Off-Plan Insurance Policy in Italy

Insurance policy for off-plan property

Buying off-plan means you purchase your home before the developer has finished building it. You may even buy it before construction has begun. This type of purchase in Italy is not without risks. Article 4 of Italian legislative decree 122/2005 states that a construction company must provide an off-plan insurance policy to property buyers.

Because this insurance policy acts as a guarantee, it is therefore an important element of your off-plan purchase.

The insurance policy provides 10 years of cover and acts as a guarantee for any “serious construction defects”.

As you should receive your insurance policy no later than the transfer of ownership, we recommend you request that the notary explicitly references this insurance in your deed of sale.

What types of defects are covered under an off-plan guarantee?

Thanks, in large part, to jurisprudence, the notion of a serious construction defect has developed substantially in recent years.

Whereas a serious construction defect only previously included problems prejudicing safety and stability of a property, it now has a far broader meaning. In effect, nowadays, a defect might be anything that provokes a significant decrement to the normal use of the property. Consequently, the insurance policy should cover any damage that might impact regular use of the property.

In addition, serious construction defects extend to secondary elements of construction. This encompasses, for instance, use of poor or inadequate materials. It also includes construction that may jeopardise habitability of the property and problems that require maintenance work.

Examples demonstrating the breadth of serious construction defects could be the detachment of tiles in a kitchen or bathroom or a poorly sealed roof. Both of these issues may lead to water infiltration and would require repairs.

Buyers should also be familiar with the responsibility of the contractor concerning defects in construction work.

Who has the right to off-plan insurance?

The law limits the right to this insurance policy to private buyers.

In a more restrictive interpretation of the law, a buyer should be a “consumer”. This means that the insurance policy and guarantee is only available to buyers who purchase an off-plan property for personal use.

In other words, any commercial or professional use of the property would exclude the buyer from the right to this insurance policy.

Finally …

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

You may want to read other articles about buying off-plan in Italy:

Advice for Buying Off-Plan in Italy

Investing in Italian Off-Plan Properties

Italian Law: Off-Plan Preliminary Contracts 

Preliminary Contracts Checklist for Italian Off-Plan Purchases

Off-Plan Italy. Where Do You Stand from A Legal Point of View?

Delivery Delays in Italian Off-Plan Properties

Building A House in Italy: A Brief Guide

Purchasing the right plot of land when building a house in Italy is crucial

Self building, or having a house built, in your own country can be daunting enough. However, when it comes to building a house in Italy things can get really tricky.

If you decide to build a house in Italy, you will be subject to stringent building approvals and regulations.

Building work carried out in breach of approvals or that do not comply with regulations, expose you to criminal charges and prosecution. Court cases in Italy are protracted and costly procedures.

Non-compliances will also impact the future saleability of the property and, in a worst-case scenario may even lead to a demolition order.

You will need to deal with many professionals and legal restrictions. Building a house in Italy requires a deep knowledge of Italian law, technical aspects and working with building companies and contractors.

There can be many pitfalls along the way and we strongly advise you to seek legal advice before you even start looking for a building plot.

Get your team in place

Involve professionals from the get go. This will make the whole procedure easier.

In addition to an architect and builder, engage a lawyer. This will give you more confidence in the building procedure since your team will guide you through what is a very complex project.

What are the steps to building a house in Italy?

Firstly, check before you buy. Can actually build on a specific plot of land and if so what size property can you build? You can ascertain this information from the land registry, certificates of intended use and, by investigating the presence of any restrictions related to zoning and urban planning.

Secondly, get your architect, surveyor, engineer to design the property. This should take into account current legislation regarding energy efficiency and any incentives available.

During this phase, we would recommend you define, in detail, a list of materials and finishes. You should then start getting estimates from construction companies or builders.

Thirdly, you will have to apply for planning and building permits and/or appropriate authorisations. The application needs to go through your local municipality. Depending on the municipality, permission can take several months.

How can a lawyer help with building a house in Italy?

Essentially a lawyer will safeguard you, your project and finances by ensuring that everything complies with Italian legislation.

In the first instance your lawyer can run checks and searches for you.

For example, so as to eliminate the risk of choosing a company that may become bankrupt during your building project, a solvency check on potential building companies is vital.

In order to have genuine benchmarks, your lawyer can request quotations from a number of building companies. Usually, for new construction, there are at least four different types of companies involved, (excavation, construction, electrician, plumber), but for easier management, it is advisable to contract the works to one company that will sub-contract the work. This is important in order to have only one point of contact on-site.

It is mandatory to check the building company you engage is tax compliant. Your lawyer can check DURC (Documento Unico di Regolarità Contributiva). This shows whether the company is in compliance with employees’ social security contributions.

Your lawyer can provide project management services. In order to avoid any conflicts of interest, you should avoid nominating a project manager related to the building company.

It is essential to have a legally drafted building contract. This is critical as it ensures you have all the legal guarantees and protections throughout your build and beyond. Again, your lawyer can manage this for you.

What needs to be in place before building can start?

Building works can only commence once you have nominated a project manager and building company and you have received all the relevant permits and documentation from the Municipal Technical Office.

A Safety and Coordination Plan (Piano di Sicurezza e Coordinamento) must also be in place, pursuant to Legislative decree 81/08.

A Safety Coordinator (Coordinatore della Sicurezza in fase di Esecuzione) must oversee the building phase. All the companies involved in the building phase must comply with the provisions of health and safety regulations. In addition they must prepare their own Operational Safety Plan (Piano Operativo di Sicurezza, POS).

Waste management produced on the construction site is particularly important. All materials must be disposed of in accordance with local regulations.

Finally …

As you can see, building a new house in Italy is not a straightforward process. Relying on our legal expertise and knowledge of Italian building laws and regulations will give you certainty and peace of mind.

Should you need further information concerning the process of building a new house, please feel free to contact De Tullio Law Firm at the following email address: info@detulliolawfirm.com.

 

You may also be interested in Insurance Policy for Off-Plan Properties.

You may also like to watch our info videos about Italian property, succession and family law.

Making An Italian Will. Information And Template

A will determines distribution of your assets

By making an Italian will, you can decide how to divide your estate after your death. In addition, it allows you to be certain that your heirs don’t pay more Inheritance Tax than necessary.

What is an Italian Will?

A will is a legal document. The will writer, known as the testator, establishes in written form, how to distribute their estate after death (article 587 of Italian Civil Code).

Anyone over the age of 18, who is not legally incapacitated, can write an Italian will. Incapacity is defined by Italian Civil Code.

Italian law states that a will is revocable at any time. Testators’ rights to dispose of their assets is protected until their last breath.

The content of an Italian will is essentially patrimonial. That is to say, it deals with the distribution of a testator’s inheritable assets. However, the law states that testators can also make dispositions of a non-pecuniary nature in a will. For example, the recognition of a natural child.

Why is having an Italian will important?

In order to understand how Italian inheritance law works, you may like to read our comprehensive guide on this subject.

If you own assets such as property in Italy, you should not underestimate the  importance of a will in Italian.

The laws governing forced heirship are very strict in Italy. Because of this, anyone wishing to derogate from these rules should seek legal advice in order to ensure their plans comply with Italian and European succession rules.

Not only does a will enable a testator to assign assets to beneficiaries, it can also be useful in preventing conflict among heirs. In certain cases, it can also permit a reduction in inheritance tax payments.

Because it makes life easier for those you leave behind, if you own property in Italy, we would advise that you make an Italian will.

How do you make an Italian will?

An Italian will must be in Italian. For an Italian will to be legally valid,  a testator must hand write, sign and date the document.

For straightforward cases, testators can use a very simple will format with wording such as this:

Io sottoscritto/a, …………………. (indicare cognome, nome, luogo e data di nascita, residenza) revoca tutte le mie precedenti disposizioni testamentarie. Dispongo del mio patrimonio al momento della mia morte come segue.

Nomino erede universale di tutti i miei beni terreni …………. (indicare cognome, nome ed eventuali rapporti di parentela. Se non si tratta di un parente, indicare anche luogo e data di nascita).

Cedo a ………… (indicare cognome, nome ed eventuale parentela, se non è un parente è opportuno indicare luogo e data di nascita) i seguenti beni: …………………….. (specificare chiaramente i beni).

Data

Firma

I, the undersigned, …………………. (indicate surname, name, place and date of birth, residence) herewith revoke all my previous testamentary dispositions. I dispose of my patrimony at the time of my death as follows.

I appoint as universal heir of all my worldly goods …………. (indicate surname, name and any relationship of kinship. If it is not a relative, you should also indicate place and date of birth).

I give to ………… (indicate surname, name and any relationship, if it is not a relative, it is appropriate to indicate place and date of birth) the following assets: …………………….. (clearly specify the assets).

Date

Signature

Finally …

Even if you think your situation is straightforward, it may not be. If you own property in Italy and elsewhere, this adds a layer of complexity. It will require cross border legal expertise. We therefore recommend that you seek independent legal advice regarding your personal circumstances.

At De Tullio Law Firm, we have over 55 years of experience managing cross border and Italian inheritance matters throughout Italy. We are a member of STEP, the world’s leading professional association for trust and estate practitioners.

If you would like to discuss your estate plan with us or if you are considering making an Italian will, please get in touch at: info@detulliolawfirm.com

 

You may also be interested in Do beneficiaries have to pay taxes on inheritance?

Holding Accounts in Italy. Property Completion funds

Keep your property completion money safe

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.

Do all notaries have holding accounts?

The Law of Competition stipulates that a notary must have a holding account 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?

In this article we explore the partition of an Italian estate. A 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

Off-Plan Property in Italy. Preliminary Contract Checklist

Investing in an off-plan property in Italy

Investing in an off-plan property in Italy entails a buyer commiting to buy a property from developer that has not yet been built or that is in the process of construction.

This type of investment hides a number of risks, the major one being that the developer goes into administration during construction of your property and you lose any money you have already invested.

Off-plan property in Italy. Checklist for preliminary contracts

Legislative decree 122/2005 introduced very strict rules concerning buying an off-plan property in Italy. Article 6 of the above mentioned legislative decree states that the preliminary contract for an off-plan property in Italy should contain key elements. A preliminary contract is a legally binding document. Before you sign one, make sure it contains all of the following items.

A full description of the parties to the transaction

Not only the buyer but also the builder and/ or developer.

Property details

Identification details of the property including cadastral plot references.

Property description

A description of the property including outbuildings for the exclusive use of the buyer.

Building permits

Details relating to the building permit or application for a building permit. In addition, the law explicitly requires the mention of any issue associated with the building permit.

Technical specifications

All technical data relating to the building. The law requires a summary of technical specification in the preliminary contract. Full data must be in an attachment (capitolato). These specifications cannot be modified without the agreement of both parties.

Completion

Deadline date for when the construction will be complete.

Payments

Method of payment. Not only the total price but also a payment plan for deposits and installments. Buyers should only use bank transfers or other traceable methods of payment.

Bank guarantee

Full details of the bank guarantee. Buyers should receive the bank guarantee when they sign the preliminary contract. The guarantee should therefore be in place prior to, or at the latest upon signing the preliminary contract.

Loans

All mortgages or other types of loan for the development. Where a mortgage for the whole development is in the name of the construction company or developer, the company must divide it among all the buyers. Unless this is the case, the notary will not legally be able to sign the deed of sale.

Contractors

A full list of the contractors involved in the construction along with proof of their identities.

Checklist for preliminary contract attachments

As attachments to the preliminary contract buyers should also have the previously mentioned full technical specifications of the property. This should detail all the construction materials as well as listing all the agreed finishes and fittings. In addition, there should be a copy of the plan submitted to request building permits.

What if the preliminary contract lacks one of the elements set out in art. 6?

A preliminary contract not in compliance with the requirements of article 6 may be null and void because it breaches Italian legislation.

Since the above mentioned legal requirements are set out in order to protect the interests of the buyer, only the buyer can object to the validity of the preliminary contract.

Finally …

There are a number of risks involved in off-plan purchases. We have written several articles  about off-plan property purchases in Italy. You can use our search tool to find more on the subject of buying an off-plan property in Italy.

At De Tullio Law Firm, we are property law specialists. We operate throughout Italy. We would always recommend that you engage your own lawyer to ensure that you protect your interests. Before signing any off-plan property-related paperwork, including a preliminary contract, you should seek independent legal advice. If you are unsure about any aspect of your off-plan property purchase in Italy, we are here to help.

You may also like to watch our info videos about buying property in Italy.

Italian Estate Agents. What Are Their Legal Responsibilities?

Italian estate agents must be registered

According to Italian Law 39/1989, in order to operate in Italy, realtors and real estate agents must register with their local Chamber of Commerce. Without professional registration, a real estate agent is liable to fines and other penalties. In addition, unregistered estate agents cannot request commissions on property sales and purchases.

Italian legislation also provides an important guarantee for the consumer. Real estate agents must have professional indemnity insurance. This ensures that in the event of negligence by the estate agent, the agent can cover the claim.

Italian real estate agents have legal responsibilities

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.

A real estate agent is not required to undertake any technical or legal checks and searches (due diligence) concerning listed properties. Nevertheless, an agent must disclose information according to the principles of a professional duty of care.

Under these principles, an agent must therefore provide all information that they have regarding a property. To withhold, impart incorrect or non-verified information about a property to an interested party is against Italian law.

Failure to exercise this professional 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 may also 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 the estate agent disclosed full information, 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 real estate agent helps close a property transaction, the agent receives a commission from both the buyer and the seller. Commission payments could arise as early as the signing a preliminary contract.

However, in order to receive a commission, the real estate agent must have played a decisive role in the transaction. Simply generating a lead is not sufficient to generate an agent’s commission.

The law does not stipulate, control or regulate rates of commission. In other words, fees are negotiable. 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.

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.

Building Defects in Italy. Who Is Liable?

A professionally drafted contract is your best protection against any faults with Italian construction work


Building defects include the use of shoddy materials, poorly executed work, deviations from an agreed plan or a request for additional money.

The best advice we can therefore offer before you enter into any arrangement with a construction, building or renovation company is to call your legal advisor.

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.

A summary of Italian legislation covering building defects

The contractor is responsible for defects and unauthorised variation of construction work. If there are visible defects, you should not accept the work. If you do, 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 work with 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, the contractor fails to point these out to the client.

Hidden building defects

The acceptance of work does not compromise your guarantee in the case of hidden defects. You can contest hidden defects when you discover them. A client will need a lawyer to take action in order to make a claim on the guarantee. 

– Report the hidden defects within 60 days of their discovery.

– Take legal action within 2 years from the completion of the work.

If a client does not comply with both of the above mentioned obligations the client will lose the cover of the guarantee. In cases where the contractor not only neglects to point out the defects but also acts in a malicious manner to hide the faults, the time limit for legal action extends to 5 years.

Fault of the contractor 

Once the client proves the defects and/or the unauthorised variations, there is a presumption of fault against the contractor. It is then the contractor’s responsibility to prove any absence of negligence.

Guarantees

According to article. 1668 of the Italian civil code, in the case of visible or hidden defects the client has 4 possible courses of action.

– Request correction with the contractor bearing the total cost.

– Request a price reduction.

If variations or building defects are serious the client can:

– Request the termination of the contract and,

– Request compensation for damages.

Responsibility of the contractor for new build properties

Article 1669 of the Italian civil code provides particular regulations for new buildings. For new builds, the contractor is liable for collapse (total or partial), evident danger of collapse or serious defects in construction.

Jurisprudence extends liability to renovation work which can be expected to be durable. This, for example would include roof waterproofing and floor and wall tiling. The contractor’s responsibility increases to a period of 10 years from the date of completion of the work. Any faults should be contested formally with a letter of default drafted by your lawyer to the contractor within 1 year of discovering them.

Italian Law stipulates that the client has one year from the recorded delivery of a letter of default to starting legal proceedings against the contractor. Once the client has highlighted serious defects, there is a presumption of liability against the contractor. The contractor must prove the contrary.

Examples of serious building defects 

There is significant jurisprudence defining the meaning of “serious defects”. In broad terms, the definition of serious defects is work that seriously compromises the use of the property or has a significant impact on essential structural elements such as stability, efficiency and duration of work. Here are some examples of serious building defects classified in Italian jurisprudence:

– Detachment and rupture of a significant number of tiles.

– Defects concerning the roof of the property causing infiltrations of water.

– Faulty heating system.

– Inadequate thermal insulation.

– Faulty plumbing system.

– Defects of the chimney or flue.

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. This right of inspection also extends to work in progress. We would recommend that you involve your lawyer and an independent surveyor in this process before accepting any work.

Article 1665 par. 4, states that where the client accepts the work at the point of signing-off without requesting an inspection or without contesting work, there is a presumption that the client has accepted the work. If the client accepts the work without any formal objection, this constitutes an implicit acceptance. As a consequence, the client loses the guarantee for visible defects or unauthorised variations. There is however an exception for malicious or undeclared issues. In addition, acceptance of work means the client must pay the contractor for the work.

Finally …

For problems concerning your Italian property renovation or construction work, please do not hesitate to contact De Tullio Law Firm. We are Italian property law specialists. 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. In addition, we have a number of info videos that you may like to watch.

Insurance Policy for Off-Plan Properties

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.

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.

Off-Plan Properties in Italy: Delivery Delays

Late delivery: one of the risks in buying Italian off-plan properties

This article is part of a series about the risks of buying off-plan properties in Italy. To read more on the topic, please use our search tool to look for off-plan properties in Italy.

Significant delays in delivery of Italian off-plan properties is one aspect that investors report as being particularly irritating.

Developers and builders can be very persuasive. Whatever you do, don’t feel obliged to sign anything without first seeking independent legal advice.

Penalty clause for late delivery of off-plan properties

Broadly-speaking, a penalty clause is a contractual provision which levies a monetary sum in the event of a breach of terms in the contract. It does not include any compensation payment for actual damages.

Buyers often try to insert a late delivery penalty clause into their contracts for off-plan properties in Italy. However, penalty clauses are generally unenforceable and ineffective under Italian law. 

Generally, the off-plan developer or builder draws up a contract. Often these are major companies. The buyer is therefore unlikely to be able to mutually agree a penalty clause. The agreement will therefore unilaterally favour the company.

The importance of a preliminary contract

The Preliminary Contract (Compromesso) is key in off-plan property purchases. If they are fortunate, off-plan buyers may manage to insert a penalty clause in the compromesso. This would see the refund of a buyer’s deposit. However, in accordance with binding terms of the contract, the buyer would still have to wait for the developer or builder to deliver the property.

Termination clause for late delivery of off-plan properties

A more effective legal safeguard would be to integrate an express termination clause in the compromesso. In effect, the termination of the preliminary contract would automatically occur – whether or not the buyer notifies the seller of the intention to terminate.

To make the clause enforceable and effective, the compresso must explicitly reference the length of delay.

If the seller exceeds the delivery date, either party can negotiate an extension and a new compromesso. Or, the buyer can claim a refund of deposits and/or any other advance payments.

Essential Term

Unfortunately, buyers of Italian off-plan properties sometimes sign a compromesso which promises more than it can deliver. Then, when delivery day arrives and buyers do not receive the keys to their property, the buyer discovers that the Italian law does not provide much protection.

If a compromesso does not include an express termination clause, the buyer can send the developer or builder a formal request to respect terms and conditions. Italian law calls this particular provision an, “essential term”.

The buyer’s formal request should warn the vendor that failure to respect terms and conditions will terminate the contract. The vendor must fulfil contractual obligations within a certain time, which cannot be less than 15 days.

Case law

In a recent court case, where the vendor had failed to comply with an, “essential term”, the Court of Vicenza (judgement n.187/2016) ruled that:

“whenever a delay is considered unbearable, it is possible to start legal proceedings against the builder, or the building company, and to obtain a refund of any advance payments. Furthermore but, only in the case of proven damages, the purchasing party can claim additional compensation”.

Either way, before taking legal action to resolve the situation and/or to make a claim for compensation for damages, an amicable settlement is always preferable. Because legal action through the Italian courts can take at least 5 years and can be very costly, an amicable settlement is likely to be quicker and more favourable. It is the route we would recommend.

Finally …

There are a number of risks involved in off-plan purchases. At De Tullio Law Firm, we are property law specialists. We are present throughout Italy. We would always recommend that you engage a lawyer you choose to ensure that you protect your interests. If the vendor recommends a lawyer, we would caution against it on the grounds of conflict of interest. Before signing any off-plan property-related paperwork, including a preliminary contract, you should seek independent legal advice. If you are unsure about any aspect of purchasing off-plan properties in Italy, we are here to help.

 

You may also be interested in Off-Plan Property in Italy: Insurance And Guarantee. You may also like to watch our info videos about Italian property law.