Your heirs may not always agree about the need to invest such substantial sums of money in the house.

Even if your heirs decide to keep the holiday home, they may run into problems in the future. Financial situations might change. What happens if one of your heirs becomes unemployed, incapacitated or bankrupt? Or, if a divorce creates a change in financial circumstances? Any of these events could force a sale of the property.

At some point your heirs will need to decide how the house fits into their own estate planning

This might include questions of whether your heirs should pass the home to the next generation. If so, what’s the best way to handle that? You need to consider that as time passes, your heirs’ families may grow. This will leave more descendants to share the home, each for less time per person each year. In the longer term, many of the descendants will be only be related to each other distantly. Co-ownership may therefore become even more problematic.

Planning to pass on a holiday home to your family is a great way to ensure that future generations have the opportunity to enjoy it. However, it’s important to consider all the aspects and take steps to assess whether it is in fact the right thing for your family to inherit, and how it would be cared for over the years.

Finally …

People put off estate planning because they think they do not own enough, they are not old enough, it will be costly or confusing, they will have plenty of time to do it later, they do not know where to begin or who can help them, or they just do not want to think about it.

Estate planning should be an ongoing process, not a one-time event. You should review and update your plan as your family and circumstances change. This would include when you make an international investment.

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 are buying or already own an Italian property and have any questions about your estate planning.

 

Self-Build Projects in Italy

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Dreaming of building your own place in Italy?

In pursuit of their Italian dream home, some people decide on self-build projects in Italy.

If you are thinking of building a house in Italy, we would always advise you to seek independent legal advice before signing any paperwork to do with a land-purchase.

Even, if on paper, it looks as if the land you are contemplating buying has outline planning permission, actually getting a building project off the ground in Italy is extremely complex.

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Italian self-build projects are complex. They need a team

Self-builders will need to navigate a maze of red tape. Zoning and planning laws, environmental restrictions, building permits and regulations – to list but a few.

Self-build projects in Italy really do require the help of a specialist team including an architect, surveyor, lawyer and a notary.

All-too-often, those who go it alone run in to trouble. This jeopardises or ends their self-build dream. Unfortunately, without a team, self-builders often don’t obtain all the relevant permits. This and spiralling costs, may mean that the project never gets off the ground.

Living on site during Italian self-build projects

When self-build projects in Italy do go ahead, living on-site whilst building the property is something many wish to do. Obviously there are advantages such as saving on travel time, being able to keep a close eye on progress and security.

We are often asked by self-builders if they can site a mobile home, RV, or caravan on their land without obtaining planning permission. Essentially this will depend on the designation of the land in question. Self-builders should ascertain this from local authority urban and rural plans (Piano Regolatore). Siting and installation of accommodation on land will also play a role.

Temporary accommodation

The Italian “Building Legislation and Regulation Consolidation Act” (Testo Unico dell’Edilizia) does not permit ground anchor systems for mobile homes, RVs and caravans without a construction permit. In other words, a ground anchoring system on mobile accommodation would legally classify the accommodation as a, “new building”.

However, according to the Decreto Casa, anchor systems are permissible where a temporary installation is within a proper outdoor accommodation setting, such as a camping site.

Anchoring must be temporary. It cannot be seasonal, which would imply a long, possibly permanent stay. The mobile accommodation would therefore contravene the requirements of temporariness. Also, connecting the mobile accommodation to utilities  (power, water, gas etc.) implies the intention of extended or permanent use.

A construction permit with regard to mobile homes, RVs and caravans, is not necessary if the mobile home is on wheels. It must have a roadworthiness  certificate and motor insurance. Installation of accommodation on a mobile support, such as a trailer, unsuitable for road transport is not permitted. The mobile accommodation must fulfil the requirements of temporariness. It must be immediately movable. This means it must be roadworthy so the owner can move it elsewhere. Anchoring is therefore prohibited. The mobile accommodation must also be autonomous in terms of utilities. This means it must have its own water, toilet and electricity.

Permanent accommodation

If the mobile home, RV or caravan is for permanent use, such as residential use during a self-build project, self-builders will require a construction permit.

Under Italian law:

“the siting and installation of accommodation during the building phase of a project does not constitute temporary status. If the accommodation has power, water and gas connections this implies long-term residence. In addition, the same principle applies to anchoring with removable devices to ensure the stability of the mobile home, RV or caravan”.

A construction permit is also necessary even if the structure is not for residential use. For example, if a self- builder uses the mobile home to store building materials or as a site-office during self-build projects. In fact, if there is evidence of regular and long-term use by the owner, the installation will be considered as permanent.

Finally …

Buying any type of property in Italy is a serious investment and often the fulfilment of a dream. Italy real estate, planning and construction laws are complex. We recommend you engage the right team of advisors in place to make your experience successful.

At De Tullio Law Firm, we have over 55 years of expertise managing cross border property law matters throughout Italy.

If you are contemplating a self-build project in Italy and you need any advice, guidance or support, please contact us. We are here to help.

Buying Italian Property at Auction

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In some parts of the world, buying property at auction is routine

Buying Italian property at auction, however, is not quite so straightforward.

There are two types of auction in Italy. Vendita con incanto and vendita senza incanto. In both types of auctions, the  actioneer sets the minimum sale before the auction.

Vendita con incanto 

These auctions happen publicly and openly. The highest bidder buys the property on the condition that the bid is at or higher than the reserve price.

Vendita senza incanto

Prior to a vendita senza incanto auction, participants must submit their bids by a certain date – in sealed envelopes. Sealed bids cannot be under the reserve price for a property.

In Italy a voluntary property sale by auction is highly unusual

Unlike in the UK or USA, where voluntarily selling property by auction can be an attractive way to fetch a good sale price, in Italy a voluntary sale by auction is rare.

Generally in Italy, people sell property at auction for two reasons. Firstly, the owner declares bankruptcy and has to sell off the property to pay creditors. This type of auction is an asta fallimentare.

The second reason for an auction in Italy happens through a court order. This is an asta giudiziaria. The property is seized or sequestered by the Italian State. This happens because the owner is part of a criminal prosecution or because the State has decided to raise funds to pay off the owner’s outstanding taxes, debts and/or mortgage payments, or it could even be that the courts order the auction to resolve an inheritance dispute.

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Buying Italian property at auction requires a cautious approach

If you are considering buying an Italian property at auction, you need to take even greater care than buying property through conventional channels such as through a real estate agency or from a private vendor. 

While the owner of a seized property cannot participate in an auction, someone the owner knows can. It is not unheard of for a relative, friend or associate of the previous owner to participate in an auction.

Participation in an Italian property auction involves registering to participate, which means amongst other things that you must have an Italian tax code, codice fiscale, and you need to obtain a receipt proving that you have paid a 10% deposit on the estimated value, or starting bid price of the property that interests you. You can also elect a third party to bid for the property on your behalf. This requires giving your nominated party a limited power of attorney, procura speciale.

Top 10 tips for buying Italian property at auction


1. Bargain?

Don’t take it for granted that you are getting a bargain at an Italian property auction. Even if you purchase a property at a much lower price than its market value, it may not necessarily turn out to be a good deal. You may be better off buying a property another way.

2. Timing

Assess the timing. Consider how urgently you want to move into the property. The amount of time required to actually obtain a property at auction is not always predictable.

3. Paperwork

Read all the available documentation very, very carefully. Then read it all again. It is critically important to conduct in-depth due diligence. Study and investigate the notice of sale, the survey report, estimates, plans and maps, photographs and all the documents published on the relevant web site at least 45 days before the auction. Individual courts advertise Italian properties for sale by asta giudiziaria on their websites. www.astagiudiziaria.com is a portal providing access to judicial auction sales across Italy.

4. Due diligence

You should engage your own lawyer to put together a legal package. Make sure you understand the implications of the property’s legal status. The onus is on the bidder to obtain legal paperwork. It should specify, amongst other things, titles, covenants, liens, debts and charges attached to the property. All these legalities will become the responsibility of the purchaser.

5. View before you bid

As part of your due diligence, visiting the property is absolutely vital. View the property before the auction with a court appointed official. You should take your own professional team with you – a lawyer, a surveyor, a builder. There are likely to be issues not in the aforementioned sales and legal packs – aspects such as, environmental, zoning and planning permissions. And, do ask about anything that concerns you. If your bid is successful, you will be held legally responsible for everything.

Also, bear in mind that quite a lot of time may have elapsed between the property documentation being prepared and your visit so, the property when you visit, may have deteriorated and conditions could be worse or zoning laws might have changed. This means that the situation described in the property packs may no longer be relevant.

6. Budget

Set yourself an auction budget and stick to it. Prior to the property auction, decide the absolute upper limit of the sum you are willing to spend on the purchase. Participating in an auction requires calm rationality. Prior to tackling your auction purchase, perhaps attend a couple of other Italian auctions to understand how they work.

7. Associated costs

Always ascertain auction and additional costs before participating. Find out exactly how much you should budget on top of the property purchase price. Costs might include, registration tax or VAT charges pending, any professional fees for the title transfer.

8. Payment

Payment methods require attention. How are you planning to pay? You will have already paid a 10% deposit to participate in the property auction. You will need to be able to access the remaining funds quickly if your bid is successful, generally between 10 – 60 days of purchase.

If you need a mortgage, you will need to have a promissory note from your provider in place in advance of the auction. 

9. Tax

Take tax in to account. There may be tax benefits available to you on the purchase of a property at auction. Normally,  property transfer tax is due on top of the property purchase price. However, the rule on “price-value” does not apply to property purchased through court enforced procedures and bankruptcy. If you want to take advantage of any available tax benefits, you must express this ahead of the property auction. You must be ready to put everything in place by the end of the auction if your bid is successful.

10. After the auction

A purchase transfer signed by a judge is enforceable and allows the immediate release of the property. However, it is not unusual in Italy for the previous owner to appeal in court to have the auction annulled. In other cases, a property may be subject to adverse possession (usucapione), or a sitting tenant. As the new owner, you will have to take eviction action – at your expense.

Finally …

We have set out a few facts and tips regarding Italian property auctions. However, as this is a vast and complex subject, it really just skims the surface. There are many potential pitfalls and legal ramifications to consider when buying Italian property at auction. We would always recommend that you seek independent professional advice before participating in an Italian property auction. 

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

At De Tullio Law Firm, we have over 55 years of experience managing all types of Italian property transactions. We have in-depth expertise of Italian and international legal systems and processes. We understand the way things work in Italy, which is often different to the way things work elsewhere. 

 

Before buying a house in Italy. What should you know?

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What you absolutely must understand before buying a house in Italy

In order to make your purchase as safe and efficient as possible, before buying a house in Italy, you should understand how the process works and who you should involve.

When you visit a country for a holiday, cultural differences are charming and exciting. This changes dramatically when you make an investment or move to that country.

Personal liability

You may have already bought a house in your own country. Maybe you are English and the estate agent passed all relevant information to your solicitor to process the purchase. Perhaps you are American and you used an independent and qualified buying agent.

In both cases, the most risk free and secure method for you, as a buyer has become the assumed. It is probably the only way you would consider purchasing a property. In the UK, USA and other common law countries, we take it for granted that our interests are so well protected that it is very difficult to unwittingly make a mistake.

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Italy is a member of the European Union so you can assume certain rights and similarities. However, when it comes to personal liability, Italy can be very libertarian. In other words, in Italy if you want to protect yourself and your interests, you can. If you don’t want to, that’s fine too.

The consequences, and ultimately the lessons, are yours alone. This mindset, for better or for worse, is practically non-existent in Northern Europe and many English-speaking nations.

Don’t assume anything

Before buying a house in Italy, you shouldn’t make any of the same assumptions that you would in your own country. You should not assume that the typical process is naturally geared to protect your interests. Nor should you assume that everyone respects the law. And, do not assume that rectifying a mistake will be a quick or cost free fix. Above all, just as you wouldn’t at home, believe everything an estate agent or vendor tells you!

Do your homework before buying a property in Italy

As you may know from your own country, you need to conduct certain checks and searches. Legally binding contracts need signing and you will have to pay deposits.

In Italy it is perfectly legal for an estate agent to provide a reservation offer contract  and a preliminary contract on behalf of buyer and seller. Following the signing of these contracts, the buyer makes deposits. The final step is to have an Italian public notary (notaio) sign-off on the sale.

Estate agency contracts are often standard pre-printed forms. Many foreign buyers assume that the notaio, who according to law  must oversee the property transaction, is the equivalent of a lawyer or qualified realtor. People believe that if anything untoward comes up, the notaio will be aware of it and inform the relevant party. This is absolutely not the case. The notaio must remain impartial and only checks the final deed of sale document.

Neither the estate agent nor the notaio are responsible for doing your due diligence – you are!

Therefore, anything omitted or glossed over in any contract will not be apparent. If the person who draws up or checks is not working for you, you are taking a risk signing it and making deposits. On top of this, you should know that the Italian language versions of contracts will prevail in a court. You can of course read and check your own contract. However, understanding depends on your grasp of Italian and/or your trust in the translator you or the estate agent engages.

Don’t take unnecessary risks

Your estate agent will of course advise you that you do not need a lawyer, which is correct. Italian law does not oblige you to engage a lawyer. However, without a lawyer you are purchasing a property entirely without independent representation. Not only that, you are choosing not to protect yourself legally in a country with one of the slowest and most complex legal systems in Europe.

In Italy prevention is always better than cure and, infinitely cheaper! If you aren’t prepared to prevent problems, you need to prepare to deal with problems that may arise later.

It is possible that a property may have debts attached to it which the seller has not disclosed. It is very often the case that the previous owner has made illegal changes to the property or, as is common, the property features an illegal swimming pool. Or, perhaps you are planning to build a pool and the seller tells you that won’t be an issue.

If you don’t have your own lawyer, no one else is going visit the property on your behalf to check plans and the actual situation. This means you could easily end up with an illegal property or a property you can’t alter. At this point, you will need to throw a substantial amount of money at the property and lawyers to try and resolve the problem.

A small amount of due diligence at the beginning of the process with someone who speaks your language will avoid risks before buying a property in Italy.

Finally …

Before buying a house in Italy, engage a local lawyer experienced in property matters. This should be someone you choose, not someone the estate agent or vendor recommends. Choose a lawyer who speaks your own language. That way, you not only get legal advice but also translation. Your lawyer should also be able to recommend a surveyor, builders and all manner of other professional services. In addition, you can appoint your lawyer as your power of attorney in case you are unable to get to Italy or attend completion. Again entrusting this responsibility to anyone with potentially conflicting interests, such as an estate agent, can be extremely risky.

Before buying a property in Italy, why not talk to us? De Tullio Law Firm can advise and guide you throughout your Italian property purchasing journey. We have over 55 years of experience working with clients on their Italian and cross border property, family and inheritance matters. Book a Free Call with one of our lawyers. 

Defects And Noncompliances in Italian Property Purchases

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“Italian property purchases. What’s the legal position when it comes to defects and noncompliances?”

Over the years, De Tullio Law Firm has helped clients deal with all sorts of defects and noncompliances relating to Italian property purchases.

Take for example, a couple who arrived in Tuscany for their first holiday at their recently purchased dream property. They found the previous owner’s brother and family in residence. It transpired that the brother had inherited co-ownership of the property. He had no idea the property had been ‘sold’ from under his feet.

Then there was the American family whose entire kitchen ceiling collapsed one morning at breakfast. It happened a couple of days after they moved into their villa in Taormina. Fortunately, no one was badly hurt. They ended up having to take the previous owner to court. The collapse had been caused by a water leak that the vendor had hidden. After the fact, a surveyor determined the had been going on for some time.

There are many other cases where buyers end up in trouble. This is generally because the vendor has failed to disclose, or misrepresented crucial information pertaining to a property. Issues range from ownership, divorce and inheritance to planning irregularities and zoning restrictions. Then there are matters of outstanding mortgages, adverse possession, rights of way – the list is long.

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DIY conveyancing in Italy is risky

Many buyers, Italian and non-Italian, want to save money by taking a DIY approach to their conveyancing.

For most people buying an Italian property is a major investment and it entails risk.

Buyers should make sure they do their homework thoroughly. Some buyers, however, look to shave costs and cut corners here and there. Generally, this involves sacrificing professional advice such as engaging a surveyor or a lawyer.

Instead, many people rely on what the vendor or the real estate agent tells them. Both parties have a vested interest in selling the property. If buyers are lucky everything goes fine. If not, buyers end up with a property that later needs a lot of costly fixes and may even be unsaleable.

Always seek professional advice to ensure protection against defects and noncompliances

Contractual terms and conditions serve to protect buyers against defects and noncompliances. Where defects and noncompliances come to light during due diligence, the promissory buyer could terminate the contract for cause.

In the Toarmina case, if the family had known about the failure to disclose a known water leak, they could have terminated the contract. Or, if they had anyway wanted to proceed with the purchase, they could have either made the purchase conditional on the owner repairing the leak. Alternatively, they could have requested an adjustment in the purchase price to take into account the cost of remedying the defect themselves. The latter two options ensure a continuation of anticipated economic exchange between the contracting parties. In addition, they also represent a general means of protection for promissory buyers.

As a final point, article 1482 of the Italian Civil Code contains provision to protect a promissory buyer who, having signed a reservation offer or preliminary contract discovers, during due diligence, undisclosed financial charges on the property in question. For example, a mortgage, a lien, a court repossession order. In this case, a promissory buyer can request suspension of purchase payment until the property becomes unencumbered.

Finally …

For over 55 years, De Tullio Law Firm has been providing international clients with independent legal advice throughout Italy. We are specialists in cross border property, inheritance and family law.

We can guide you through the whole purchasing process or organise the whole process, including an Italian property survey, on your behalf. Get in touch with us.

If you would like further information about buying an Italian property, you may find our buying in Italy guide useful.

Always seek knowledge about the risks entailed in property investment. If you are a promissory buyer in need of support, guidance or advice, please get in touch.

Italian Will. Why Is It Worth Drafting An Italian Will?

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Why is it worthwhile making an Italian will?

If you own property in Italy, having an Italian will can prevent all sorts of difficulties for heirs when transferring ownership of an Italian property.

In Italy, the disposal of an estate occurs in compliance with the decisions of the testator as set out in an will. Or, where the deceased was intestate, in accordance with inheritance law.

in Italy, the law requires that a public notary authenticate a will before probate can begin.

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Although, generally speaking, Italy recognises the validity of international wills, they can raise a number of difficulties. As a matter of fact, a notary cannot publish or legalise documents in a foreign language until a court-sworn translator has translated them into Italian. This entails additional cost. It can also lead to misinterpretations of the testator’s wishes regarding disposal of an estate. Sorting out any misunderstandings may end up being another costly and lengthy matter.

It is also worth bearing in mind that having an Italian will can speed up  administrative procedures. For example, with banks. In Italy, accounts and deposits of the deceased are frozen following an account holder’s death. The procedure to access funds can be a difficult and protracted process. Heirs will have to pay certain expenses from their own pockets in the meantime.

In summary. The main advantages to making an Italian will are threefold

1. Reduces the risk of conflict among heirs.

2. Creates possible inheritance tax reductions for heirs.

3. Makes the decedent’s wishes clear to Italian authorities.

A competent legal advisor can help you draft a will that complies with EU Succession Regulations and Italian law. This limits the effects of legal succession in Italy and ensures that the estate is disposed of according to the testator’s wishes, without violating EU and Italian succession regulations.

Finally …

Inheritance is a complex matter. In addition, if you own assets in more than one country, this can further compound the complexity. We recommend you seek independent legal advice regarding your personal situation. If we can be of assistance, please get in touch.

For more information about succession and inheritance in Italy, you may find our Italian Succession Guide useful.

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

 

You may also be interested in Legitimate Heirs. Rights of “Forced Heirs” in Italian Inheritance

Changes to layout of property interiors in Italy

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Interior changes to layout in Italian properties do not always require planning and building permission

Recently, the Italian government has simplified the paperwork necessary for renovation and building work. As part of these efforts, new legislation was introduced in 2014. Measures include a Notice of Commencement of Work – Comunicazione Inizio Lavori (CIL). A CIL allows home owners to carry out certain interior changes to layout of a property. This means that home owners no longer need to apply for planning and building permits.

Regional variations apply however, making certain changes to interior layout of a property has become easier. For example, work involving  removal or moving internal dividing walls.

Essentially, provided changes to layout neither substantially change the use of the property nor increase its footprint, a CIL is sufficient.

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Case law pertaining to change of layout

A case in Lazio involved a man who modernised the apartment he owns in Rome. The man wanted to remove a couple of walls in his apartment to create an open-plan kitchen and living space. Having found a builder to do the work, the man filed a CIL with the Comune. From a legal point of view, if a Comune fails to respond to a CIL within 30 days of a home owner filing it, work can begin.

Six weeks after filing the CIL, not having heard anything from the Comune, the man and his builder carried out the work. Two weeks after completing the renovation work, the Municipal Police visited the apartment to inspect the work. The police alleged that the owner had not obtained the requisite planning and building permits. They said the renovations were therefore illegal.

A few weeks later, the owner received an order from the Comune to return the apartment to its original state. Having sought legal advice, the home owner took the Comune to court.

The Regional Administrative Court in Lazio ruled in favour of the property owner, (Tar Lazio, sez. I quater, 17 October 2015 n. 11831). The court found in the home owner’s favour stating that the owner had correctly filed a CIL. As the home owner had heard nothing back from the Comune, this constituted tacit approval of the proposed work. While his demolition and renovation work changed the floor-plan and layout of internal spaces, the work neither substantially changed the use of the space nor increased the overall size of the apartment. Thus, the court ruled that the work did not require planning or building permission.

How to file a CIL for changes to interior layout

A CIL form and local regulations regarding planning, building, health and safety can be obtained from your Comune. Some municpalities have put the form and regulations online for convenience.

Finally …

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

You may also be interested in Italian Property: Who Is Liable for Defects in Building Work in Italy? You may also like to watch our info videos on the subject of Italian property law.

Wills. Do You Have A Valid Will That Covers All Your Assets?

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Are your affairs in order? Wills are important – especially if you own assets in more than one jurisdiction

The independent professional body for solicitors in England and Wales has warned that the consequences of dying without a valid will can be dire for those left behind. The research revealed that 73 per cent of 16-54 year olds don’t have wills. Whereas 64 per cent of people over the age of 55 have made their final wishes clear in a will.

The research also found that men are more likely to have a will and keep it updated than women.

Twenty-three per cent of respondents wrongly believed that without a will, their possessions would automatically go to their family.

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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Dying intestate not only means your final wishes will probably go unheeded, but the financial and emotional mess is left for your loved ones to sort out. This need not be your final legacy.

Owning property in Italy adds to the complexity for heirs if you die intestate

If the deceased was resident in Italy at the time of death, Italian Inheritance law applies to the deceased’s worldwide assets.

If the deceased lived outside Italy, Italian inheritance law is only applicable to assets in Italy.

This means that foreign nationals with a second home in Italy are subject to international succession procedures.

Generally speaking, Italy recognises the validity of international wills. However, a will in a foreign language needs to be translated by a sworn translator before a notary can register and publish it. This involves cost, takes time and may lead to misinterpretation.

It is therefore advisable for non-Italian nationals who own assets in Italy to draft an Italian will to cover those assets.

Why should you have an Italian will for your assets in Italy?

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.

Making a will is usually a relatively simple process but we urge people to use a qualified, insured solicitor because he or she will be able to spot cross-border nuances that could lead to trouble later on if not properly addressed.

You need to list all the assets that you would like to include in your Italian will . For example, Italian property, vehicles you keep in Italy, bank accounts and so on.

Estate planning should be an ongoing process, not a one-time event. You should review and update your will as your family and circumstances change. This would include when you make an international investment such as buying property in Italy.

EU Succession Regulations: choice of law in wills

EU Law 650/2012, also known as the Brussels IV Regulation came into effect on 17thAugust 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.

Finally …

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

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 making an Italian will or if would like to discuss your situation.

You may also be interested in How to write an Italian Will.

To find out more about Italian inheritance, you might find our Guide to Italian Inheritance helpful.

Italian Conveyancing Lawyers

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Italian conveyancing is the legal transfer of property ownership from vendor to buyer

Italian conveyancing starts when the vendor accepts your formal reservation offer. It finishes after you have signed the deed of sale.

How long the Italian property purchasing process takes depends on all sorts of things. How many buyers and vendors are involved? Often Italian properties are owned by several heirs. It may take time for all the co-heirs to agree to sell. Legal issues may also impact the the timing of the conveyancing process. For example, concerns about the location, planning, zoning, whether the property is off-plan or partially built. Basically, the whole process can take weeks or months.

Although it is not a legal requirement in Italy to engage a lawyer when purchasing a property, an experienced property lawyer can guide you through the complexities of Italian conveyancing and related paperwork as well as help resolve any legal issues that come up along the way. While instructing a lawyer may seem like an additional cost, prevention is always a less frustrating and expensive solution than remedying legal issues once you own an Italian property.

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How can a lawyer help with Italian conveyancing?


EXPLANATIONS

Your lawyer will clarify the Italian property purchasing process for you. A lawyer can help identify what would be the best option in terms of purchasing structure, tax and any other issues relevant to your particular situation. Your lawyer will guide you through the process and provide legal support and advice throughout.

SEARCHES

There are things you may not know about the property just from viewing it with an estate agent or the vendor. These include structural and legal problems, which a lawyer can play a crucial role in identifying before you purchase.

For example, in a worst case scenario a failure to identify planning permission issues before you buy could generate consequences under criminal law. Once you have purchased an Italian property, it may be hard to rectify illegal work or planning discrepancies. In all likelihood it will be difficult to prove that the vendor was in fact the originator of the work. Legalising such problems can often be very costly and is sometimes impossible. Illegal work, when discovered, can lead to seizure of the property and a criminal court case. Seeking compensation from the vendors generally implies a litigation in court. This might take years and sometimes could turn out to be pointless if the vendors are unable to pay compensation. You may end up with a property that is unsaleable in the future.

Your lawyer will do a set of legal checks and searches for you and, where applicable your mortgage lender. Searches should include land registry titles and local authority planning and zoning compliance.

Environmental factors could be important too. For instance, some regions of Italy are particularly susceptible to ground stability issues, such as landslides and earthquakes. Your lawyer can help you arrange geological and structural surveys. If the survey finds anything out of the ordinary, your lawyer will be able to advise you what action you can take.

CONTRACTS

Throughout the Italian conveyancing process, your lawyer will check all documents and paperwork before you enter in to any legally-binding contracts. There are three contracts involved in Italian conveyancing. First, a Proposta. Second, the Compromesso and finally, the Atto di Vendita. Each contract involves handing over a deposit or payment. It is therefore crucial that you understand everything and resolve any property-related legal issues before you sign anything. Your lawyer will also make sure that completion dates are agreed and arranged.

COMPLETION

By law, a notary public – an official representative of the Italian State – must oversee the sale. Your lawyer will be able to advise you on choosing a notary and take all steps to help you complete the purchase safely. This would include where necessary, sworn translations of the atto di vendita,  help with transferring funds, collecting the new title deeds.

Italian law requires that all parties to a property transaction attend completion to sign the atto di vendita . Your lawyer will accompany you in case there are any ladt minute legal issues that need resolving. If you are not fluent in Italian but have an English-speaking lawyer, your lawyer will be able to translate for you. If for some reason you are unable to attend completion in person, your lawyer can complete on your behalf through a power of attorney.

Finally…

With over 55 years of experience as specialist property lawyers throughout Italy, we strongly recommend that you seek independent legal advice before purchasing any property in Italy. If you would like to discuss your situation, please get in touch. We are here to help.

For more comprehensive information on Italian conveyancing process, you might like to read our Property Buying Guide or look at our Property Buying Checklist. You may also like to watch our info videos on the subject of Italian property law.