Tag Archive for: Italian Property Law

Buying A Property to Renovate in Italy

Avoid common mistakes when buying a property to renovate in Italy

Buying a property to renovate in Italy is a common scenario. It is also a common scenario for these projects to end in heartache.

At De Tullio Law Firm we often don’t meet these buyers until after they have purchased a property. They have usually spent way more than they expected and need to fix problems.

The best advice we can give you is to engage an Italian lawyer before buying a property to renovate in Italy. It will save you time, money and anguish.

A Renovation property in Italy: the right project for you?

No matter how experienced you are, a renovation project anywhere can be a stressful and time-consuming process. Even more so if you live overseas, can only visit Italy periodically and you are not a fluent Italian speaker. Unless a project is guaranteed to give you your dream home, or make you money, think carefully. You may be taking on the wrong property.

Make sure you know exactly what you are buying

Don’t wait to discover major legal issues such as lack of planning permission until after your purchase is complete. Having a lawyer means you have someone to work on your behalf to conduct thorough due diligence. Any legal non­-compliances will be detected before you complete the purchase.

In addition, your lawyer will assist you in obtaining a structural survey. A survey of the property will reveal important information about construction and building materials. It will highlight problems and remedial actions. Moreover, it will give you a good indication of the likely cost of renovations. It is also worth commissioning a measured survey of the building. This will give you a detailed set of floorplans and elevations on which to base your proposed renovations.

Builders

Even minor renovations can turn into a nightmare if your builders or subcontractors fail to do a good job.

Always ask for references, and speak to previous clients. Your lawyer can help you hire reputable builders and can act as project manager on your behalf throughout the project.

Buying a renovation property in Italy: costs

Work always costs more than you expect. This is because you can’t foresee some problems until renovations start. You may have to change your mind or alter designs or specifications.

Always include a budget contingency of 10 – 20% to cover unforeseen costs and fully expect to spend it.

Make sure your plans are as detailed as possible; list all the tasks and materials and, who is going to do the work. Don’t forget to allow for skips, scaffolding, tools and plant hire. Estimate costs by comparing similar projects in the area. Make sure you, and/or your lawyer, get builders’ quotes.

We would recommend that you instruct your lawyer to draft a building contract with your chosen builder. A building contract makes the builder’s quote legally binding.

Heed Italian rules and regulations when buying a property to renovate

Under no circumstances, should you ignore requirements of the Italian law, as it will eventually catch up with you. Do not undertake any work without first checking whether you need to satisfy requirements such as planning and building permits.

You may also need to notify neighbours or others regarding your renovation plans. Your lawyer can advise you if property deeds contain restrictive covenants, leases or other overriding interests in the property and land.

What are the penalties if you don’t follow the Italian law?

You may think that you can obtain the required planning permission retrospectively. However this is not always possible. Even if you can make  a retrospective planning application, it may be rejected. Your illegal work could then  constitute a criminal offence. In this case, the Italian State may seize your property. Getting your property back will likely be a very lengthy and costly process.

If you fail to obtain the relevant approvals, you will have to prove compliance. This may mean undoing completed work.

Breaching a restrictive covenant or the terms of a lease can lead to a court injunction, you may have to pay fines or even have to undo your renovations.

Before you can start renovations, you will probably need to do some demolition.  As building materials need careful disposal, demolition work is a procedure that will also require authorisation.

Finally …

With over 55 years of experience as specialist property lawyers throughout Italy, we strongly recommend that you seek independent legal advice before purchasing any property in Italy. If you have already purchased a property but have run into trouble and would like to discuss your situation, please get in touch. We can help!

 

You may also be interested in Building a House in Italy: a short step by step guide and our Guide to Buying Property in Italy. We also have a number of info videos on the subject of how to buy Italian property safely.

Resident in Italy for tax purposes?

One or more of the following conditions makes you resident in Italy for tax purposes

According to the provisions of Article 2 (2) of the Italian tax code, Testo Unico delle Imposte sui Redditi (TUIR), if you spend more than 183 days per fiscal year in Italy, the Italian tax authorities will consider you resident in Italy for tax purposes.

If you meet one of the following conditions, you qualify as a resident for Italian tax purposes:

– you have registered at your local town hall’s (comune) registry office;

– you have your domicile in Italy, i.e. your principal centre of business, economic and social interests, e.g. your family, as defined by paragraph 1 of Art. 43 of the Civil Code;

– you have your residence in Italy, i.e. your habitual abode, as defined by the paragraph 2 of Art. 43 of the Civil Code.

The requirements indicated by TUIR are stand-alone: the occurrence of one of the above conditions is sufficient for the Italian tax authorities to consider you resident in Italy for tax purposes.

Registration at your local comune confirms your residence for tax purposes in Italy

If you spend more than 3 months in Italy you must register at your local comune.

Your registration with a comune presumes your residence in Italy for tax purposes.

At the end of your stay in Italy, you should de-register from your comune.

Double Taxation Agreements for residents of two countries

Double taxation agreements (DTA) protect a government’s rights to collect tax and protect against attempts to avoid or evade tax. DTA contain provisions for the exchange of information between national taxation authorities. There are more than 3,000 DTA world-wide.

If you can prove you are resident in two countries, you may have recourse to the application of Article 4 of the relevant DTA in order to resolve any conflict of dual residence for tax purposes. You can find more information about DTA here.

The onus is on the taxpayer to provide documented evidence of tax residence outside Italy

You will need to request a certificate of tax residence under the relevant DTA. It is also important to keep records such as travel documents and receipts. These help evidence how long you were physically present in Italy in any given fiscal year.

Finally …

For over 55 years, De Tullio Law Firm has been providing international clients with independent legal advice. If you need support with your Italian and cross border tax matters, we are here to help.

You may also be interested in Elective residence Visa Italy: general information

How to get a mortgage in Italy

Can foreign nationals get a mortgage in Italy even if they are not residents?

The short answer is yes. However, compared to foreign nationals resident in Italy, obtaining a mortgage in Italy is more complex for non-resident foreign nationals with an income from outside Italy.

There are fewer options when it comes to lenders who offer mortgages to non-residents in Italy, and receiving a negative response from lenders is not unusual.

It is crucial to follow the right procedures and seek advice from professionals. Providing a mortgage to non-resident foreign nationals differs from the domestic market. This is mainly because lenders put constraints on the level of mortgage borrowing. Usually, lenders will only offer mortgages of up to 60% of the property purchase price.

Lenders have to take a number of factors into consideration pursuant to the European Mortgage Credit Directive. These include the currency of your income and your age. Generally, the mortgagee should not exceed 75 – 78 years of age by the end of the mortgage term.

A lender will also take into account the level and the source of your income; whether you are self-employed or employed for example.

In addition, a lender will required proof of creditworthiness and that you have sufficient funds to make Italian mortgage instalment payments on top of any other mortgages and loans elsewhere.

What are the steps to getting a mortgage in Italy?

The first stage of the mortgage application procedure includes gathering documents. We would always recommend that you seek independent legal advice at this stage. Your lawyer will be able to advise you what documents you need, identify whether you qualify for a mortgage and how best to proceed with your application.

Usually, obtaining financial pre-approval from a mortgage lender takes 3 – 4 weeks in Italy. The second stage of the mortgage application involves due diligence requested by the lender. This will entail getting a legal report and a technical survey of the property you want to purchase. If technical and legal assessments are accepted by the lender, the mortgage application will progress to the lender’s final approval.

It is essential to highlight that the real estate you wish to buy with your mortgage must be habitable and in compliance with current Italian technical, energy performance and building regulations on the matter. In the event that finalising your Italian property purchase is contingent on obtaining a mortgage, it is vital that the property you wish to buy meets the stated requirements of habitability and technical regulations. You should also make sure that the preliminary contract reflects the fact that your purchase is subject to getting a mortgage.

Finally …

For over 55 years, De Tullio Law Firm has been providing international clients with independent legal advice. We offer services in all the major fields of Italian law with particular expertise in real estate and inheritance matters. Get in touch.

You may also like to watch our info videos on the subject of Italian property law.

Buying Property in Italy

The Italian property market

Dreaming of buying property in Italy? The country’s rich heritage, magnificent buildings, cities steeped in history and regions with landscapes are as sublime as they are varied. This territorial diversity and widely different prices per square metre of property make the Italian real estate market very interesting.

Property Prices

The average price per square metre for Italian property was around €2,300 at the end of 2019.

However, it was much lower in southern Italy. In Puglia for example, it is possible to buy a house for 1,300 €/m².

If you’re looking for a property in Florence or Venice, prices are much higher: expect to pay more than 5,000 €/m² for an apartment in Venice.

Fees and taxes

Before committing to the purchase of a property in Italy, it is essential to consider the inherent costs.

First of all, as a foreign national, you are more likely to use a real estate agent. Estate agent fees vary and can be as much as 4% of the selling price, i.e. €12,000 for a property worth €300,000.

In Italy, a notary public (Notaio) must oversee the transaction on behalf of the Italian state. The notary’s fees are also variable: allow for between 2% and 4%.

However, in Italy, the most important fees are the registration fees, which represent 9%, or €27,000 for a property worth €300.000. That said, these costs should be put into perspective, as the rate is based on the land registry (cadastral) value of the property, which is generally lower than the actual value.

As for property taxes, they vary between 0.46% and 1.06% per annum. Nonetheless, these are costs that should be anticipated before buying a property in Italy.

Buying property in Italy: the legal steps

It is crucial to clarify the situation before buying. Italian property law is complex and may differ from your own country. You should always seek independent legal advice before signing any paperwork.

Reservation Offer

Once you decide to purchase a property, you and the vendor will sign a reservation offer. This is an irrevocable letter of intent to purchase (proposta irrevocabile d’acquisto) and means the vendor agrees to remove the property from the market for a defined period of time – usually two weeks.

Due Diligence

While the property is off the market, you should conduct legal checks and searches into the property. This includes verifying property ownership, planning permits, zoning regulations and mortgages on the property. In addition, we would recommend that you have a property survey conducted.

Deposit

Following your due diligence if you decide to proceed with the purchase, you will have to pay a deposit. If the sale falls through, you will get your deposit back in full. If on the other hand you continue to completion, the deposit will form part of the agreed purchase price.

It is advisable to sign a preliminary contract (contratto preliminare di vendita), even though it is not a compulsory step in the process. Having a preliminary contract allows you to fix terms and conditions of the sale based on your due diligence.

Deed of Sale

Any conditions contained in the preliminary contract will be included in the deed of sale (atto di vendita), which you sign when you complete the transaction.

It should be noted that when one of the two parties does not understand Italian, a second draft of the deed in your language is required, but the Italian version of the deed will prevail in a court of law.

Finally …

For more comprehensive information about the Italian property purchasing process, you might like to read our guide. If you would like to discuss your situation or, if we can be of assistance, please get in touch.

1 Euro Houses in Italy

1 Euro houses in Italy: too good to be true?

In recent years, to combat dwindling populations in rural areas of Italy, a number of Italian villages, have been launching charm offensives by putting a number of houses up for sale for the symbolic sum of 1 Euro.

The aim of local municipalities is to attract Italian and foreign investors to revitalise their areas. Cinquefrondi in Calabria is the latest Italian town to launch 1 Euro houses in Italy for sale.

Although these 1 Euro property schemes seem attractive, it may be wiser to pass on them. The €1 schemes are widely advertised and, with so many people expressing interest in these homes, there are always more applications than homes available.

How do you buy 1 Euro houses in Italy?

Whereas other towns selling homes for 1 Euro have required a deposit of up to €5000 that buyers forfeit if they fail to renovate the house within three years, Cinquefrondi is requesting an annual €250 fee for an insurance policy, payable until renovation works are complete.

Located in the historical centre of Cinquefrondi, properties are roughly 40 – 50 square metres in size. New owners will be liable to a fine of €20,000 if they do not complete their renovation projects within three years.

1 Euro houses at auction

As with all 1 Euro house schemes around Italy, sales take place in public auction (vendita con incanto).

It’s impossible to tell what you are taking on just from looking at a few photos of a property.

In some countries house auctions are common. In Italy however, they are not. The vendor’s lawyer does not prepare a set of documentation known as a, “legal pack”. Legal packs contain essential information including official titles and searches, property information and planning permission are therefore not available. In effect, you are responsible for conducting property-related searches.

To avoid buying what seems like a bargain but subsequently turns out to be a money pit, it is advisable that you go and inspect the property before you decide to make a bid. Obviously, this may not be possible because of time constraints and it can become costly. As you may not speak fluent Italian or have the expertise to assess what you are bidding for, we would recommend that you seek independent legal advice and professional expertise in Italy to evaluate the property before you submit a bid.

1 Euro is just the opening bid for properties

In fact, usually properties end up costing at least €20.000 at auction. On top of this, there is the legal requirement to renovate within a specific time frame. These properties therefore often end up costing a minimum of €50.000.

There are plenty of other reasonably-priced houses in Italy without the terms and conditions attached to €1 property schemes. These properties may be a better option for you.

Finally…

If you are thinking of applying to buy a 1 euro house in Italy, or any other property in Italy, at De Tullio Law Firm, we can help you with everything from property checks and searches, to facilitating the transaction, liaising with construction companies, obtaining Italian residence and providing tax and inheritance advice.

 

You may also like to read: Homes for 1 Euro in Sambuca, Sicily (Italy). You may also find our info videos about buying property in Italy useful.

COVID Pandemic: What’s The Impact on The Italian Property Market?

COVID pandemic impact on the Italian property market

If you own property in Italy or you are planning to buy one, you may be wondering how the COVID-19 pandemic has impacted the real estate market in Italy.

Unfortunately, many people have lost their jobs or have had to halt professional activities during the pandemic. You might think that this will force property prices down so it would be a good time to invest in real estate in Italy.

Is that true?

Will the COVID pandemic negatively impact the Italian real estate market?

This is not an easy question to answer. Because Italian real estate agencies have only recently restarted their activities, it is too early to evaluate price fluctuations.

Generally speaking, no matter the cause of a crisis, properties sell at lower prices if owners need cash in the short term. However, if owners don’t need of cash, it is unlikely that they will sell at lower prices to achieve a quick sale.

How will COVID effect Italian house prices?

In order to understand the impact of COVID on Italian house prices, there is an important cultural aspect to consider. For Italians, investing in the property market and has always been seen as a secure investment. In any period of crisis, property safe havens become even more relevant.

In light of the above, it is hard to say how the pandemic will actually impact Italian property prices. It is difficult to predict whether property prices in Italy will drop or remain substantially the same.

What about pre-pandemic property contracts?

The scenario might be slightly different for property purchase negotiations started prior to the pandemic.

If you signed a contract to purchase an Italian property but the pandemic caused a delay in completion, it is unlikely that your situation has changed. Once it is possible, your transaction will complete according to the terms and conditions of your contract.

In other cases, you may be able to claim a force majeure applies due to the pandemic. It depends on the specific circumstances. For example, the exact fulfilment of the contract, payment timing, breach of contract claims, etc.

Finally …

If you would like more information about how to price an offer for an Italian property or, if you need advice on the impact of the pandemic on a property contract, please get in touch.

You may also like to read about force majeure clauses in property contracts. We also have a number of info videos about buying property in Italy that you might find useful.

Cura Italia Decree. March 2020

Wide-ranging central bank and government policies and stimulus packages are supporting the economy during the COVID pandemic. The Italian government has moved quickly to activate a fiscal package to support businesses and individuals through the crisis. The measures introduced in the “Cura Italia Decree” take a three pronged approach. Firstly, they aim to reinforce the health sector through these difficult times. Secondly, they help alleviate the impact of the COVID pandemic on business in general and thirdly they support daily life for individuals and families.

Below we summarise some of the measures included in the Cura Italia Decree.

Cura Italia Decree. Suspension of payments

VAT registered companies and professionals with their fiscal domicile, registered office or place of business in Italy, whose turnover did not exceed €2 million in the fiscal year preceding the entry into force of the Cura Italia Decree, are eligible to defer the following payments:

– VAT (balance due on the VAT return and payment due on February 2020)

– Withholding Tax on employee / similar  income

– Social Security Contributions

These payments are now due by 31/05/2020 either in full or they can be made in 5 equal instalments starting from May 2020. No interest or penalties are applicable.

Cura Italia Decree. Suspension of obligations due between 08/03/2020 – 31/05/2020

 

  Previous Due Date New Due Date
VAT Return 30/04/2020 30/06/2020
TR Form 30/04/2020 30/06/2020
Esterometro (Jan./Feb./ Mar.) 30/04/2020 30/06/2020
Intra Form 25 monthly taxpayer or quarterly 30/06/2020
SSP Form 30/04/2020 30/06/2020
EAS Form 31/03/2020 30/06/2020

Dates for Income tax returns have not been extended and must therefore be submitted on 30/11/2020 and 30/06/2020 respectively.

There have also been no changes to income tax payment deadlines. That is to say, based on the self-assessment system, payments are due in June (30/06/2020) and November (30/11/2020) respectively.

Regarding companies, the Cura Italia Decree provides an extension for approval of financial statements to 180 days from the end of the financial year. In addition it allows for a deferment of tax payments. Given travel restrictions, annual general meetings to approve financial statements can move online via for example, video-conferencing.

  Date Income tax payments
Approval within 120 days from end of 2019 30/04/2020 (regular) 30/06/2020 – 30/11/2020
Approval within 180 days from end of 2019 28/06/2020 31/07/2020 – 30/11/2020
Approval within 180 days from end of 2019 (maximum add 30 days) 28/07/2020 31/08/2020 – 30/11/2020

IMU (property tax), payment deadlines also remain as is: 16th June, 2020 and 16th December, 2020.

Cura Italia Decree: Suspension of payments due between 2/3/2020 – 30/04/2020 for hospitality and leisure sector

The government has extended payments by one month for companies in the tourism-hotel sector with reference to VAT, withholding tax, social security contributions. However, these tax liabilities must be paid in full by 31/05/2020 or in 5 instalments from that date.

Cura Italia Decree: Payments to Tax Collection Agency (Agenzia Riscossione)

The Cura Italia Decree provides for the suspension of tax payments due in the period between 08/03/2020 and 31/05/2020 arising from bills issued by Tax Collection Agencies.

In addition, a suspension also applies to notices issued by the Italian Customs Agency as well as injunctions and further collection notices issued by municipalities or local authorities.

Furthermore, a suspension also applies to payments of facilitated settlement of tax bills (Rottamazione-ter). Instalments due in February will now therefore be payable on 31/05/2020.

Other liabilities

Payments on debts to other collection agencies (Agenzia Riscossione) including for instance INPS and Italian Customs that are payable between 8/03/2020 – 31/05/2020 have been deferred until 30/06/2020. However, suspension of payments does not extend to payment reminder notices from the Italian tax authority (Agenzia delle Entrate).

Other measures

A tax credit of 60% on rent for commercial premises (cadastral category C/1) for March 2020.

Companies can activate lay-off procedures. The Cura Italia Decree includes provisions in order to support employers who are facing a reduction or suspension of activities due to the Covid-19 emergency. This means employers can use a simplified procedure to apply for ordinary social security funds (cassa integrazione) for employees who were already employed by 23 February 2020. This support lasts for a maximum of nine weeks and, in any case, no later than August 2020.

In consideration of the lockdown of several economic sectors in Italy, additional indemnity payments for registered VAT self-employed entrepreneurs or professionals who do not benefit from specific social security coverage have been agreed. Payments of Euro 600.00 per month in lieu of income. Although procedures have yet to be announced, the payment of this allowance will be borne by INPS.

Requests for a suspension of first home mortgage payments is to be made to the relevant credit institution.

Finally …

While this summary does not provide an exhaustive explanation of the contents of the Cura Italia Decree, it aims to provide a brief overview of the measures that the Government has adopted. Although details regarding the implementation of measures are pending, each of the measures has specific requirements that will be implemented by provisions issued on a ministerial and regional level. Get in touch for additional information.

You may also like to read about how the pandemic has impacted the Italian property market.

You may also like to watch our info videos.

Demolition order Italian Property. Voices of Experience

Voices of Experience: “I’m fighting a demolition order on my Italian Property”

Involved in an ongoing legal case to get a demolition order reversed, our client offers insights and advice on how to safely buy an Italian property.

If you are facing a similar situation and need help or if you have a story you would like to share, please get in touch with us. You might also be interested in reading our practical guides and checklists.

“They say hindsight is a wonderful thing. If I could turn back time and buy my Italian property all over again, I would do it completely differently. The following explains why. I hope that what I have learnt will help anyone thinking of buying a property in Italy”.

How to avoid a demolition order? Take care when buying property in Italy

The fact is that buying Italian property can be risky. A 2017 report by the Office for Italian Statistics (ISTAT), estimates that nationally, some 20% of Italian properties are illegal builds – more in the south of the country. On top of this, many legally built properties in Italy harbour significant liabilities that are not compliant with the law.

All this lies ready to catch out unwary purchasers, whose lives can become a nightmare. In the worst case, you could, like me, find yourself facing a demolition order and then find yourself investing a significant amount of money to fix problems. So, when buying property in Italy, you need to be very careful.

Back in 2005, I purchased a villa with a pool on the outskirts of a beautiful small town in southern Italy. It was love at first sight, the Italian dream. Admittedly, something of an impulse purchase. At the time, I asked the estate agent if there were any issues with the property and whether I needed to get some independent legal advice or a survey. He said not, so I didn’t. The sale went through very quickly and smoothly. I used the same notary as the vendor and estate agent and within weeks I was the proud owner of the villa.

A demolition order makes an Italian property unsellable

In 2015, I developed a few health issues. I decided to downsize and put my villa on the market.

Enquiries slowly trickled in and occasionally the estate agent brought potential buyers to have a look at the place. One couple, who really liked the property, hired a lawyer to check all the details. To my horror, they discovered that the property had no planning permission whatsoever. I had no idea that for a decade, I’d owned an illegally built property. Obviously, the couple’s lawyer warned them off buying the property.

At the time, I thought it must be some sort of mistake; an oversight at the local authority or a problem with the land registry. After all, how could the previous owners sell a property without planning permission? However, when I went to my local town hall to investigate, it transpired this was the case. Worse was to come.

To cut a long story short, after a protracted and very complex process, the whole situation eventually led to the local authority issuing a demolition order on my villa in 2018. I can’t tell you how many sleepless nights this has caused me.

I have a house that is unsellable and am having to spend thousands of Euros to get the demolition order reversed and remedy the situation so that I can at last sell up and move on with my life.

To buy property safely in Italy, exercise more caution than you would at home

Buying property in Italy can be safe. However, to buy a property that is both fully legally compliant and to make sure you aren’t taking on any legal liabilities, you need to exercise far greater care than you would at home.

Illegal buildings are not unusual in Italy. They are ticking time bombs potentially subject to a demolition order

There was a lack of a cohesive approach to building controls and regulations during the Italian building-boom of the 1970s and 80s. Local authorities, overwhelmed by the sheer volume of construction, were unable to check buildings properly.

Often illegal properties in the countryside started out as summer homes. They may be on land that has no zoning permission for buildings. The owners may have failed to get planning permission for the property when they built, extended or renovated it. In addition, the property may not comply with  building controls or building regulations. They may lack damp proofing, insulation and, often, any logical room distribution, let alone solid foundations.

Often an illegal Italian property doesn’t get demolished even though illegalities are blatantly obvious to local authorities.  There are many reasons for this including an erratic attitude to enforcing the law in Italy, local vested interests and even corruption. Illegal properties can be likened to a cash cow. Penalties, fines and demolition orders can suddenly be handed out, as and when a local authority needs money.

Because of illegal construction, many areas in the countryside have sprung up. These areas usually lack primary services such as mains electricity, water, sewage and telephone lines. They are prime candidates for infrastructure projects when local authorities decide to formalise these areas. Naturally, householders will bear the costs.

However, even in urban areas there are properties that should make you wary. Properties too close to a road or a beach or, in the case of apartment blocks, common areas that breach building regulations. Some villas may extend beyond their allowable habitable area. These type of problems are ticking time bombs.

Seek professional help when buying in Italy

Foreign nationals buying property in Italy can be incredibly naïve. Like me, many people do not use a lawyer to manage checks and conveyancing when buying an Italian property. Believe me, this can expose you to abuse or lead to the possible loss of your property or at least significant costs.

Estate Agents

Make sure your estate agent has a licence. Estate agents offer great support when it comes to looking for properties. However, they may not know everything about a property when it comes to any problems or liabilities. Plus they have a vested interest in selling the property. Their fees are contingent on selling so they don’t want a buyer to pull out of the purchase. When I bought my property in Italy, I asked the estate agent if I needed a lawyer. The estate agent told me I didn’t. Talk about innocents abroad! Start with the premise that the property you are looking at has a problem.

Get a lawyer

Appoint a lawyer before you even start to look at any property. And, choose your own lawyer rather than one your estate agent or the vendor recommends. Make sure that your lawyer understands property law, speaks your language, is registered with the Italian Law Association and has insurance.

Make sure your lawyer provides a written due diligence report and checks who owns the property and that there aren’t any debts such as mortgages on the property.

The report should also include all the details of the property and surrounding area. Land registry details should match property deeds.

Have a survey done

Is the structure sound? Do property boundaries in the land registry match those you can see from walls and fences? A qualified surveyor can confirm all this as well as checking whether there are any alterations to the property including out buildings.

Always get a check on the exact description of the property (existing bathrooms, bedrooms, kitchen(s), sitting rooms, conservatories, garages, out buildings, pool etc.) with your lawyer before signing any contract. To ensure there’s no illegal building work, it’s essential that all the details match the land registry.

If in doubt, don’t!

Don’t hurry and never sign anything without your lawyer’s approval.  Remember it is always better to lose out on a property rather than buy something illegal that risks risks fines or demolition.

Of course, the above does not include everything that you should do. The more information you gather, the easier it will be to make an informed decision as to whether or not to buy a property.

If you follow the guidelines above, I hope you will avoid all the costly worries I am currently experiencing. Be careless or too credulous and sadly, your Italian dream could turn into a nightmare some time down the line.

Finally …

De Tullio Law Firm specialises in cross-border property and inheritance matters throughout Italy. If you are buying an Italian property and need advice or support or, if you would like to discuss a matter with us, we are here to help. Get in touch.

 

You may also be interested in Changing layout of internal spaces does not require building permission

Italian Properties for €1. First City To Offer The Scheme

€1 properties in Taranto, Puglia

Following the success of Italian hill-towns and villages, Taranto is now offering €1 properties for sale.

Taranto, a city that sits on an island between a lagoon and the open sea in the region of Puglia is offering to sell some of its abandoned palazzi through a €1 scheme.

Taranto’s city council plans to start by offering five properties for sale, with the hope that if the scheme is a success, the project will expand.

The hope is to breathe new life into Taranto’s run down but picturesque old town by attracting investment which will develop the historic centre of Taranto.

€1 is the opening bid at auction

As with all 1 Euro house schemes around Italy, sales take place in public auction (vendita con incanto).

In Italy auctions are not common. There are no legal packs, which contain essential information including property titles and searches. Detailed property information and planning permission are therefore not available. Because you cannot tell anything about the background to a property just from looking at photos, you are responsible for conducting property-related searches.

To avoid buying what seems like a bargain but subsequently turns out to be a money pit, it is advisable that you go and inspect the property and check the local land registry. before you decide to make a bid. Obviously, this may not be possible because of time constraints and it can become costly. As you may not speak fluent Italian or have the expertise to assess what you are bidding for, we would recommend that you seek independent legal advice and professional expertise in Italy to evaluate the property before you submit a bid.

Terms and conditions apply to all Italian €1 property schemes

In fact, properties for €1 usually cost at least €20.000 at auction. On top of this, there is the legal requirement to renovate within a specific time frame. Italian properties for €1 schemes therefore generally end up costing at least €50.000.

In the case of Taranto, owners will be expected to foot the bill of restoring the properties. This could run to many of thousands of euros. Owners will have to present a restoration plan within two months of acquiring the building. In addition, owners will have to occupy the properties. The latter is a condition to stop speculators renovating and selling on these properties.

Finally …

There are plenty of other reasonably-priced houses in Italy without the terms and conditions attached to €1 property schemes. These properties may be a better option for you.

If you are interested in buying Italian properties for €1 or any other type of property in Italy, we recommend you seek independent legal advice before making committing yourself. We are here to help, please get in touch.

 

You may also be interested in reading more about 1 euro houses in Italy.

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Real Estate in Italy: Reservation Offer

Real estate contract law in Italy

If you are considering buying real estate in Italy, Italian civil code in art. 1470 governs sales and purchase contracts for Italian real estate.

A contract is a consensual transactional instrument through which one party (the vendor) transfers the ownership, or a right, to an assets to another party (the buyer).

Contractually therefore, a buyer is under obligation to pay the agreed fee to the vendor for an asset or right.

Acceptance of a reservation offer for real estate in Italy

If you are not familiar with the legal and financial implications of the three-step property purchase process in Italy, you may wish to read our guide to buying property in Italy.

The first step to purchasing a property in Italy is a reservation offer

In effect, when buyers find an Italian property they like, they make a written offer on the property. Amongst other things, the reservation offer identifies the property in question and makes a price offer.

For the offer to be valid, first a vendor must accept the reservation offer in writing. This acceptance must then reach the potential buyer within a time frame stipulated in the reservation offer.

Contractual obligations of a reservation offer

Until written acceptance of a reservation offer reaches potential buyers, no contractual obligation exists between the parties. In other words, the reservation offer is revocable.

However, buyers may stipulate they wish to keep their reservation offer firm for a specified amount of time. If a vendor accepts the time frame, it means the vendor has an obligation to remove the property from the market. Because the vendor will not be able to market the property for the duration, the offer is known as, an irrevocable reservation offer.

Italian real estate agents: roles and fees

As in other countries, vendors in Italy often put their property in the hands of a real estate agency. The role of Italian real estate agents is to market the property to potential buyers. When a potential buyer makes an offer for a property, the real estate agent passes the offer on to the vendor. The estate agent does this through a reservation offer.

At this point, vendor and buyer are usually looking to move towards the second stage of the Italian purchasing process. This is where both parties sign a preliminary contract. If the vendor does not progress the sale to a preliminary contract stage, the reservation offer elapses and neither party has any obligation towards each other.

At the reservation offer stage, another aspect to consider is the estate agency commission. It is always worth asking if a real estate agent’s fees are negotiable. Generally however, commission ranges from 3% to 8% of the property sale price. Some agencies work on a fixed fee. To put that another way, fees are based on a percentage of the total sale price.

A reservation offer may not end in a sale

Between the reservation offer and signing a preliminary contract, buyers should carry out property checks and searches (due diligence). This may highlight problems or irregularities related to the property. These issues may subsequently lead to buyers withdrawing their offer.

The acceptance of a reservation offer between the seller and buyer is not therefore a guarantee it will end in a sale.

You should therefore be wary if the estate agency requests their commission at this stage.

At what stage should you pay Italian estate agency commission?

To clarify when exactly estate agents should receive their commission, a 2010 Supreme Court case is pertinent. In order for a real estate agent to be entitled to their fee, it is not sufficient that a broker merely puts vendors and buyers in contact. It is not enough to hope that the transaction concludes successfully.

In other words, commission is only payable to a real estate agent once a preliminary contract is in place between the vendor and buyer.

Difficulties linked to successful completion of a real estate transaction arise because there are so many pitfalls between the reservation offer and preliminary contract.

Contractual risks of real estate in Italy

To avoid risks, it is wise to seek independent legal advice before you sign any paperwork relating to buying property in Italy. To avoid any conflicts of interest, make sure you choose your own lawyer rather than a lawyer recommended by an estate agent or a vendor.

Your lawyer will guide you step by step through the intricacies of the Italian property purchase process.

Finally …

De Tullio Law Firm is an Italian Inheritance and Real Estate Law Firm present throughout Italy. We specialise in cross-border residential and commercial property transactions and inheritance matters in Italy. Should you need any further clarification concerning this or other property-related topics, De Tullio Law Firm will be happy to help. Get in touch with us at: info@detulliolawfirm.com.

You may also be interested in Insider Tips for Buying A Property in Italy. You may also like to watch our info videos.