Off-Plan Property in Italy: Insurance And Guarantee

Selling Property in Italy. A Short Guide

The Italian sales process and possible issues for vendors

A Short Guide To Selling Property in ItalyWhen selling property in Italy, certain legal issues need serious consideration. Due to differences in legal systems, a real estate transaction in Italy can appear like a difficult and protracted process for foreign investors.

The Italian law is complex. If you don’t fully understand how it works, you may expose yourself to risks. Considering the high stakes involved in a real estate transaction, you should seek legal advice. You should always choose your own lawyer to avoid possible conflicts of interest.

Selling property in Italy is organised in three stages:

  1. Marketing and Reservation offer
  2. Negotiation and signature of the preliminary contract
  3. Completion of the sale

The first stage is to put the property on the market

Vendors can market a property themselves or through an estate agency

If you are considering appointing an Italian real estate agent, it is important to ensure that the agent is qualified and registered with the local Chamber of Commerce. Registration not only guarantees the professional qualification of real estate agents but also ensures they have professional indemnity insurance.

Unregistered estate agencies could be liable to prosecution for carrying out a reserved activity. This carries the risk of fines and other penalties such as not being entitled to commission fees. The agent is in fact, usually paid a commission (Provvigione) both by the buyer and the vendor. Such a commission is negotiable but generally equivalent to 3% of the sale price.

Frequently, real estate agencies require foreign nationals to sign their standard terms of engagement. These need careful evaluation before signing. It is of course key to assess terms and conditions of the brokerage fees. In addition, however, it is important to understand minimum sales price, duration of the mandate and its exclusivity.

Reservation offer

If a potential buyer chooses your property, they would generally sign the first legally binding document called a, “reservation offer”. If you accept the offer, you need to sign off on it and return it to the buyer. In addition, the buyer should pay a small deposit. The reservation offer effectively removes the property from the market for a period of time.

Due diligence

During the period the property is off the market, the buyer should start the legal due diligence process. This means carrying out checks and searches. It should include surveys, planning and local authority (Comune, Building and Land Registry) searches. Checking local planning, zoning and building regulations is also important.

Amongst others, the buyer will want to ascertain the following points prior to moving on to the next stage of the purchase process.

  • The property exists. It is as in the description and, the seller has the legal right to sell the property.
  • There are no mortgages/charges or any third party rights or other undisclosed encumbrances affecting the property.
  • The property complies with all local planning, zoning and building regulations. Or, where relevant, building plans have consent from the Local Authority (Comune).
  • The property is fit for human habitation, unless selling to reconstruct. A certificate to this effect (Certificato di abitabilità) should be available.
  • The seller has complied with all the relevant Italian tax legislation by lodging tax returns and paying income tax (Imposta sui Redditi), which may have been due in the previous tax years. In default of this requirement, the property may legally be unsaleable. If the vendor is a trader or a company, they should not be bankrupt (Fallito), and no application to this effect should be pending against them.
  • Where the property is in an apartment building (Condominio), all service charge payments should be up to date.

The second stage is negotiating and signing a preliminary contract (Compromesso)

When selling property in Italy, the vendor must ensure that all the statements contained in the contract are true to the best of their knowledge. This means full disclosure regarding the property. Any specific enquiries raised by the buyer must be addressed truthfully.

Preliminary contract deposit

Generally, signing a preliminary contract entails the buyer paying a deposit. This can range between 10% and 30% of the sales price of the property. The implication of such a payment is that in the event the purchaser subsequently backs out of the preliminary contract, the purchaser will automatically lose the whole deposit. Should the seller breach the preliminary contract by backing out, they are required to refund the buyer double the amount of the deposit. In addition, further sums may be payable, if there is proof that damages exceed the amount of the deposit.

Italian law states that both parties to a prospective transaction must act in good faith

Prior to signing a preliminary contract, the seller must provide the buyer, or their legal advisers, with copies of all documentation relating to the property. In addition, the seller must inform them of any material fact which may affect the decision of the buyer to proceed with the purchase of the property.

It is important to ensure that the property complies with all applicable planning and building regulations. Any breach of this legislation may result in the rescission of the purchase contract and heavy penalties. Where the seller has applied for a planning amnesty (Condono Edilizio), the prospective buyer should receive copies of the relevant documentation.

Certificate of habitability

Note that before or at the latest upon completion,  the seller must produce the property’s certificate of habitability (Certificato di abitabilità). The local municipality is responsible for issuing a certificate. It confirms compliance of all the systems installed in the property with Italian law and in respect of the relevant health and safety regulations. This certificate is mandatory. It goes without saying that it is, therefore, advisable for the seller to obtain this certificate prior to signing a preliminary contract and payment of the relevant deposit. Otherwise, the seller may run the risk that the transaction falls through. This would put the seller in a position of breach of contract.

To avoid possible claims and penalties, should a certificate of habitability not be available on exchange of contracts, the seller should disclose the issue prior to signing a preliminary contract and the contract should state either that the buyer is renouncing receipt of the certificate of habitability or alternatively that completion of the purchase is conditional on the seller obtaining this certificate.

Mortgages

If the property is subject to a mortgage, the seller has a duty to redeem the same and cancel the corresponding entry on the Local Land Registry before completion of the sale.  If the buyer is purchasing the property using a mortgage, it is advisable to finalise all the arrangements before signing a preliminary contract. However, this process may become expensive and protracted for the prospective buyer.

Pre-emption rights when selling property in Italy

Particular care should be taken if the sale is a villa or land with statutory farming pre-emption rights (Prelazione agraria) by owners or tenants or immediate neighbours in agricultural areas in Italy. According to Italian law, farmers, tenants and neighbours are entitled to be notified of a proposed sale of a property to third parties. They have first option on buying agricultural land in their immediate neighbourhood. Therefore, immediately before, or if this isn’t possible, after signing the preliminary contract, it will be necessary for the seller to serve a copy of the contract on all parties having pre-emption rights, so that any person with an interest can declare within the statutory term (usually 30 days).

It is important to ensure full compliance with this legislation. A breach of statutory farming pre-emption rights may result in a claim on the property. Anyone making a claim can do so up to a year after the sale. This in turn, would give the buyer a legal claim against the seller.

Breaches can have serious consequences

Essentially, at this stage, the seller should disclose any breaches pertaing to the property as well as proof of remedial action.  This includes any missed tax payments and outstanding breaches or notices from relevant authorities.

These are just some of the points to take into consideration, but there are many others. All have potentially serious consequences for the vendor. It is therefore important that the vendor acts in good faith. A claim for damages based on misrepresentation is just one of the consequences that the seller should aim to avoid.

Selling property in Italy. The third stage: completing the sale

This usually takes place in the offices of a notary (Notaio). In Italy, vendors and purchasers often use the same notary, but you are perfectly within your rights to have your own notary.

A notary must oversee completion of Italian property transactions

Italian Notaries are officials entrusted by the law to transfer the legal title of an Italian real estate. They have a duty to correctly draft the Deed of Sale (Rogito), to ensure its proper execution and registration. In addition, on behalf of the Italian State, they collect payment of all Italian taxes ancillary to the completion.

While notaries are qualified lawyers, Italian law prohibits them from acting on behalf of any of the parties involved in a transaction. They must remain impartial. Only your own lawyer may offer legal advice to protect your interests.

Before completion the vendor should provide the Title Deeds. This could be the Purchase Deed, or the Italian Inheritance Tax Return lodged with the tax authorities. The vendor will also need to produce all the relevant documentation pertaining to the property. This includes for example, planning and building licenses. And, if the sale is of a building, rather than land, an Energy Performance Certificate and a certificate of Habitability.

All parties have a legal duty to provide the notary with information regarding the sale price and the appointed estate agency. This information will appear in the Deed of Sale, in the form of a solemn affirmation under oath (Dichiarazione sostitutiva di atto di notorietà). If this information is missing, incorrect or incomplete, the parties risk a harsher form of taxation on the sale of the property, plus substantial fines.

Fiscal matters

If the vendor benefits from “prima casa” (first home) fiscal reductions, there will be a penalty to pay if resale takes place within five years of the original purchase. The seller can however avoid penalties if they buy a new residential property in Italy within one year of the sale.

Following completion, the seller may be subject to Italian capital gains tax. However, no tax is usually levied if the vendor has owned the property for more than five years.

Finally …

As a general rule, it is wise to familiarise yourself with the legal framework regulating international property sales. If you are thinking of selling property in Italy and would like more detailed information, you might like to read the full version of our Selling Italian Property Guide.

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

If you are in need assistance selling property in Italy, we are here to help. We can guide you through the whole process or even organise the whole process on your behalf. Get in touch with us for a free preliminary consultation.

 

 

 

Buying An Italian Property. A Short Guide

This short guide aims to cover the key elements of the Italian purchasing process

For a more in-depth explanation, you may wish to read our comprehensive Italian Property Buying Guide.

Italian Property Buying GuideBuying an Italian property proceeds through 3 key stages:

– Proposta irrevocabile d’acquisto (Reservation offer)

– Contratto preliminare di vendita (Preliminary contract)

– Atto di vendita (Deed of sale)

Once you have chosen your property you should engage the services of a solicitor, whether you buy through a real estate agent or directly from the vendor.

The knowledge that an Italian solicitor has about Italian real estate law is invaluable – plus, your own solicitor is there exclusively to look after your interests.

The first stage. Reservation offer

When buying an Italian property, the first document you will have to sign is a, “proposta irrevocabile d’acquisto” (reservation offer). This is normal practice when purchasing through an estate agent

In contrast, when purchasing directly from the seller (a private sale) a reservation offer is unusual. The implications of dispensing with a reservation offer is one of the many reasons why you should seek legal advice.

By signing the proposta irrevocabile d’acquisto, you secure the removal of the property from the market for a limited period of time, normally 15 days.

It is important to highlight that a reservation offer is only binding upon the buyer when formal written acceptance of the offer has been received from the vendor. Once the agreement has been signed by both parties, it becomes a legally binding contract.

First deposit

You will need to pay a small deposit, which is normally held by the estate agent or solicitor until the vendor has formally accepted the reservation offer.

Should you finalise the purchase, this deposit becomes a part payment of the purchase price. If the seller does not formally accept the offer, your deposit will be refunded.

Due diligence

While the property is off the market, your solicitor, assisted by a surveyor, will make all the necessary searches to ascertain that the property doesn’t have any debts, mortgages, claims etc. Due diligence checks and searches ensure there will be no unpleasant and possibly costly surprises during or after the purchase.

The second stage of buying an Italian property. Preliminary contract

Normally at this stage, buyer and seller having agreed to go ahead with the conveyance, will formalise their agreement through a “contratto preliminare di vendita” (preliminary contract)

Some estate agents (and especially in the case of private sales) choose, or recommend, leaving out this part of the purchase process. However, this legal document really is essential. It sets out the detailed terms and conditions of the sale.

Estate agents often use boilerplate preliminary contract templates. These may not be suitable for your personal situation. Your purchase may be subject to certain terms and conditions. For example, you may have come across some structural issues during due diligence and want to make your purchase contingent on a surveyor’s report. This condition would need to be in the preliminary contract. A solicitor can draft the contract, or at least to examine the estate agent’s template and advise you on any implications before you sign it.

Second deposit

One of the essential legal elements of the preliminary contract is the payment of a deposit (caparra confirmatoria). This is normally equivalent to a minimum of 10% of the purchase price.

If you back out of the contract without a valid legal reason, you will lose this deposit. On the other hand, if the seller changes their mind about the sale, they will have to refund your deposit in full. You would also have the right to claim an amount equal to the deposit through the Italian courts.

In the preliminary contract, the parties also set the date to finalise the conveyance in front of the public notary.

The third Stage of buying an Italian property. Completion of the sale

By law a notary must oversee Italian property transactions. The notary is a public official who has State authority to validate contracts transferring the ownership of a property. The notary is also responsible for paying all land registry fees and cadastral taxes.

A notary must remain absolutely impartial

A notary may not therefore offer legal advice to any party involved in a property transaction. The notary cannot therefore act as a substitute for a solicitor in terms of representing the interests of the buyer.

In order to ensure you have proper legal safeguards, the only way is to engage the services of an independent solicitor. Only by having your own solicitor, can you be confident that no unpleasant surprises will be revealed at this late stage of the purchase process.

Deed of sale

Buying an Italian property concludes with the, “atto di vendita” (deed of sale).

The deed of sale is drafted by the notary and has to be fully compliant with the preliminary contract. In other words, the preliminary contract dictates all the essential elements of the transaction.

Translation

Should any of the parties not understand the Italian language, Italian law requires a translation of the deed of sale. Unless you have an Italian solicitor who speaks your language, the notary may also require that a qualified translator be present at the signing.

Unlike a translator, the advantage of having a solicitor with you is that should any last-minute legal issues arise at the signing, your solicitor will be able to immediately resolve these.

You should be aware that the Italian version of the deed will prevail in a court of law if any issues arise at a later stage.

Signing day

On the appointed signing day, all parties to the transaction convene, usually at the notary’s office. The notary reads the deed aloud and all parties then sign it in front of the notary. Once signed, the buyer pays the balance of the purchase price to the seller and the new owner receives the keys of the property.

New owners can collect a copy of the deed from the notary approximately one month after the signing. It takes approximately one month to register the deed at the relevant land registry office.

If the buyer cannot be present to sign the deed of sale in front of the notary, the buyer can give a power of attorney to their solicitor. This will permit the solicitor to sign the deed of sale on the buyer’s behalf.

Finally …

As a general rule, it is wise to familiarise yourself with the legal framework regulating international property sales.

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

If you would like further information about buying an Italian property, we are here to help. We can guide you through the whole process or even organise the whole process on your behalf. Get in touch with us for a free preliminary consultation.

Buying an Italian property. Glossary
  • Proposta irrevocabile di vendita: An initial formal offer with a small deposit. It contains the price you are willing to offer and any conditions.
  • Contratto preliminare di vendita: This contract sets out, in detail, the terms and conditions of the sale and also all the relevant cadastral and land registry information. Also called a, “Compromesso”.
  • Caparra confirmatoria: Italian Civil Code regulates this deposit under art.1385 of the. If a deposit is defined as a “caparra confirmatoria” its payment gives rise to legal rights and obligations on both parties.
  • Atto di Vendita: All parties sign the deed of sale in front of a public notary. The buyer makes outstanding balance of payment and receives the keys to the property. Also called a, “Rogito”.

Holding Accounts in Italy. Property Completion funds

Keep your money safe

Keep Your Money Safe in Italy: Notarial Holding Accounts for Your Italian Property Purchase On 29th August 2017, Italian legislation saw the introduction of holding accounts. The legislation governing payment for the purchase of Italian residential and commercial real estate is part of the Italian Law of Competition.

The law aims to provide better protection to both property buyers and sellers.

Holding accounts are applicable to funds for the completion of the purchase of Italian property. Deposits connected with a reservation offer and preliminary contracts are not subject to this legislation.

The buyer and/ vendor must request their chosen notary to use a holding account. In other words the notary doesn’t automatically use holding accounts.

In addition, the buyer can request the notary to keep funds in a bonded account. Again, the onus is on the buyer to specifically request that the notary use bonded holding accounts. As this may generate problems with the seller, we would recommend that the preliminary contract include a clause that all parties authorise the notary to hold completion funds in bonded holding accounts.

How do holding accounts work?

The buyer acquires legal ownership of the property at the signing of the deed of sale. However, by using a holding account, the notary will delay payment until after registration of the deed.

Following signature by all parties to the transaction, the notary has 30 days to register the deed of sale with the relevant land registry authorities.

Once registration of the deed takes place, the buyer can be certain that the purchase has been completed smoothly. Tranfer of funds to the vendor can then take place.

Keeping funds in holding accounts therefore provides protection to the buyer between signing the deed of sale and its registration.

Between signing and registering the deed, adverse entries pertaining to the property can come to light. Issues might include outstanding debts, mortgages, encumbrances, court applications for seizures and foreclosures.

The Law of Competition states that when purchasing property, all outstanding payments by the buyer to the seller should be kept in dedicated holding accounts belonging to a notary. This sum also includes any amounts the vendor may require to settle liabilities. For instance, the vendor may still be paying off a mortgage on the property. In this case, the buyer would pay the entire balance of payment for the property into the notary’s holding account. However, a part of this will serve to redeem and cancel the vendor’s mortgage lender once the purchase is complete.

Can all notaries hold money?

The Law of Competition stipulates that a notary must have holding accounts in which the notary can receive funds from clients for the delayed payment of real estate property.

A notary has no entitlement to any interest accruing to these holding accounts. Nor can a notary use funds for any other purpose than the payment of a particular property.

Furthermore, if a notary has debts, creditors can not foreclose on money deposited in holding accounts. Should the notary die, any funds in holding accounts do not constitute part of the notary’s estate. And in the event of death, funds do not form part of the notary’s matrimonial property regime.

Finally …

If you are looking for further information about the Italian property purchasing process, you might find our comprehensive guide helpful, or if you need independent legal advice,  please get in touch for a free consultation.

 

You may also find Buying Property in Italy useful.

Partition of an Italian estate. Inheritance Law

How does the partition of an Italian Estate work?

Partition of an Italian estateA testator’s estate comprises assets and rights. Whenever there is more than one heir in an Italian will, this triggers a condition of joint-ownership of rights and duties.

The co-heirs receive the estate in accordance with their inheritance quota.

This quota may be in  accordance with a will or, where the deceased was intestate, in accordance with Italian inheritance law. Beneficiaries inherit not only assets but also take on any liabilities of the testator.

Partition of an Italian estate refers to the division of assets and liabilities between beneficiaries

At this point, it should be noted that each co-heir has the right to request the partition of an estate at any time following the death of the deceased, unless otherwise stipulated in a will.

As a result, all co-heirs, or their successors (legatees), must take part in the partition of an estate. Failure of one or more beneficiaries to participate, will render their rights invalid. As a matter of fact, absentee co-heirs cannot later rectify this.

According to Italian legislation, the partition of an estate can be executed through three methods:

1. Amicable partition

In order to convert co-heirs’ legitimate rights to a quota of the estate into rights on single assets from the estate, an amicable partition can be made. This would be in the form of a contract. The contract then ensures that the value of the assets individually assigned (known as de facto quotas) equate to the value of the joint ownership quotas.

2. Judicial partition

Should co-heirs disagree on the the partition of an estate, each of them can refer it to the courts. A judgment regarding the partition of an estate may include a number of options. For example:

INVENTORY OF THE INHERITED ESTATE

This includes all the assets and/or liabilities left to the co-heirs by the deceased.

APPRAISAL OF ASSETS

This determines the market value of assets. The testator may have nominated a person or organisation in a will to conduct the appraisal. No estimates are necessary if assets belong in the same asset category. However, in other cases, the estimate of individual assets is essential in order to make portions of value corresponding to the quota of each co-heir in the decedent’s will.  If the decedent died intestate, apportionment is according to Italian inheritance law.

POSSIBLE SALE OF INDIVISIBLE ASSETS

Prior to the partition of an Italian estate, it may be necessary to sell real estate property or to assign property to one of the co-heirs in return for payment. Co-heirs would then receive the proceeds to make up their share of inheritance.

3. Testamentary partition

A testator can stipulate in a will, either the portions to assign to each co-heir, or can simply lay down terms in order to set quotas.

Because the effective value of a testator’s assets may not cover the quotas stipulated in a will and co-heirs dispute the partition of an estate, they have the same recourse: amicable or judicial partition.

Finally …

As a co-heir, it may be difficult for you to manage succession procedures or participate in the partition of the estate in Italy. You can confer a Power of Attorney to sign inheritance documents and paperwork. A specialist Italian inheritance lawyer can assist you and will work in your best interests.

You might find De Tullio Law Firm’s comprehensive Guide to Italian Inheritance useful. If you would like to discuss your situation, you can get in touch with us for a free consultation.

You may also beinterested in Accepting an inheritance with the benefit of inventory in Italy

Legal Action against Italian Real Estate Agents

According to Italian Law 39/1989, realtors and real estate agents in Italy must be registered with their local Chamber of Commerce.

If they are not registered, a real estate agent is liable to fines and other penalties and is not entitled to agreed commissions.

 

Italian legislation also provides an important guarantee for the consumer: real estate agents must have professional indemnity insurance in order to practice their profession. This professional insurance ensures the consumer is covered in the event of negligence on the part of the agent.

According to article 1759 of the Italian Civil Code, the real estate agent must make certain disclosures to the parties if the agent knows of, or becomes aware of, matters which impact a property transaction – an Italian attorney can advise you of the full details regarding such matters.

Italian real estate agents have a duty of care

While a real estate agent is not required to undertake any technical or legal investigations (due diligence) concerning listed properties, an agent is nevertheless obliged to disclose information according to the principles of a professional duty of care. The agent must provide information regarding any known circumstances or issues that should be known about under these principles. To impart incorrect or non-verified information about a property to an interested party is unacceptable according to Italian law.

Failure to exercise duty of care could result in a contractual liability and trigger consumer rights including a request for repayment of any commission. In certain circumstances, the client could be entitled to request compensation for damages and/or take legal action against the real estate agent.

If the culpable silence of a real estate agent induces a client to sign a contract, which the consumer would not have signed had full information been disclosed, the real estate agent could be held liable to compensate the client for losses.

Italian estate agents’ commission

According to article 1755 of the Italian Civil Code, if a property transaction is closed with a real estate agent’s help, the agent is entitled to a commission from both parties. Commission payments could arise as early as the signing of a preliminary contract.

To be entitled to a commission, the real estate agent must have played a decisive role in the transaction. Simply generating a lead without accomplishing any other task is not sufficient to generate an agent’s commission.

The law does not stipulate, control or regulate rates of commission, and this can therefore be freely agreed by the parties. It is always advisable to agree the commission in writing before signing a contract with a real estate agent.

Finally …

Property purchasers should be wary of signing any documents before fully understanding the legal implications. Italian law is complex and it is always prudent to have an independent lawyer look at any paperwork before you sign it. At De Tullio Law Firm we have over 55 years of experience managing property transactions throughout Italy. If you need help, please don’t hesitate to get in touch. We are here to help.We are here to help.

Italian Property: Who Is Liable for Defects in Building Work in Italy?

The best advice we can offer before you enter into any arrangement or contract with a construction, building or renovation company is to call your legal advisor to get a contract drafted between you and the company you have chosen to carry out the work. A professionally drafted contract is your best protection should any problems with construction work arise. Whether there are issues with defective material, poor execution of work, deviations from the agreed plan or a request for additional money, a professionally drafted contract in both English and Italian will prevent a lot of problems, reduce stress and often save you a considerable amount of money. Below we have summarised the Italian legislation covering this topic: The contractor is responsible for defects and unauthorised variation of construction work. If there are visible defects, you should not accept the work otherwise you lose the right to claim on the guarantee (art. 1667, first paragraph of the Italian civil code). In order to formally contest the construction work, you should request your legal advisor to notify the contractor through a formal letter of default. If you accept the work where there are visible defects and/or unauthorised variations of work, you will lose the right to trigger the guarantee – unless the defects and variations were caused with malicious intent. A contractor is considered to have acted with malice if, despite being aware of the defects and/or variations, these have not been explicitly pointed out to the client. Hidden defects The acceptance of work does not compromise your guarantee if there are hidden defects. Such defects can be contested once they are discovered. In order to make a claim on the guarantee the client, through his lawyer, should do the following: Report the hidden defects within 60 days of their discovery Take legal action within 2 years from the end of work If one of the two above mentioned obligations is not complied with, the client will lose the cover of the guarantee. In cases where the contractor not only neglects to point out the defects, but also behaves in a malicious manner in order to hide those defects, the time limit for legal action is extended to 5 years. Fault of the contractor Once the defects and/or the unauthorised variations have been proven, the fault of the contractor is considered as presumed and it becomes the contractor’s responsibility to prove absence of negligence. Guarantees According to article. 1668 of the Italian civil code, in the case of visible or hidden defects the client is entitled to take 4 possible legal courses of action: Request correction of the defects and/or variations, the total cost to be borne by the contractor Request a reduction in price If the variations or the defaults are very serious, request the dissolution of the contract and Request compensation for damage. ResponsibilIty of the contractor for new build property Article 1669 of the Italian civil code provides particular regulations for new buildings. In these cases, the contractor will be held liable for collapse (total or partial), evident danger of collapse or serious defects in construction. Jurisprudence extends this responsibility to include renovation work which can be expected to be durable e.g. paving, waterproofing on a roof. The contractor’s responsibility extends for a period of 10 years from the date of completion of the work. Any defective work should be contested formally with a letter drafted by your lawyer and addressed to the contractor within 1 year of discovering the defect. Italian Law stipulates that the client has one year from the time of the recorded delivery of the letter of default to starting legal proceedings against the contractor. Once serious defects are highlighted, the contractor is presumed liable unless able to prove the contrary. Examples of serious building defects There is significant jurisprudence defining the meaning of “serious defects”. In broad terms, serious defects are defined as seriously jeopardising the use of the property or having a significant impact on essential structural elements such as stability, efficiency and duration of work. Here are some examples of serious defects highlighted by Italian jurisprudence: Detachment and rupture of a significant number of tiles Defects concerning the roof of the property causing infiltrations of water Defective heating system compromising the normal use of the property Inadequate thermal insulation Defects in the plumbing system Defects of the chimney or flue compromising normal use of the property Inspecting construction work Article 1665 of the Italian civil code provides the client with the option to inspect completed work before signing-off on it. The right of inspection also extends to when the work is being carried out. It is highly recommended to involve your lawyer and an independent surveyor in this process before accepting any work. According to art 1665 par. 4, if the client accepts the work at the point of signing-off without requesting an inspection or without contesting the work, the work is presumed to be accepted. Work is also considered as implicitly accepted if the client accepts it without making any type of formal objection. The direct consequence of this is the loss of guarantee cover for visible defects or unauthorised variations, (an exception is made for maliciously undeclared work). In these cases, the contractor is entitled to final payment for work. Finally … If you are facing problems concerning your Italian property renovation or construction work, please do not hesitate to contact De Tullio Law Firm. We offer legal assistance throughout Italy. While it is always best to engage independent legal services prior to starting a renovation or construction project, contacting a lawyer as early as possible in a dispute can often lead to a settlement thus avoiding lengthy and costly litigation in the Italian courts.The best advice we can offer before you enter into any arrangement or contract with a construction, building or renovation company is to call your legal advisor to get a contract drafted between you and the company you have chosen to carry out the work. A professionally drafted contract is your best protection should any problems with construction work arise.

Whether there are issues with defective material, poor execution of work, deviations from the agreed plan or a request for additional money, a professionally drafted contract in both English and Italian will prevent a lot of problems, reduce stress and often save you a considerable amount of money.

Below we have summarised the Italian legislation covering this topic:

The contractor is responsible for defects and unauthorised variation of construction work. If there are visible defects, you should not accept the work otherwise you lose the right to claim on the guarantee (art. 1667, first paragraph of the Italian civil code).

In order to formally contest the construction work, you should request your legal advisor to notify the contractor through a formal letter of default. If you accept the work where there are visible defects and/or unauthorised variations of work, you will lose the right to trigger the guarantee – unless the defects and variations were caused with malicious intent. A contractor is considered to have acted with malice if, despite being aware of the defects and/or variations, these have not been explicitly pointed out to the client.

Hidden defects

The acceptance of work does not compromise your guarantee if there are hidden defects. Such defects can be contested once they are discovered. In order to make a claim on the guarantee the client, through his lawyer, should do the following:

  • Report the hidden defects within 60 days of their discovery
  • Take legal action within 2 years from the end of work

If one of the two above mentioned obligations is not complied with, the client will lose the cover of the guarantee. In cases where the contractor not only neglects to point out the defects, but also behaves in a malicious manner in order to hide those defects, the time limit for legal action is extended to 5 years.

Fault of the contractor 

Once the defects and/or the unauthorised variations have been proven, the fault of the contractor is considered as presumed and it becomes the contractor’s responsibility to prove absence of negligence.

Guarantees

According to article. 1668 of the Italian civil code, in the case of visible or hidden defects the client is entitled to take 4 possible legal courses of action:

  • Request correction of the defects and/or variations, the total cost to be borne by the contractor
  • Request a reduction in price
  • If the variations or the defaults are very serious, request the dissolution of the contract and
  • Request compensation for damage.

ResponsibilIty of the contractor for new build property

Article 1669 of the Italian civil code provides particular regulations for new buildings. In these cases, the contractor will be held liable for collapse (total or partial), evident danger of collapse or serious defects in construction.

Jurisprudence extends this responsibility to include renovation work which can be expected to be durable e.g. paving, waterproofing on a roof. The contractor’s responsibility extends for a period of 10 years from the date of completion of the work. Any defective work should be contested formally with a letter drafted by your lawyer and addressed to the contractor within 1 year of discovering the defect.

Italian Law stipulates that the client has one year from the time of the recorded delivery of the letter of default to starting legal proceedings against the contractor. Once serious defects are highlighted, the contractor is presumed liable unless able to prove the contrary.

Examples of serious building defects 

There is significant jurisprudence defining the meaning of “serious defects”. In broad terms, serious defects are defined as seriously jeopardising the use of the property or having a significant impact on essential structural elements such as stability, efficiency and duration of work. Here are some examples of serious defects highlighted by Italian jurisprudence:

  • Detachment and rupture of a significant number of tiles
  • Defects concerning the roof of the property causing infiltrations of water
  • Defective heating system compromising the normal use of the property
  • Inadequate thermal insulation
  • Defects in the plumbing system
  • Defects of the chimney or flue compromising normal use of the property

Inspecting construction work 

Article 1665 of the Italian civil code provides the client with the option to inspect completed work before signing-off on it. The right of inspection also extends to when the work is being carried out.

It is highly recommended to involve your lawyer and an independent surveyor in this process before accepting any work.

According to art 1665 par. 4, if the client accepts the work at the point of signing-off without requesting an inspection or without contesting the work, the work is presumed to be accepted. Work is also considered as implicitly accepted if the client accepts it without making any type of formal objection. The direct consequence of this is the loss of guarantee cover for visible defects or unauthorised variations, (an exception is made for maliciously undeclared work). In these cases, the contractor is entitled to final payment for work.

Finally …

If you are facing problems concerning your Italian property renovation or construction work, please do not hesitate to contact De Tullio Law Firm. We offer legal assistance throughout Italy. While it is always best to engage independent legal services prior to starting a renovation or construction project, contacting a lawyer as early as possible in a dispute can often lead to a settlement thus avoiding lengthy and costly litigation in the Italian courts.

 

You may also be interested in Off-Plan Property in Italy: Insurance And Guarantee

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A good piece of advice is to request that the Notary Public, who must be involved in the sale, make explicit reference to the insurance policy in the Deed of Sale. Read more

English-Speaking Italian Property Lawyer

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It involves the law of Italian real estate property, which is complex and raises special issues of practice, and problems not present in other transactions and or jurisdictions. An Italian real estate attorney is a trained legal specialist, experienced at dealing with these problems.

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 are conducted through the broker, who most often acts as an intermediary. Once an informal agreement is reached, buyer and seller enter into a formal written contract for the sale, the purchase agreement. The buyer pays deposits. Ownership is ascertained, titles, deeds and other due diligence needs to be undertaken. Finally, the property is transferred from the seller to the buyer, and the seller receives the purchase price stipulated in the contract. Read more

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