Definition of legal requirements for preliminary contracts in off-plan transactions
The legislative decree 122/2005 introduced very strict requirements for preliminary contracts concerning investments in off-plan properties in Italy.
Following art.6 of the above mentioned legislative decree the preliminary contract should also contain:
- A full description of the parties.
- Identification details of the property, including the cadastral reference of the plot – A description of the property is required including of those outbuildings for the exclusive use of the buyer, the object of the contract.
- Details relating to the building license or the request for the building license – The law explicitly requires the mention of any burden connected with the building license.
- Technical data relating to the building – The law requests a summary of the technical data in the preliminary contract. Such data will be described in detail in the attachment concerning technical specifications (capitolato). Such specifications cannot be modified without the agreement of both parties.
- A deadline for completion.
- A method of payment – The entire price should be declared, also specifying the amounts paid as a deposit. Payments should be executed by using bank transfers or other means that are traceable and that will leave a clear trail.
- Details of the bank guarantee – The bank guarantee should be delivered at the signing of the preliminary contract. Such a guarantee should be issued prior to, or upon signing of, the preliminary contract.
- The presence of mortgages or any other type of burden – In the presence of a mortgage opened by the construction company covering an entire compound that shall be parcelled out amongst several buyers, the notary will not be entitled to sign the Deed of Sale until the parcelling out of the said mortgage to the individual buyers has been completed.
- The presence of the contractors together with proof of their identities.
The preliminary contract should also have the following attachments:
- Technical specifications of the property, detailing all the materials to be used in the construction, a list of agreed finishes and fittings.
- Copy of the Plan submitted to file the request for the building license.
What are the consequences if the preliminary contract lacks one of the mandatory elements set out in art. 6?
A preliminary contract not in compliance with the requirements of articles 6 could be affected by nullity on the grounds of its contrasting with mandatory rules (public policy).
Since the above-mentioned legal requirements are set in order to protect the interests of the buyer, the invalidity of the preliminary contract can be objected to only by the buyer.
Please note, any statement made in this article is intended to be a general practical introductory explanation only and not formal legal advice. This firm accepts no liability or any responsibility for any statement made.