1 Euro Houses in Italy

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1 Euro houses in Italy: too good to be true?

In recent years, to combat dwindling populations in rural areas of Italy, a number of Italian villages, have been launching charm offensives by putting a number of houses up for sale for the symbolic sum of 1 Euro.

The aim of local municipalities is to attract Italian and foreign investors to revitalise their areas. Cinquefrondi in Calabria is the latest Italian town to launch 1 Euro houses in Italy for sale.

Although these 1 Euro property schemes seem attractive, it may be wiser to pass on them. The €1 schemes are widely advertised and, with so many people expressing interest in these homes, there are always more applications than homes available.

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How do you buy 1 Euro houses in Italy?

Whereas other towns selling homes for 1 Euro have required a deposit of up to €5000 that buyers forfeit if they fail to renovate the house within three years, Cinquefrondi is requesting an annual €250 fee for an insurance policy, payable until renovation works are complete.

Located in the historical centre of Cinquefrondi, properties are roughly 40 – 50 square metres in size. New owners will be liable to a fine of €20,000 if they do not complete their renovation projects within three years.

1 Euro houses at auction

As with all 1 Euro house schemes around Italy, sales take place in public auction (vendita con incanto).

It’s impossible to tell what you are taking on just from looking at a few photos of a property.

In some countries house auctions are common. In Italy however, they are not. The vendor’s lawyer does not prepare a set of documentation known as a, “legal pack”. Legal packs contain essential information including official titles and searches, property information and planning permission are therefore not available. In effect, you are responsible for conducting property-related searches.

To avoid buying what seems like a bargain but subsequently turns out to be a money pit, it is advisable that you go and inspect the property before you decide to make a bid. Obviously, this may not be possible because of time constraints and it can become costly. As you may not speak fluent Italian or have the expertise to assess what you are bidding for, we would recommend that you seek independent legal advice and professional expertise in Italy to evaluate the property before you submit a bid.

1 Euro is just the opening bid for properties

In fact, usually properties end up costing at least €20.000 at auction. On top of this, there is the legal requirement to renovate within a specific time frame. These properties therefore often end up costing a minimum of €50.000.

There are plenty of other reasonably-priced houses in Italy without the terms and conditions attached to €1 property schemes. These properties may be a better option for you.

Finally…

If you are thinking of applying to buy a 1 euro house in Italy, or any other property in Italy, at De Tullio Law Firm, we can help you with everything from property checks and searches, to facilitating the transaction, liaising with construction companies, obtaining Italian residence and providing tax and inheritance advice.

 

You may also like to read: Homes for 1 Euro in Sambuca, Sicily (Italy). You may also find our info videos about buying property in Italy useful.

Cadastral and Zoning Compliance in Italy

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Italian Property: The importance of cadastral (land registry) and zoning compliance

We often meet people who find themselves in trouble because they didn’t seek legal advice about cadastral and zoning compliance when they bought their Italian property.

It is not uncommon to discover – some time after buying an Italian property, that the property is wholly or partially illegally.

A 2017 report by the Office for Italian Statistics (ISTAT), estimates that nationally, some 20% of Italian properties are illegal builds – more in the south of the country.
On top of this, many legally built properties in Italy harbour significant liabilities that are not compliant with the law. Even slight discrepancies in plans, such as distribution of internal spaces can expose you to civil or criminal repercussions.

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The minimum penalty for the seemingly most trivial of matters is at least Euro 1,000. This financial penalty is over and above professional costs to remedy the discrepancy.

Cadastral and zoning discrepancies  impact the future marketability of your Italian property

When you purchase an Italian property, due diligence checks regarding Cadastral and Zoning compliance are of the utmost importance. Ensuring your property complies with the law will save you time, money and stress in the long run.

Making sure your Italian property complies with the law isn’t just applicable to sales and purchases. It is also relevant for other cases such as, obtaining a mortgage, planning renovations, accessing tax benefits and subsidies and organising inheritance and asset division.

Cadastral compliance (legittimità catastale)

This term refers to the compliance between a property’s current condition and its registration in the Italian Cadastre. As such, it does not have a zoning relevance.

Italian tax authorities manage cadastral services. Entries in the Cadastre neither prove ownership nor property compliance with zoning legislation.

Zoning compliance (legittimità urbanistica)

Since July 2010 a deeds of sale must prove that a property complies with zoning and cadastral legislation. It is therefore compulsory to list in the deed of sale the various building permits used in order to build, extend or renovate a property.

For properties built prior to 1st September, 1967, exemptions may apply to omitting the property’s zoning history. After this date however, the deed of sale must list any renovation work.

Finally …

At De Tullio Law Firm we are specialists in Italian property and inheritance matters. Before signing any property-related paperwork, please get in touch with us. We are here to help.

 

You may also be interested in Buying Property in Italy

COVID Pandemic: What’s The Impact on The Italian Property Market?

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COVID pandemic impact on the Italian property market

If you own property in Italy or you are currently looking at the Italian Property Market, you may be wondering how the COVID-19 pandemic has impacted the real estate market in Italy.

Unfortunately, many people have lost their jobs or have had to halt professional activities during the pandemic. You might think that this will force property prices down so it would be a good time to invest in real estate in Italy.

Is that true?

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Will the COVID pandemic negatively impact the Italian real estate market?

This is not an easy question to answer. Because Italian real estate agencies have only recently restarted their activities, it is too early to evaluate price fluctuations.

Generally speaking, no matter the cause of a crisis, properties sell at lower prices if owners need cash in the short term. However, if owners don’t need of cash, it is unlikely that they will sell at lower prices to achieve a quick sale.

How will COVID effect Italian house prices?

In order to understand the impact of COVID on Italian house prices, there is an important cultural aspect to consider. For Italians, investing in the property market and has always been seen as a secure investment. In any period of crisis, property safe havens become even more relevant.

In light of the above, it is hard to say how the pandemic will actually impact Italian property prices. It is difficult to predict whether property prices in Italy will drop or remain substantially the same.

What about pre-pandemic property contracts?

The scenario might be slightly different for property purchase negotiations started prior to the pandemic.

If you signed a contract to purchase an Italian property but the pandemic caused a delay in completion, it is unlikely that your situation has changed. Once it is possible, your transaction will complete according to the terms and conditions of your contract.

In other cases, you may be able to claim a force majeure applies due to the pandemic. It depends on the specific circumstances. For example, the exact fulfilment of the contract, payment timing, breach of contract claims, etc.

Finally …

If you would like more information about how to price an offer for an Italian property or, if you need advice on the impact of the pandemic on a property contract, please get in touch.

You may also like to read about force majeure clauses in property contracts. We also have a number of info videos about buying property in Italy that you might find useful.

Italian EPC (Attestato di prestazione energetica )

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What is an Italian EPC (Attestato di Prestazione Energetica) ?

An Italian EPC (Attestato di Prestazione Energetica or APE) describes the energy characteristics of a property.

In Italy an APE is mandatory in order to sell or let a property.

When is an APE mandatory?

An APE is a legal requirement that came into effect on 1st July 2009 for property sales and 1st July 2010 for property lets.

Since January 2012, real estate advertisements must include a property’s energy performance index (value in kWh / sqm per annum).

In most cases, an APE is valid for 10 years. In order to maintain the validity of the Attestato di Prestazione Energetica, property owners must have their boilers serviced in accordance with requirements of the Italian law.

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How do you get an Attestato di Prestazione Energetica?

An APE can only be issued by a qualified professional called a,  “certificatore energetico”. Italian Regional administrations are responsible for training and accrediting technicians according to their own regulations.

At the time of writing, about half of the Italian Regions have yet to adopt their own regulations. Where a Region hasn’t implemented its own regulations, national law (Legislative Decree 192/05) applies.

The certificatore energetico is a technical expert with specific skills in the field of building and systems energy efficiency. For example, an architect, an engineer or a surveyor.

How is an APE issued?

An onsite inspection of the property is mandatory.

The certificatore energetico uses software to assess the characteristics of the property. This includes input about structural aspects of the building, walls and frames – both doors and windows. The inspection also takes into consideration the efficiency of heating, ventilation, air conditioning, hot water and energy production systems such as photovoltaic panels.

Based on all the input, the software calculates the property’s level of energy efficiency and the certificatore energetico issues the APE. In addition, the certificatore energetico submits a copy of the APE to the competent Regional authority.

You should keep your APE with your boiler manual and, when you sell or let your property, provide it to the new owners or tenants.

If you are buying a property in Italy, you should request its APE well before you sign a deed of sale.

How much does an APE cost?

There is no set fee. Costs depend on the location and the characteristics of the property. As a guideline, the price of an APE for an apartment varies on average between € 150 and € 250. For bigger properties such as villas, townhouses, shops and offices, the cost is higher.

Why do you need an Attestato di Prestazione Energetica?

As previously mentioned an APE is a statutory requirement.

Its main purpose is to evaluate the financial implications of energy consumption when buying or renting a property. An APE also provides recommendations to reduce energy consumption and costs.

Although, it may seem like just another bureaucratic process, the APE is a document that can help with marketability. Properties with lower energy consumption are more sought after when it comes to selling or letting them.

In addition, the Italian government offers green incentives for energy efficient new build constructions and renovations to existing properties that improve energy efficiency. For renovation-related incentives, you can use before and after APEs to prove that you have improved energy efficiency.

Avoid Attestato di Prestazione Energetica scams!

There have been a number of scams associated with APE issuance. Our advice is to make sure you check that your certificatore energetico has been accredited by your Region. Compare estimates in your area. Make sure that the estimate includes VAT, postal costs, expenses and any other additional costs. Be wary of excessively low prices or anyone who tells you that you don’t need an onsite inspection. And watch out for intermediaries who offer their own expert at an excessive price.

Finally …

An APE is also useful when obtaining a Certificate of Habitability for a property.

If you have any questions about an Attesto di Prestazione Energetica, or if you need support or help with getting an APE, we would always advise that you seek independent legal advice.

 

You may also be interested in What is an italian Energy Performance Certificate?

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

Force majeure clause in Italian contracts. COVID-19

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Force Majeure: “Act of God”

Does the  COVID-19 pandemic trigger a Force Majeure Clause in Italian Property Sales and Purchasing Contracts?

Also known as an “Act of God”, a Force Majeure clause in contracts is widely known, yet narrowly understood.

In general, a Force Majeure is an event that is beyond the control of either party to a contract. It prevents or hinder the performance of the contract.

Illness is a very unusual reason for causing a Force Majeure in contracts. However, the Coronavirus pandemic is not a common ailment. It has confined entire countries and restricted peoples’ movement and travel.

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Recent disruptions have seen an increased number of calls from clients concerned about their responsibilities and rights regarding Italian property contracts.

A particularly frequent question is whether a Force Majeure clause exonerates vendors and buyers from performing contractual obligations?

What happens to Italian property contracts during Coronavirus restrictions?

Art. 91, 17 March 2020 n. 18 (“Decreto Cura Italia”) legislation deals with the liabilities for non-performance of a contract.

A party to a contract, who fails to perform contractual obligations shall be liable to pay damages unless it can be proved that the non-performance was caused by circumstances resulting from a cause beyond control (i.e. a Force Majeure).

The same law includes containment measures that limit movement, designed to prevent the spread of the Coronavirus disease. Failure to comply with these measures is a criminal offence under Article 650 of the Penal Code.

The issue of containment measures, and the restriction of movement, represent an obstacle in terms of completion of a Deed of Sale. Not only for those who may need to move from one Italian Municipality to another, but above all for people involved in cross-border real estate transactions.

Such containment measures may make it difficult and/or impossible to complete a Deed of Sale with a notary public.

Remedies

Extensions

Parties may be able to negotiate an extension to the contractual time limit for completion of a Deed of Sale.

Non-authenticated private deed

In order to avoid missing a contractual deadline, parties can also complete the Deed of Sale by means of a non-authenticated private deed.

In line with art. 1350 of the Italian Civil Code, parties will need to repeat the transcription and authentication process at an ulterior date. This will be possible once restrictions ease. Failure to have a Deed of Sale authenticated and transcribed later could render the Deed of Sale null and void.

Power of Attorney

By conferring a Limited Power of Attorney,  you can have someone act on your behalf in Italy. If you opt for a Power of Attorney, it is important that you entrust your affairs to a reliable and competent person such as a lawyer. Appointing someone who does not have enough experience or with whom there may be a conflict of interests, is highly inadvisable.

Use a holding account to protect your property payment

Our advice would be that you only use a bonded holding account to protect the balance of your payment for a property sale in Italy. Not just during the pandemic but always.  Known as a, “Deposito Prezzo” in Italian. You can arrange this with a notary public, who will act as guarantor for your transaction.

I am negotiating a Preliminary Contract for a property. Can I get a force majeure clause?

If you are in the process of negotiating the sale or purchase of a property in Italy, you should make sure that you include a “Force Majeure” clause in the Preliminary Contract. The clause should take into account a wide range of events. Not only natural disasters and catastrophic events but also disease epidemics and pandemics.

Finally …

If you are buying a property and need legal advice because of the pandemic, our legal professionals are here to provide help and guidance.

Please contact De Tullio Law Firm at the following email address info@detulliolawfirm.com

You may also be interested in our article about conferring a Power of Attorney. You may also like our info videos.

Italian Real Estate Agency Services

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An Italian real estate agency’s role is to connect vendors with buyers

The first step in purchasing a home in Italy is to look for properties that you like. For this, services of a licensed Italian real estate agency provide invaluable support.

An Italian real estate agency will facilitate property transactions. The agency will provide relevant information to buyers and vendors. However, Italian real estate agencies have no legal obligation to undertake searches of a technical or legal nature (due diligence).

Clearly, a lack of due diligence could in the first instance impact the transaction itself. Further down the line, if you didn’t conduct due diligence prior to buying, you might run into issues. You may discover the property lacks of full or partial planning permission or that renovations do not conform with building regulations. Crucially, a lack of due diligence may effect the future saleability of your property.

Italian real estate agencies in Italy are of course required to disclose information based on the principles of a professional duty of care. This implies an obligation to provide information on any circumstances or issues that potential buyers should know about. Imparting incorrect or false information to an interested party is illegal.

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Italian real estate agencies have a duty of care

In 2012, the  Milan Court of Appeal heard a case regarding an estate agency’s duty of care: ruling no. 307 filed on 27th  January 2012.

Clients of a real estate agency took them to court on the grounds that the agent had failed to provide relevant information on adverse encumbrances on a property the clients wished to purchase.

The clients sued the real estate agent for a refund of the €6,000 commission fee they had paid to the agency. They argued that the real estate agency had been derelict in their duty of care. The clients claimed that the real estate agency should have communicated the existence of two mortgage transcriptions on the property. They maintained they would not have signed a reservation offer or a preliminary contract had they known. Signing the latter triggered the commission payment to the real estate agent.

The court dismissed the case.

The onus is on potential buyers to conduct pre-purchase due diligence

In support of the court decision, the judge stated that legal searches did not form part of a real estate agent’s responsibilities. In other words, technical and legal investigations, including land registry, planning, zoning and mortgage searches on a property do not form part of a real estate agent’s remit.

What does the law say about the scope of Italian real estate agency services?

Article 1759 of the Italian Civil Code requires real estate agents to notify parties of all known circumstances concerning a property transaction.

In this case,  the real estate agency had done this. They argued that as they had no prior knowledge of the encumbrances, they could not have informed the clients of their existence. The real estate agency had only become aware of the mortgage transcriptions when the clients informed them. The clients had only learned of the encumbrances when they were about to complete the sale.

There was no evidence that the real estate agency had any knowledge of the mortgages. The judge ruled they had not wilfully omitted to advise the clients about the adverse encumbrances. The responsibility for ascertaining this information did not lie with the real estate agent but, with the purchaser.

Article 1176 of the Italian Civil Code states that performance of checks and searches related to a property is not part of the agent’s professional duty of care. Furthermore, estate agents are neither legally responsible, nor qualified, to conduct in-depth due diligence.

Anything pertaining to the legal and technical due diligence of Italian property purchases should therefore be handled by legal and technical professionals.

Real estate agents facilitate the search for an Italian property

However, Italian real estate agents do not provide due diligence services.

When buying or selling a property at home, most people wouldn’t dream of entering into a transaction without the assistance of a lawyer and a surveyor. These are the professionals who conduct legal and technical searches and checks. Yet all too often, we meet foreign buyers who have decided to rely on what an estate agent tells them about a property.

Finally …

The reality is that a property transaction in Italy is an investment. It can quickly become costly – both financially and emotionally if things go wrong. In addition, there are the complexities of the Italian legal, tax and administrative systems. On top of this, there are the language barriers.

Essentially, in order to avoid any problems and before you sign any paperwork, you should engage an experienced, independent lawyer. The need for legal advice is far greater for an overseas transaction than when buying property at home.

De Tullio Law firm specialises in cross-border residential and commercial property transactions in Italy. We recommend that before you sign any paperwork with an estate agent that you seek independent legal advice.

Get in touch if you feel unsure about anything property-related and need advice.

 

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

Your Overseas Home Property Seminar

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

Property Guides and The Overseas Guides Company (OGC) regularly run Your Overseas Home Property seminars. These are free events to help people buy property and move abroad safely and risk-free.

Kim Brown founded OGC some 15 years ago. Kim’s parents had bought a home in Cyprus in 2004. However, without access to the right information and with some contacts who turned out to be untrustworthy, it sadly ended unhappily.

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Your Overseas Home Property seminars offer high-quality, carefully researched guidance

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

Kim soon realised that in-depth information alone was just the first step.
“People also needed expert, trustworthy contacts to help them act on that information and turn their dream into reality. We now call these the ‘Golden Three’: your estate agent, your lawyer and your currency specialist”.

OGC has developed an extensive network of trustworthy experts across fourteen countries. They are all tried and tested to ensure the very best service.

Your Overseas Home Property Seminars started in 2017. Since then, a number of events have taken place around the UK. They have helped many people to buy safely overseas.

Expertise

Experts at the Your Overseas Home Property Seminar include leading Italian estate agents, currency, Italian law, finance and removals experts.

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

Finally …

We have over 55 years of experience managing cross border property and inheritance matters throughout Italy. If you would like to discuss your personal situation but are unable to attend a Your Overseas Home event, why not get in touch with us today?

 

You may also be interested in our Guide To Buying Property in Italy.

Demolition order Italian Property. Voices of Experience

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Voices of Experience: “I’m fighting a demolition order on my Italian Property”

Involved in an ongoing legal case to get a demolition order reversed, our client offers insights and advice on how to safely buy an Italian property.

If you are facing a similar situation and need help or if you have a story you would like to share, please get in touch with us. You might also be interested in reading our practical guides and checklists.

“They say hindsight is a wonderful thing. If I could turn back time and buy my Italian property all over again, I would do it completely differently. The following explains why. I hope that what I have learnt will help anyone thinking of buying a property in Italy”.

How to avoid a demolition order? Take care when buying property in Italy

The fact is that buying Italian property can be risky. A 2017 report by the Office for Italian Statistics (ISTAT), estimates that nationally, some 20% of Italian properties are illegal builds – more in the south of the country. On top of this, many legally built properties in Italy harbour significant liabilities that are not compliant with the law.

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All this lies ready to catch out unwary purchasers, whose lives can become a nightmare. In the worst case, you could, like me, find yourself facing a demolition order and then find yourself investing a significant amount of money to fix problems. So, when buying property in Italy, you need to be very careful.

Back in 2005, I purchased a villa with a pool on the outskirts of a beautiful small town in southern Italy. It was love at first sight, the Italian dream. Admittedly, something of an impulse purchase. At the time, I asked the estate agent if there were any issues with the property and whether I needed to get some independent legal advice or a survey. He said not, so I didn’t. The sale went through very quickly and smoothly. I used the same notary as the vendor and estate agent and within weeks I was the proud owner of the villa.

A demolition order makes an Italian property unsellable

In 2015, I developed a few health issues. I decided to downsize and put my villa on the market.

Enquiries slowly trickled in and occasionally the estate agent brought potential buyers to have a look at the place. One couple, who really liked the property, hired a lawyer to check all the details. To my horror, they discovered that the property had no planning permission whatsoever. I had no idea that for a decade, I’d owned an illegally built property. Obviously, the couple’s lawyer warned them off buying the property.

At the time, I thought it must be some sort of mistake; an oversight at the local authority or a problem with the land registry. After all, how could the previous owners sell a property without planning permission? However, when I went to my local town hall to investigate, it transpired this was the case. Worse was to come.

To cut a long story short, after a protracted and very complex process, the whole situation eventually led to the local authority issuing a demolition order on my villa in 2018. I can’t tell you how many sleepless nights this has caused me.

I have a house that is unsellable and am having to spend thousands of Euros to get the demolition order reversed and remedy the situation so that I can at last sell up and move on with my life.

To buy property safely in Italy, exercise more caution than you would at home

Buying property in Italy can be safe. However, to buy a property that is both fully legally compliant and to make sure you aren’t taking on any legal liabilities, you need to exercise far greater care than you would at home.

Illegal buildings are not unusual in Italy. They are ticking time bombs potentially subject to a demolition order

There was a lack of a cohesive approach to building controls and regulations during the Italian building-boom of the 1970s and 80s. Local authorities, overwhelmed by the sheer volume of construction, were unable to check buildings properly.

Often illegal properties in the countryside started out as summer homes. They may be on land that has no zoning permission for buildings. The owners may have failed to get planning permission for the property when they built, extended or renovated it. In addition, the property may not comply with  building controls or building regulations. They may lack damp proofing, insulation and, often, any logical room distribution, let alone solid foundations.

Often an illegal Italian property doesn’t get demolished even though illegalities are blatantly obvious to local authorities.  There are many reasons for this including an erratic attitude to enforcing the law in Italy, local vested interests and even corruption. Illegal properties can be likened to a cash cow. Penalties, fines and demolition orders can suddenly be handed out, as and when a local authority needs money.

Because of illegal construction, many areas in the countryside have sprung up. These areas usually lack primary services such as mains electricity, water, sewage and telephone lines. They are prime candidates for infrastructure projects when local authorities decide to formalise these areas. Naturally, householders will bear the costs.

However, even in urban areas there are properties that should make you wary. Properties too close to a road or a beach or, in the case of apartment blocks, common areas that breach building regulations. Some villas may extend beyond their allowable habitable area. These type of problems are ticking time bombs.

Seek professional help when buying in Italy

Foreign nationals buying property in Italy can be incredibly naïve. Like me, many people do not use a lawyer to manage checks and conveyancing when buying an Italian property. Believe me, this can expose you to abuse or lead to the possible loss of your property or at least significant costs.

Estate Agents

Make sure your estate agent has a licence. Estate agents offer great support when it comes to looking for properties. However, they may not know everything about a property when it comes to any problems or liabilities. Plus they have a vested interest in selling the property. Their fees are contingent on selling so they don’t want a buyer to pull out of the purchase. When I bought my property in Italy, I asked the estate agent if I needed a lawyer. The estate agent told me I didn’t. Talk about innocents abroad! Start with the premise that the property you are looking at has a problem.

Get a lawyer

Appoint a lawyer before you even start to look at any property. And, choose your own lawyer rather than one your estate agent or the vendor recommends. Make sure that your lawyer understands property law, speaks your language, is registered with the Italian Law Association and has insurance.

Make sure your lawyer provides a written due diligence report and checks who owns the property and that there aren’t any debts such as mortgages on the property.

The report should also include all the details of the property and surrounding area. Land registry details should match property deeds.

Have a survey done

Is the structure sound? Do property boundaries in the land registry match those you can see from walls and fences? A qualified surveyor can confirm all this as well as checking whether there are any alterations to the property including out buildings.

Always get a check on the exact description of the property (existing bathrooms, bedrooms, kitchen(s), sitting rooms, conservatories, garages, out buildings, pool etc.) with your lawyer before signing any contract. To ensure there’s no illegal building work, it’s essential that all the details match the land registry.

If in doubt, don’t!

Don’t hurry and never sign anything without your lawyer’s approval.  Remember it is always better to lose out on a property rather than buy something illegal that risks risks fines or demolition.

Of course, the above does not include everything that you should do. The more information you gather, the easier it will be to make an informed decision as to whether or not to buy a property.

If you follow the guidelines above, I hope you will avoid all the costly worries I am currently experiencing. Be careless or too credulous and sadly, your Italian dream could turn into a nightmare some time down the line.

Finally …

De Tullio Law Firm specialises in cross-border property and inheritance matters throughout Italy. If you are buying an Italian property and need advice or support or, if you would like to discuss a matter with us, we are here to help. Get in touch.

 

You may also be interested in Changing layout of internal spaces does not require building permission

Italian Properties for €1. First City To Offer The Scheme

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€1 properties in Taranto, Puglia

Following the success of Italian hill-towns and villages, Taranto is now offering €1 properties for sale.

Taranto, a city that sits on an island between a lagoon and the open sea in the region of Puglia is offering to sell some of its abandoned palazzi through a €1 scheme.

Taranto’s city council plans to start by offering five properties for sale, with the hope that if the scheme is a success, the project will expand.

The hope is to breathe new life into Taranto’s run down but picturesque old town by attracting investment which will develop the historic centre of Taranto.

€1 is the opening bid at auction

As with all 1 Euro house schemes around Italy, sales take place in public auction (vendita con incanto).

In Italy auctions are not common. There are no legal packs, which contain essential information including property titles and searches. Detailed property information and planning permission are therefore not available. Because you cannot tell anything about the background to a property just from looking at photos, you are responsible for conducting property-related searches.

To avoid buying what seems like a bargain but subsequently turns out to be a money pit, it is advisable that you go and inspect the property and check the local land registry. before you decide to make a bid. Obviously, this may not be possible because of time constraints and it can become costly. As you may not speak fluent Italian or have the expertise to assess what you are bidding for, we would recommend that you seek independent legal advice and professional expertise in Italy to evaluate the property before you submit a bid.

Terms and conditions apply to all Italian €1 property schemes

In fact, properties for €1 usually cost at least €20.000 at auction. On top of this, there is the legal requirement to renovate within a specific time frame. Italian properties for €1 schemes therefore generally end up costing at least €50.000.

In the case of Taranto, owners will be expected to foot the bill of restoring the properties. This could run to many of thousands of euros. Owners will have to present a restoration plan within two months of acquiring the building. In addition, owners will have to occupy the properties. The latter is a condition to stop speculators renovating and selling on these properties.

Finally …

There are plenty of other reasonably-priced houses in Italy without the terms and conditions attached to €1 property schemes. These properties may be a better option for you.

If you are interested in buying Italian properties for €1 or any other type of property in Italy, we recommend you seek independent legal advice before committing yourself. We are here to help, please get in touch.

 

You may also be interested in reading more about 1 euro houses in Italy.

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

Real Estate in Italy: Reservation Offer

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Real estate contract law in Italy

If you are considering buying real estate in Italy, Italian civil code in art. 1470 governs sales and purchase contracts for Italian real estate.

A contract is a consensual transactional instrument through which one party (the vendor) transfers the ownership, or a right, to an assets to another party (the buyer).

Contractually therefore, a buyer is under obligation to pay the agreed fee to the vendor for an asset or right.

Acceptance of a reservation offer for real estate in Italy

If you are not familiar with the legal and financial implications of the three-step property purchase process in Italy, you may wish to read our guide to buying property in Italy.

The first step to purchasing a property in Italy is a reservation offer. 

In effect, when buyers find an Italian property they like, they make a written offer on the property. Amongst other things, the reservation offer identifies the property in question and makes a price offer.

For the offer to be valid, first a vendor must accept the reservation offer in writing. This acceptance must then reach the potential buyer within a time frame stipulated in the reservation offer.

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Contractual obligations of a reservation offer

Until written acceptance of a reservation offer reaches potential buyers, no contractual obligation exists between the parties. In other words, the reservation offer is revocable.

However, buyers may stipulate they wish to keep their reservation offer firm for a specified amount of time. If a vendor accepts the time frame, it means the vendor has an obligation to remove the property from the market. Because the vendor will not be able to market the property for the duration, the offer is known as, an irrevocable reservation offer.

Italian real estate agents: roles and fees

As in other countries, vendors in Italy often put their property in the hands of a real estate agency. The role of Italian real estate agents is to market the property to potential buyers. When a potential buyer makes an offer for a property, the real estate agent passes the offer on to the vendor. The estate agent does this through a reservation offer.

At this point, vendor and buyer are usually looking to move towards the second stage of the Italian purchasing process. This is where both parties sign a preliminary contract. If the vendor does not progress the sale to a preliminary contract stage, the reservation offer lapses and neither party has any obligation towards each other.

At the reservation offer stage, another aspect to consider is the estate agency commission. It is always worth asking if a real estate agent’s fees are negotiable. Generally however, commission ranges from 3% to 8% of the property sale price. Some agencies work on a fixed fee. To put that another way, fees are based on a percentage of the total sale price.

A reservation offer may not end in a sale

Between the reservation offer and signing a preliminary contract, buyers should carry out property checks and searches (due diligence). This may highlight problems or irregularities related to the property. These issues may subsequently lead to buyers withdrawing their offer.

The acceptance of a reservation offer between the seller and buyer is not therefore a guarantee it will end in a sale.

You should therefore be wary if the estate agency requests their commission at this stage.

At what stage should you pay Italian estate agency commission?

To clarify when exactly estate agents should receive their commission, a 2010 Supreme Court case is pertinent. In order for a real estate agent to be entitled to their fee, it is not sufficient that a broker merely puts vendors and buyers in contact. It is not enough to hope that the transaction concludes successfully.

In other words, commission is only payable to a real estate agent once a preliminary contract is in place between the vendor and buyer.

Difficulties linked to successful completion of a real estate transaction arise because there are so many pitfalls between the reservation offer and preliminary contract.

Contractual risks of real estate in Italy

To avoid risks, it is wise to seek independent legal advice before you sign any paperwork relating to buying property in Italy. To avoid any conflicts of interest, make sure you choose your own lawyer rather than a lawyer recommended by an estate agent or a vendor.

Your lawyer will guide you step by step through the intricacies of the Italian property purchase process.

Finally …

De Tullio Law Firm is an Italian Inheritance and Real Estate Law Firm present throughout Italy. We specialise in cross-border residential and commercial property transactions and inheritance matters in Italy. Should you need any further clarification concerning this or other property-related topics, De Tullio Law Firm will be happy to help. Get in touch with us at: info@detulliolawfirm.com.

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