Real Estate Transaction in Italy. Legal Translations

/in ,

An accurate understanding of the Italian legal system is essential for a translator dealing with an Italian real estate transaction


All legal documents relating to an Italian real estate transaction must be in Italian, regardless of the nationality of the parties.

Italian legal writing is highly technical, ritualistic and often archaic due to close links with Roman Law. Legal language can seem obscure for people without a solid legal background in Italian law. 

There are huge differences between Common Law and Italian Civil Law. This can add to the confusion. In fact, there are legal concepts in Roman Law that simply do not exist in Common Law and vice versa. There are concepts bearing the same name in the two systems but with different meanings.

Get Your FREE Guide to Buying Property in Italy

Our PDF guide covers every aspect of the buying process so you're ready to purchase with confidence

Download now

An accurate understanding of legal systems and processes is therefore essential for translators or interpreters dealing with Italian real estate transactions. Translators require an in-depth knowledge of specialist terminology as well as knowledge of legal concepts. 

This is why you should never sign a legal document without a lawyer to explain commitments in your own language.

Italian versions of contracts prevail in a court of law 

Italian real estate agents often use pre-printed contracts with an English translation. In reality, these translations are rarely faithful and can often be misleading for the buyer. It’s important to underline that in case of litigation, the Italian version of any contract will always prevail in a court of law.

In the most crucial completion phase of the real estate transaction, you will have to sign the deed of sale in the presence of a public notary. The Italian law requires the presence of an interpreter if one or more parties does not speak fluent Italian.

Our advice is to make sure that your interpreter is qualified not only from a linguistic point of view, but also in terms of legal background.

Another crucial aspect to bear in mind is the independence of the interpreter in order to avoid any conflict of interest. This precludes using the real estate agent, a relative or a friend of any parties involved in the transaction.

Finally …

Engaging a bilingual property lawyer will ensure you have the right expertise throughout your Italian real estate transaction. Your lawyer will always make sure you have a full understanding of all documents before you sign them. In addition, a lawyer can act as your interpreter to explain all the legal ramifications. If you need any assistance with your property purchase in Italy, Please get in touch.

International Property Sales in Italy. Contract Law

/in ,

International property sales involve a citizen, or company, of one country buying real estate in another country

The legal framework regulating international property sales in Italy is governed by Italian law and international treaties. Where there is a conflict between Italian and international laws, Italian law prevails when it comes to international property sales.

Article 51 of the Italian law n. 218 (31st May, 1995) states that a real estate conveyance is subject to the law of the country in which a property is located.

This is in accordance with the “Rome Convention” of 1980, now superseded by the Rome I Regulation (593/2008).

The Rome I Regulation has thus created a common choice of law system in contracts within the European Union. While Rome I determines which law governs contracts, it does not however harmonise the substance or actual law.

Get Your FREE Guide to Buying Property in Italy

Our PDF guide covers every aspect of the buying process so you're ready to purchase with confidence

Download now

Contract law

In light of the above legislation, signatories to a contract may choose the applicable law for the whole or part of a contract and select the court which will have jurisdiction over any disputes. By mutual agreement, the parties may change the law applicable to the contract at any time in accordance with the principle of freedom of choice.

If parties do not make an explicit choice of applicable law, the country with which the contract has the closest connection will prevail. Place of habitual residence, place of central administration, principal place of business or the location of a business responsible for performing the contract determine the closest connection to a contract.

International property sales in Italy. Applicable contract law

When it comes to contracts for immovable property however, specific rules apply. By default, the location of the property determines applicable law.

Consequently, if a property is in Italy and the sale involves individuals who are either resident in Italy or elsewhere, the transaction will always be subject to the requirements of Italian law.

The jurisdiction of courts in civil and commercial matters

EC Regulation 44/2001 lays down rules governing the jurisdiction of the courts in civil and commercial matters. Recognition of a judgment in any EU Member State is automatic. No special proceedings are therefore necessary, unless a party to the contract contests recognition of a judgment.

In accordance with this Regulation, for real estate transactions, the location of a property determines exclusive jurisdiction. In other words, if a property is in Italy, exclusive authority belongs to the Italian courts.

Finally …

If you are uncertain as to what your situation is, it is advisable to contact an Italian lawyer. At De Tullio Law Firm, we have extensive knowledge and experience of Italian and international law. For over 55 years, we have been providing specialist legal services for residential and commercial property transactions throughout Italy. Whatever your legal matter, get in touch with us for a free consultation.

Insurance Policy for Off-Plan Properties

/in , ,

What defects does an off-plan insurance policy cover?

In accordance with article 4 of legislative decree 122/2005, a construction company must provide off-plan property buyers with an insurance policy.

Essentially, this is a guarantee which covers any serious construction defects. The guarantee should provide 10 years of cover.

Off-plan buyers should obtain the insurance policy when the transfer of ownership takes place.

Because by law, a notary public must handle completion of Italian property conveyancing, we would advise you to request that the notary explicitly references the insurance policy in your deed of sale.

What constitutes a serious construction defect?

The notion of serious construction defects has developed substantially over time. This is thanks, in large part, to jurisprudence. Originally, the notion only included defects involving prejudice to the safety and stability of the property.

Get Your FREE Guide to Buying Property in Italy

Our PDF guide covers every aspect of the buying process so you're ready to purchase with confidence

Download now

However, nowadays, the notion has a wider meaning. It therefore includes all defects that can be defined as provoking significant detriment to the use of the property. Consequently, the guarantee should cover any damage that might impact the owner’s regular, day-to-day use of the property.

Does the insurance policy also cover the use of poor quality materials?

If the construction defect impacts on the regular use of the property, it may involve secondary elements of the construction. Thus, if the fault inhibits an owner’s ability to live in the property and implies maintenance work, the use of poor or inadequate materials may also constitute a serious defect.

For example, floor tile detachment in some areas of a property may constitute a slip and fall hazard. Another example could be poor sealing of the roof which allows water ingress. Both examples clearly demonstrate that the notion of serious construction defects is quite broad.

Who can make a claim on an off-plan insurance policy?

The law limits the right to make a claim on a serious defect insurance policy to buyers who are private individuals. According to a more restrictive interpretation of the law, the buyer should be a “consumer”. In other words, an owner can only claim on the insurance policy if they purchased the property for personal use. The insurance policy excludes tenanted, entrepreneurial or professional use of the property.

Finally …

There are many risks related to buying off-plan property in Italy. We have written a number of posts on the subject, which you can access using our search tool.

Off-plan property purchases in Italy are complex. There are many hidden risks. We would therefore always advise that you seek independent legal advice before signing any documents or paperwork.

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. Get in touch.

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.

English-Speaking Italian Property Lawyer

/in ,

How Can An English-Speaking Italian Property Lawyer Advise with The Purchase of A Property in Italy?

Buying a home anywhere, including Italy, is probably one of the largest and most significant investments you will make in your life. Italian property law is complex. It raises special issues of practice as well as points of law not present in other transactions and or jurisdictions. An English-speaking Italian property lawyer is a trained legal specialist, experienced at dealing with these problems.

The Italian property sales and purchase process

Briefly, in the typical Italian home purchase, the buyer enters into a brokerage contract with a real estate agent, usually in writing. Negotiations with the vendor go through the real estate agent, who acts as an intermediary.

In the first stage of the Italian property purchasing process, the buyer and seller enter into a formal written contract for the sale, a reservation offer. The buyer pays a small deposit. Once the reservation offer is in place, the buyer undertakes initial due diligence. Amongst other things, this includes checking title deeds and ascertaining the property has all the correct planning permits.

Get Your FREE Guide to Buying Property in Italy

Our PDF guide covers every aspect of the buying process so you're ready to purchase with confidence

Download now

The second stage in the Italian purchasing process is to sign a preliminary contract. This contains all the terms and conditions of the transaction and is a legally binding document. Another deposit is due at this stage.

The third and final stage is when all parties to the transaction sign the deed of sale in the presence of a notary. In effect, this is the transfer of ownership when the seller receives the remainder of the purchase price.

The Italian property sales and purchase process may seem straightforward. However, having a specialist Italian property lawyer specialised in Italian property on your side will help you avoid some common pitfalls. 

Estate agency agreements

For example, a buyer may sign a brokerage agreement with a real estate agent that does not deal with a number of legal matters. This is a common occurrence. Estate agents often use standard forms, expecting that they will cover all circumstances. However this ‘one size fits all’ approach is not easily customisable for unusual circumstances.

In the absence of an agreement to the contrary, the buyer may be liable to pay a brokerage commission even if a sale does not occur, or to pay more than one brokerage commission. An English-speaking Italian property lawyer can explain the implications before you sign a brokerage agreement. In addition, your lawyer can negotiate the agent’s rights if the seller withdraws the property from the market, or can’t deliver a marketable title.

Due Diligence

An English-speaking Italian property lawyer can execute title searches, explain the title, determine if the legal description is correct and whether there are problems with co-­owners or prior owners. A lawyer can also explain the effect of easements, agreements or restrictions imposed by a prior owner.

In addition your lawyer can ascertain whether there are any legal restrictions. For instance zoning legislation may impair your ability to change use or make alterations to the property.

The title search does not tell the buyer anything about existing and prospective plans in the area. Having your own Italian legal advisor will enable you to obtain this type of information more accurately, thoroughly and easily than trying to do it yourself.

You may have plans to alter, renovate or extend the property. It is important to ascertain that your plans are possible from a legal point of view. Your lawyer can help this and can engage a surveyor or architect to inspect the property to ascertain  whether your plans are possible.

We would advise buyers to have a survey of the property. Not just structural but also measured. In addition, the survey should check for materials such as asbestos and lead-based paint and check the land for hazardous waste.

A buyer or seller may also find it useful to consult with a lawyer regarding purchasing structures, tax and inheritance implications of a cross-­border transaction.

The preliminary contract is the single most important document in a property transaction

Because a preliminary contract is so important, it is crucial that it reflects the buyer’s wishes. Again, Italian estate agents tend to use standard printed forms for preliminary contracts. Although these are useful, we would advise you to consult a lawyer for an explanation and clarification of the form.

You may need to make changes or add tailored conditions to reflect your personal circumstances. For example, is your purchase contingent on being able to get a mortgage? Are there any alterations to the property? If so, are they lawful? Does the whole property have full planning permission? What are the legal consequences if completion is delayed or doesn’t take place? What happens to deposits? This also raises related questions. Who will hold the deposits? Will they held in escrow by the estate agent?

Again, it is important to remember that printed contract forms are generally inadequate to incorporate the real understanding of the buyer and seller without significant changes. Once you sign a preliminary contract, it is not easy to back out of it and remember, you have paid deposits that you risk losing.

Deed of Sale

Completion is the most important event in the purchase and sale transaction. When you purchase a property in Italy you must do so through a notary. A notary is a government official. As such, the law requires notaries to remain impartial in all property transactions. They cannot therefore offer legal advice to any party to a transaction. A notary’s main tasks are to ensure that all documents are authentic. They also deal with registration and tax matters on behalf of the Italian State.

Although the role of notary is to ensure that the transaction meets all legal requirements, this does not mean that the notary is acting on the buyer’s behalf to ensure the buyer gets the best deal. Furthermore, contrary to what many people believe, the notary cannot guarantee the absence of legal issues such as any unlawful work to a property – (abusivi). While a notary will check planning permission, a notary will not make a site inspection of the property to ensure there are no additional illegal work.

The notary will require the presence of a translator if any party to the transaction is not a fluent Italian speaker. Having an English-speaking Italian legal advisor means buyers benefit not only from translation ability, but also legal know-how and expertise.

The closing process can be confusing and crowded. Those present include the buyers and sellers, their respective attorneys, and the real estate broker. There may be last minute disputes about delivering possession and personal property or the adjustment of various costs. If you are the only person without a lawyer, your rights may be at risk.

Conflicts of interest

Perhaps the most important reason to engage a lawyer is conflicting interests of the parties. Throughout the process, a buyer’s and seller’s interests can be at odds with each other.

The estate agent generally serves the seller. Both the seller and estate agent want to close the deal since this is how they will get paid. Because of this, we would advise you to choose your own English-speaking Italian property lawyer rather than one recommended by the estate agent or vendor.

Finally …

If you are looking at a real estate investment 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. Get in touch.

Leasehold or Emphyteusis in Italy: What You Should Know

/in ,

Emphyteusis is a type of leasehold arrangement

The closest Common Law legal term to Emphyteusis is a leasehold.

The landlord retains the ownership of property. However, a tenant has the right to use it for a contractually agreed period of time. In this type of leasehold or Emphyteutical arrangement, the tenant must both maintain and improve the property.

Leasehold or Emphyteusis is a contractual arrangement which has its roots in Roman Law. It formed part of the feudal system and has connections to the agricultural economy. Farmers had the possibility to cultivate land thereby sustaining themselves. In return, farmers paid an annual ground rent or canon in money and or in kind.

Italian leasehold or Emphyteusis arrangements are applicable to all types of physical assets

Contractual arrangements exist between two parties. On the one hand, the Dominium Directum, the freehold owner the (dominus) or landlord of the property. And, on the other hand, the Dominium Utile – the tenant (emphyteuta) who has the right to use property on a leasehold basis.

Emphyteusis is applicable to both land and buildings, including villas and apartments.

For the duration of an Emphyteusis contract, where land is involved, the tenant has the right to alter the surface of the land. This includes ploughing up pastures to cultivate a crop or plant trees.

Where the arrangement concerns buildings, a tenant may alter these. However, alterations must not cause any deterioration of the building. Therefore, if the tenant wishes to build an extension or add to existing structures, the tenant may do so.

Get Your FREE Guide to Buying Property in Italy

Our PDF guide covers every aspect of the buying process so you're ready to purchase with confidence

Download now

The contract between the ‘landlord’ and the ‘tenant’ must be in writing. Rent payments are recurring and the duty to pay rent only ceases if the estate is destroyed. Destruction may either be due to human causes  such as a fire or through natural events for example, an earthquake.

Duration and obligations of leasehold or Emphyteusis contracts

Emphyteusis can be in perpetuity or limited to a minimum of 20 years. In either case, entitlements are the same.

In other words, a tenant may sublet the property, receive compensation for improvements made and even retain the property until full payment of his credit is rightfully received. These things, as well as those previously mentioned, do not require the consent of the landlord.

If the Emphyteusis has a duration of 20 years, the tenant cannot contractually transfer rights to another party. The right of pre-emption does not apply to the tenant in the same way it does to farmers. This means that the tenant in a leasehold or Empyteutical contract arrangement does not have right of first refusal to purchase land.

The tenant has a very broad right to dispose of the property held under perpetual Emphyteusis. Thus a tenant may dispose of the emphyteutical property by means of a deed in compliance with Italian Civil Code. This can either be an act inter vivos, i.e. made during the tenant’s lifetime, or causa mortis, i.e. after death. In the event of death, disposal is by means of a will.

Redemption of leasehold or Emphyteusis contracts

A tenant can acquire full ownership of Emphyteutical property through the payment of a price corresponding to fifteen times the annual rent. A tenant can make use of this redemption right at any time.

This redemption right prevails as an equivalent right accorded to the landlord in case of breach of contract by the tenant, known as the “devolution” (devoluzione).

Redemption may be settled either out of court, by means of an agreement between the landlord and tenant. A notarised deed must reflect the settlement. Where the landlord and tenant cannot reach agreement, the dispute can be settled in court.

Check the title deeds of an Italian property before you buy

A tenant must increase the productivity, the usefulness or the value of the estate, rural or urban. This obligation lasts for the duration of the term of Emphyteusis and must be in writing. Annual rents to the landlord are payable annually.

The landlord has the right to request the end of the Emphyteusis due to a breach of contract by the tenant. The landlord must refund any improvements the tenant has made. Payments should be proportional to the increase of value of the estate when it returns to the landlord.

Finally …

Acquiring, redeeming or disposing of property subject to leasehold or Emphyteusis arrangements can present challenges. Other types of leasehold arrangements also exist in Italian law. It is advisable that you contact an Italian lawyer to ensure you understand all the implications of such arrangements.

If you are looking at a real estate investment 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. We are here to help.  Get in touch with us.

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.

European Mortgage Credit Directive. The Italian Perspective

/in ,

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

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

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

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

The European Mortgage Credit Directive is part of Italian legislation

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

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

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

Get Your FREE Guide to Buying Property in Italy

Our PDF guide covers every aspect of the buying process so you're ready to purchase with confidence

Download now

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

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

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

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

Main provisions of the European Mortgage Credit Directive 

Standardised Information

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

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

Creditworthiness

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

Code of conduct

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

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

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

Forbearance on foreclosures

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

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

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

The EMCD provides discretion about applying certain provisions

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

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

Finally …

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

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

 

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

Italian Notary

/in , ,

What is the difference between an Italian notary and a lawyer?

International clients are often confused about the role of an Italian Notary. There is a mistaken belief that a public notary (notaio) performs the same function as a lawyer, solicitor or attorney (avvocato). This is not the case.

Public notaries emerged from the institution of scribes and scriveners. They were revered and knowledgeable public officials of the Roman Empire. These Notaries prepared and drew up fair copies of deeds and other legal documents. They endorsed these documents using the seal of the court and thus the documents became ‘public acts’. Eventually, Notaries gained the right to use their own official seals to give their acts public status.

In modern times, Italian notaries act on behalf of the Italian State. It is the Italian Ministry of Justice that appoints them. Because an Italian notary is an official of the Italian State, a document endorsed by a notaio guarantees its legal status.

On the other hand, a lawyer, is someone you engage to act exclusively on your behalf in a legal matter. Whereas a lawyer exclusively commits to protecting your interests, a notaio endorses acts, deeds and documents and collects taxes.

Get Your FREE Guide to Buying Property in Italy

Our PDF guide covers every aspect of the buying process so you're ready to purchase with confidence

Download now

A notaio is a qualified lawyer who works as a public officer for the Italian State. However, because an Italian notary is an official of the State, by law they must maintain impartiality in all transactions. A notary cannot therefore provide legal representation to any party involved. A notary can however provide advice if requested but, must protect parties equally.

An Italian notary prepares acts, endorses documents and collects tax for the Italian State

Notaries operate in every area of law including family, property, inheritance, asset, corporate, rural, local authority, and other areas. An Italian notary is present at all significant times in life which require a State document or tax payment.

A notary is empowered by the Italian State to endorse documents, agreements, contracts and other instruments by affixing a seal and signature.  In so doing, Italian Public Notaries officially witness the wishes expressed by the signatories and give a personal guarantee regarding the content and date of the instrument.

Although a notaio has public authority, the notaio operates on a self-employed basis. They are mostly paid by clients (not by the taxpayer) on the basis of a rate fixed by the Italian State for notarial services.

Regardless of whether a property is purchased from a private vendor or through a real estate agent, in accordance with Italian legislation, a notaio must oversee the sale. The notaio is responsible for receiving all legal documents pertaining to the sale, verifying their authenticity and drawing up the deed of sale – Atto di Vendita.

Often in Italy the vendor and purchaser use a single notaio for a property transaction. According to Italian law, it is the buyer’s legal right to appoint the notary public. We would advise that buyers choose their own notary. You should bear in mind that an estate agent and the vendor have a vested interest in selling a property. Using a notary recommended by these parties may therefore create a conflict of interest.

What is the specific role of an Italian notary in Italian property transactions?

The notaio may execute certain checks at the very end of the conveyancing process but, this would only be after the buyer has already paid substantial deposits to the vendor.

Checks might include each party’s rights to buy or sell the property, or a land registry search to see whether any third parties have a claim on the property. A notary may also search for any mortgages on the property or verify the presence at of planning permission. However, a notary public will not inspect the property to make sure it actually complies with planning permission.

The main role of the notaio therefore revolves around the exchange of contracts. This involves drawing up the deed of sale. This is based on input from the vendor and/or the estate agent and the preliminary contract.

At the signing of the deed of sale, an Italian notary first verifies the identity of parties involved in the transaction. Then the notaio reads the contract aloud to all parties. After all parties have signed, the notaio provides a copy of the deed of sale to both buyer and vendor and oversees the transfer of funds for the transaction. In addition, the notary ensures that the Italian State receives taxes and fees in full. Finally, the notary registers the new deed of ownership at the land registry.

Why would a buyer need an avvocato for a property transaction?

Although it is not a legal requirement in Italy, as they would in their home country, many buyers appoint an avvocato to make sure their best interests are served throughout the three-step Italian property purchasing process.

A buyer’s avvocato will conduct thorough due diligence, searches and detailed checks on the buyer’s behalf and provide legal advice throughout the Italian property purchasing process.

Having your own lawyer ensures you get:

– the best contractual terms and conditions on the property

– deposit protection

– efficient and smooth conveyancing

– no hidden surprises along the way or later

Finally …

If you are thinking of making a real estate investment 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. Get in touch.


You might find our guide to buying property in Italy useful.
For more information about the Italian notary’s role in property transactions, visit the Consiglio Nazionale del Notariato website.

Estate Planning And Tax. Buying An Italian Property

/in , , , ,

Tax and estate planning matters. Think long term when buying property in Italy


Owning a second home in your home country presents administrative and logistical challenges. However, at least that second home is within linguistic, tax and legal frameworks that are familiar to you. The challenges escalate with a foreign property. Italy is a popular choice for second home ownership. In recent years foreign ownership of Italian property has increased as people take advantage of favourable property prices.  If you are considering buying a property in Italy, you should carefully think through Italian estate planning aspects. In particular tax and succession matters.

You should always seek independent tax and estate planning advice, from experts in Italy as well and at home.

There are a number of tax issues to consider in Italy and in your home country. Any of the following may trigger a tax event in either or both your home country and Italy:

– Disposal of property or investments to fund the purchase of an Italian property.

– Transferring money to Italy.

– Associated property purchase tax (local equivalent of closing costs / stamp duty).

– Local service taxes on the running of the property.

– Income tax from letting the property.

– Estate and transfer taxes on the death of an owner.

– Capital Gains Tax on the transfer or sale of the property.

Income Tax

If you are resident outside of Italy, you may be liable to pay income tax on all income, regardless of where this arises.  For example, UK residents who generate an income by letting an Italian property will be subject to UK income tax on the rental income. There will also be a liability to pay tax in Italy. There may be some double taxation relief available. However, it is essential that prior to purchasing a second home and commencing any rental activity that you seek advice both at home and in Italy.

Capital Gains Tax

Foreign nationals who own a property in Italy may be subject to Capital Gains Tax at home. If the Italian property is not the owner’s main residence, when the owner sells or transfers the property title, there may be a tax payment on any profit. There will also be a liability in Italy.

Get Your FREE Guide to Planning Your Inheritance in Italy

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

Download now

Inheritance Tax

Individuals who are domiciled, for example, in the UK are subject to UK Inheritance Tax (“IHT”) on their worldwide assets in the event of their death. UK IHT does not therefore just apply in respect of assets physically located in the UK if an individual is domiciled in the UK. In addition, Italian Estate Tax will apply to the entire net value of the decedent’s estate, including movable and immovable assets in Italy.

Italian estate tax rates depend on the relationship of the beneficiary with the deceased. Spouse and children: 4% of the estate value, with an exemption of EUR 1 million for each beneficiary. Siblings and close relatives (up to fourth degree of kinship): 6%. Each sibling is entitled to an allowance of EUR 100,000. Any other beneficiary: 8%, with no allowances.

There may be some double taxation relief available. Because each case is different, it is crucial to take advice before purchasing a property in Italy.

Estate planning. Make an Italian will

It is essential to take advice on the succession implications of owning a property in Italy at an early stage. Buyers should consult an Italian solicitor and a solicitor in their home country. A specialist estate planning lawyer will have experience of managing all aspects which arise with cross-border assets or estates.

Generally, succession to a property is subject to the law of the country where that property is physically situated. However, a 2015 EU Regulation known as, “Brussels IV”, makes it possible to nominate a jurisdiction to rule your succession. Even if your home country is not part of the EU, Brussels IV is still applicable to non-EU nationals who own assets in Italy.

It is wise to make a separate will in Italian, to ensure that your property passes to your chosen beneficiaries after your death in the most tax efficient way.

Based on Roman law, Italy has, “Forced Heirship” rules. These govern what portion close family members must receive from an Italian estate. Seeking professional advice is therefore essential to understand how these rules apply to your specific circumstances.

Even though having an Italian will is not a legal requirement, it can save costs, time and misunderstandings for those you leave behind. In addition, your local solicitor will wish to confirm that your home country will takes precedence in Italy. 

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. We operate throughout Italy. Our firm is 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.

 

For more in depth information about Italian succession, you might find our Succession Guide useful.

 

Make an Italian Will if you own property in Italy

/in , ,

Making an Italian will facilitates the Italian succession process


Do you own property at home and in Italy? If so, we would advise that you make an Italian will. If you are resident in Italy at the time of your death, Italian Inheritance law is applicable to your worldwide assets. Whereas if you were resident outside Italy, Italian inheritance law is applicable to assets in Italy. Either way, Italian law governs your Italian property.

Making an Italian will therefore facilitate the way forward for those you leave behind. It reduces translation costs and prevents potentially costly disputes and misinterpretations regarding your wishes. In addition, an Italian will also creates tax and administration efficiencies.

Isn’t making an Italian Will expensive? 

On the contrary, the cost of making an Italian Will is not excessive. It is a worthwhile expense to keep your affairs in order and save stress, time and expense after your death. 

Get Your FREE Guide to Planning Your Inheritance in Italy

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

Download now

Can you make a DIY will in Italy?

It is possible to make an Italian DIY will. In a previous article, we have provided a simple template for this purpose.

However, if your circumstances are even slightly complex, you could be causing more problems than you solve. If you own assets in Italy and elsewhere, this is a more complex cross-border situation. If you make your own will, without legal assistance, it can lead to mistakes or a lack of clarity. You may even run the risk of your will being invalid.

Seeking legal assistance when making an Italian will is advisable 

If you have a number of beneficiaries, if you own assets in Italy and elsewhere, if you have residential or business connections in Italy, we would always counsel taking legal advice from a specialist Italian inheritance lawyer.

In Italy, couple cannot have a joint will. Each spouse or partner needs their own separate will. Therefore, you should seek advice if you live with someone, if you are married or in a civil partnership. Likewise you should seek advice if you have children from a previous relationship or step-children. The latter may not automatically be beneficiaries of your estate.

Wills, estate-planning and inheritance are serious matters. They touch many lives in many ways. If you die intestate – without a will, you have no say in what happens to your estate. Instead, the division of your estate will be determined by the law of the country (or countries) where your assets are situated.

In Italy, succession law is based on the principle of ‘Unity of Inheritance’. This principle differs substantially from common law. Essentially, you may find that Italian assets you own are not inherited by those who you wished and, the whole estate may not be passed on in the most tax-efficient way.

You should review your will periodically

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.

Once you have written your will, you should review it regularly to make sure it reflects your wishes, especially if your life changes. 

Finally …

People put off making a will 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.

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 making or reviewing a will.

 

You may also like Estate Planning And Tax. Buying An Italian Property.

Inheritance Law in Italy

/in , ,

What are the principles of inheritance law in Italy?

Law n.218, 31st of May 1995 regulates the field of inheritance law in Italy. This law falls within the framework of international private law.

The national law of the deceased party at the time of death determines succession rules.

The Italian legislator adopted the principle of “unity of inheritance”. This principle differs substantially from the one adopted in other countries. Notably common law countries. Unity of inheritance makes a distinction between between movable and immovable assets.

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

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

Movable assets

The law of the last domicile or last citizenship of the deceased party is applicable to movable assets.

Get Your FREE Guide to Planning Your Inheritance in Italy

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

Download now

Immovable assets

The national law of the location of immovable assets is applicable. This is the so called, “lex rei sitae” (law of the country where the property is located). One of the most important consequences is that, if the deceased’s estate includes properties located in different states, the succession of each property is subject to the law of the country where the property is located.

Inheritance law in Italy regulates property succession

Italian conflict of laws considers the possibility that the national law of a deceased foreign national might defer to the law of another country. Such deferment is however, only effective if the law of the third State accepts the deferment. For example, if an English citizen owned a property in Italy,  succession will be regulated by the law of England and Wales. However, according to  the conflict laws of England and Wales, the law applicable to overseas property is“lex rei sitae”. In other words, Italian inheritance law is applicable to the Italian property.

The testator has the right to submit his succession to the law of the country where he resides. Such choice has to be formally expressed in a will and shall not be prejudicial to the rights that the Italian law provides for, “legittimari” or forced heirs. These are close members of the family who have the right to receive a fixed part of the estate. Whether the deceased had a will or died intestate, legally, the deceased’s spouse or registered partner and children for example must receive a portion of the estate.

If you own property in Italy, it is advisable to make an Italian will

It is highly advisable to make an Italian will in order to limit the consequences of  “testamentary succession”. This also applies where the deceased has not left a will, in such case the Italian law determines which relatives of the deceased have a right to succeed (primarily the spouse, the legitimate and natural children, and the ascendants).

Where there are no heirs, Italian inheritance law assigns Italian assets to the Italian State.

EU Regulation 650/2012 simplifies cross-border inheritance matters

Also known as Brussels IV, EU Regulation 650/2012 came in to effect on 17th August, 2015. The regulation harmonises succession rules in participating EU States, which is all of them except Ireland and Denmark. In an effort to simplify cross-border succession, the EU adopted a single, unified connecting factor – habitual residence.

Brussels IV provides an opportunity to elect a country law to apply to your succession

Brussels IV allows individuals to make an election for the country of their nationality to apply to the devolution of their entire estate. Or, where individuals have multiple nationalities, a testator may choose to apply one of these nationalities.

Testators do however need to take action. If you own a property in Italy, you can nominate a country law in your will. This is known as a Choice of Law codicil.

If you are in the process of making or reviewing your will, it is therefore worth considering including a properly drafted Choice of Law codicil to apply to cross-border inheritance. You need to carefully consider matters such as foreign matrimonial regimes, usufruct, tax consequences, joint ownership structures and other foreign proprietary rights with respect to your estate.

Another benefit of Brussels IV is the European Certificate of Succession (ECS). This allows heirs, legatees, executors of wills and administrators of the estate to prove their status. The certificate is then valid in all other EU Member States.

Brussels IV also provides potential benefits for non-EU nationals

Interestingly, there are also potential benefits for non-EU nationals resident in an EU Member State. Again, you need to make an appropriate Choice of Law in your will. For example, US nationals could nominate US law to apply to the succession of their property in Italy. An Australian with property in Spain could nominate Australian law. A Canadian citizen with property in France could elect Canadian law, and so on.

Finally …

Cross-border inheritance law is a complex matter. We recommend you seek independent legal advice regarding your personal situation.

At De Tullio Law Firm, we have over 55 years of experience managing cross border succession and estate planning matters throughout Italy. We are a full member of STEP, the world’s leading association for trust and estate practitioners. If we can be of assistance, please get in touch.

 

For more information about Italian succession and inheritance, you may find our Italian Succession Guide useful. You may also like to watch our info videos on the subject of Italian inheritance law.