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.
Identification details of the property including cadastral plot references.
A description of the property including outbuildings for the exclusive use of the buyer.
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.
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.
Deadline date for when the construction will be complete.
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.
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.
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.
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.
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.