Tag Archive for: Italian Solicitor

Italian Property Survey – Need One Or Not?

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Should you have a survey before you buy property in Italy?

Because for most people buying a property is a major expense, not commissioning an Italian property survey is a false economy.

A surveyor, “geometra”, will provide you with invaluable information and support during the property purchasing process. This information will help save you money both prior to and after completion.

Buyer beware!

In Italy, property is purchased under the principle of ‘caveat emptor’ or ‘buyer beware’. In other words, the onus is on the buyer to ensure that there are no issues with the property. This includes land purchases.

If you purchase an Italian property and subsequently discover a problem, it is always time-consuming, frustrating and costly to resolve.

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Amongst other things, an Italian property survey will reveal hidden defects, illegally built structures, planning and zoning issues. In addition, a geometra will highlight any areas of the property that require repair or maintenance. It is important to be aware of all these issues. After completion, you will have to pay to rectify any defects. You may even have to take legal action through the Italian courts to get a refund from the vendors.

An Italian property survey can save thousands of Euros

It is important to make sure you are not overpaying for your Italian property. A common misconception is that the vendor’s or estate agent’s valuation is based on Italian property market prices. Obtaining a valuation as part your survey will give you the true value of a property. The valuation will take into consideration any defects uncovered and repairs needed. This will ensure you pay a fair price for your property. A survey can therefore save thousands of Euros.

The importance of an Italian property survey

The support of a surveyor during the home buying process is invaluable, but it can also be extremely useful after completion. Depending on the type of survey you commission, the report will give detailed information about parts of the property that may require attention in the future thus allowing you to budget those costs going forward. In addition, a surveyor can give you preliminary advice on any plans you may have to extend or alter the property in the future.

Finally …

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.

We can guide you through the whole purchasing process or organise the whole process, including an Italian property survey, on your behalf. Get in touch with us.

If you would like further information about buying an Italian property, you may find our buying in Italy guide useful.

 

The Italian Rent to Buy Scheme. Information And FAQ

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Introducing the Italian rent to buy scheme

In September 2014, the Italian parliament introduced measures to revitalise the property real estate sector. Measures include an Italian rent to buy scheme as part of the Sblocca Italia – Unlock Italy – decree (Article 23 of Legislative Decree 133/2014).

The Italian rent to buy scheme has two main aims. Firstly to help people purchase a property and secondly to support builders and developers sell property stock.

The Italian rent to buy scheme is similar to the UK model

It allows a promissory purchaser to immediately start living in a property as a tenant and provides the option to purchase the property at a later date.

As a tenant, the promissory purchaser pays a regular rent. In effect, this postpones the purchase of the property until a specified future date. Purchase should take place no more than 10 years from the start of the rent to buy contract. Rental payments reduce the overall property price.

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Decree 133/2014 addresses and resolves problems that stemmed from the lack of specific legislation in this domain. Notably, the decree provides for the legal transcription of a rent to buy contract in the land registry for the duration of the contract.

Essentially, the land registry transcription counts as a full and proper reservation of the purchase of the property. Consequently, the owner of the property cannot sell it to anyone else for the duration of the contract.

No mortgages or easements or any other prejudicial rights can be held on the property. Creditors of the property owner / vendor will neither be able to register a mortgage on the property, nor foreclose on it.

As soon as a rent to buy contract is in the land registry, this guarantees that the property is reserved for the promissory purchaser. Any other transcription or registration will be unenforceable against it.

Frequently asked questions about the Italian rent to buy scheme

What is a rent to buy contract?

The contract combines a rental contract and a preliminary contract of sale for a specific property. This means that from the outset of the contract, the owner/vendor gives the promissory purchaser the right to buy the property. The promissory purchaser is able to live, as a tenant, in the property and pays a regular rent. After a contractually agreed period of time, but not more than 10 years, the promissory purchaser may decide to buy the property. The owner must deduct rent paid during the term of the rent to buy contract.

Example: Consider the sale of a villa for €100,000. The monthly rent is €1,000 per calendar month. A part of this rental payment, €500, is the rent payment for living in the property, as if it were a normal rent. The remaining €500, counts toward the purchase of the property. In effect, this portion of the monthly rent constitutes a down payment on the sales price.  If the term of the rent to buy contract is 5 years and at that point, the promissory purchaser decides to buy the property, rather than pay €100,000, the promissory purchaser pays the outstanding EUR 70,000. This is because €30,000 has already been paid as part of the rent to buy scheme.

Is the promissory purchaser obliged to buy the property at the end of the rent to buy contract?

The law provides for an option to buy the property. However, there is no obligation. Obviously the parties may agree that the tenant must purchase, but that contract would not be subject to rent to buy legislation. It is merely a private arrangement.

How long does a rent to buy contract last?

The parties to the rent to buy contract establish the period within which the tenant may decide to buy the property. According to legislation,  this must be within 10 years from the start of the rent to buy contract.

What are the benefits of a rent to buy contract for property vendors?

The main advantage is the ability to find a larger number of potential buyers.

What are the risks of a rent to buy contract for property vendors?

There are a couple of risks. Firstly, a tenant may decide not to buy the property. In this case, however, the owner can retain part or all of the rent payments. These should be a sum greater than a normal rental income.

The other risk is that the tenant doesn’t abide by contractual terms, becomes insolvent or causes significant damage to the property. This may mean the property owner has to go to court to evict the promissory purchaser, regain possession of the and free the property from contractual obligations in order to sell it to others.

What does an eviction order entail in terms of time and cost?

The procedure is not strictly-speaking an eviction, but the release of a property. Generally, this is a much shorter and less costly process. Just how long the release of a property takes very much depends on individual courts.

In order to use a property release procedure, the rent to buy contract must contain legally compliant and watertight clauses. You should always seek independent legal advice in structuring the entire rent to buy contract. It is crucial to ensure that you cover everything.

Are there any measures in place to safeguard the owner /vendor?

It is imperative that the rent payments are higher than a normal rent contract. In the event that the sale does not conclude, the retainer payment that the property owner retains serves as compensation.

Commitment to retainer conditions also serves as an indication of the promissory purchaser’s commitment to conclude the transaction at term.

What protection does rent to buy provide for promissory purchasers?

The law provides for the transcription of an Italian rent to buy contract in the land registry. In the same way a deed of sale is managed. A notary – an official of the Italian State –  must oversee the rent to buy contractual process. The contract must be legally compliant. The transcription in the land registry guarantees that the promissory purchaser has agreed to buy a property free of mortgages, liens, foreclosures, or any other detrimental matters, which might arise following the transcription of the rent to buy contract. The land registry transcription is valid for a maximum term of 10 years.

This protection holds even if the property vendor / owner is declared bankrupt during the term of the rent to buy contract.

What type of property can be included in rent to buy contracts?

Rent to buy contracts are valid for any type of property. This includes apartments, houses, farms, garages, vineyards, shops, offices, factories, land.

Are rent to buy contracts also applicable to buildings under construction?

Yes. Rent to buy contracts are applicable to buildings under construction. For contractual purposes, any pre-existing mortgage on the construction must be repaid. If after careful consideration and having taken independent advice, the promissory purchaser wishes to assume a pre-existing mortgage, it is however possible to provide a clause to that effect.

For building and development companies, rent to buy contracts can represent an interesting way to finance mortgage payments for property construction.

Regarding rent to buy contracts for buildings under construction, does the promissory purchaser lose money if the builder or developer goes into administration?

No. The buy to rent contract continues even if the property vendor / owner is declared bankrupt. So long as there is a price agreement in the rent to buy contract and the property is the main residence of the promissory purchaser or close relatives, the owner / vendor’s insolvency will not impact the sale.

Can the promissory purchaser confer a power of attorney to sign the rent to buy contract?

Yes. Legislation provides the right to confer a power of attorney on a third party to sign the rent to buy contract, and the final deed of sale, where applicable, on the promissory purchaser’s behalf.

You should be extremely careful about who you chose for your power of attorney. You are delegating the management of your legal and financial affairs to someone else. Hence, it is extremely important that you entrust these matters to a reliable and competent person, preferably a professional. Appointing anyone who does not have enough experience or who has a vested interest is highly inadvisable.

What taxes are applicable with a rent to buy contract?

Tax depends on whether the owner / vendor of the property is a private individual or a company. Direct tax is chargeable to the owner / vendor and indirect tax is levied on the promissory purchaser.

As a rule of thumb, for the duration of the rent to buy contract, as with any Italain rent contract, tax related to the property ownership is borne by the vendor / owner.

The promissory purchaser pays costs pertaining to the transcription of the contract in the land registry. And, where applicable, the promissory purchaser is liable for any subsequent costs, expenses and tax liabilities and/or costs associated with completion of the property sale.

For tax calculation purposes, each rent to buy contract requires case by case assessment regarding advantages and/or disadvantages. This is another reason to involve an independent professional from the outset when considering a rent to buy scheme in Italy.

Finally …

If you do not find your question relating to the Italian rent to buy scheme here, please contact us and we will be happy to answer it for you.

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.

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.

Self-Build Projects in Italy

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Dreaming of building your own place in Italy?

In pursuit of their Italian dream home, some people decide on self-build projects in Italy.

If you are thinking of building a house in Italy, we would always advise you to seek independent legal advice before signing any paperwork to do with a land-purchase.

Even, if on paper, it looks as if the land you are contemplating buying has outline planning permission, actually getting a building project off the ground in Italy is extremely complex.

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Italian self-build projects are complex. They need a team

Self-builders will need to navigate a maze of red tape. Zoning and planning laws, environmental restrictions, building permits and regulations – to list but a few.

Self-build projects in Italy really do require the help of a specialist team including an architect, surveyor, lawyer and a notary.

All-too-often, those who go it alone run in to trouble. This jeopardises or ends their self-build dream. Unfortunately, without a team, self-builders often don’t obtain all the relevant permits. This and spiralling costs, may mean that the project never gets off the ground.

Living on site during Italian self-build projects

When self-build projects in Italy do go ahead, living on-site whilst building the property is something many wish to do. Obviously there are advantages such as saving on travel time, being able to keep a close eye on progress and security.

We are often asked by self-builders if they can site a mobile home, RV, or caravan on their land without obtaining planning permission. Essentially this will depend on the designation of the land in question. Self-builders should ascertain this from local authority urban and rural plans (Piano Regolatore). Siting and installation of accommodation on land will also play a role.

Temporary accommodation

The Italian “Building Legislation and Regulation Consolidation Act” (Testo Unico dell’Edilizia) does not permit ground anchor systems for mobile homes, RVs and caravans without a construction permit. In other words, a ground anchoring system on mobile accommodation would legally classify the accommodation as a, “new building”.

However, according to the Decreto Casa, anchor systems are permissible where a temporary installation is within a proper outdoor accommodation setting, such as a camping site.

Anchoring must be temporary. It cannot be seasonal, which would imply a long, possibly permanent stay. The mobile accommodation would therefore contravene the requirements of temporariness. Also, connecting the mobile accommodation to utilities  (power, water, gas etc.) implies the intention of extended or permanent use.

A construction permit with regard to mobile homes, RVs and caravans, is not necessary if the mobile home is on wheels. It must have a roadworthiness  certificate and motor insurance. Installation of accommodation on a mobile support, such as a trailer, unsuitable for road transport is not permitted. The mobile accommodation must fulfil the requirements of temporariness. It must be immediately movable. This means it must be roadworthy so the owner can move it elsewhere. Anchoring is therefore prohibited. The mobile accommodation must also be autonomous in terms of utilities. This means it must have its own water, toilet and electricity.

Permanent accommodation

If the mobile home, RV or caravan is for permanent use, such as residential use during a self-build project, self-builders will require a construction permit.

Under Italian law:

“the siting and installation of accommodation during the building phase of a project does not constitute temporary status. If the accommodation has power, water and gas connections this implies long-term residence. In addition, the same principle applies to anchoring with removable devices to ensure the stability of the mobile home, RV or caravan”.

A construction permit is also necessary even if the structure is not for residential use. For example, if a self- builder uses the mobile home to store building materials or as a site-office during self-build projects. In fact, if there is evidence of regular and long-term use by the owner, the installation will be considered as permanent.

Finally …

Buying any type of property in Italy is a serious investment and often the fulfilment of a dream. Italy real estate, planning and construction laws are complex. We recommend you engage the right team of advisors in place to make your experience successful.

At De Tullio Law Firm, we have over 55 years of expertise managing cross border property law matters throughout Italy.

If you are contemplating a self-build project in Italy and you need any advice, guidance or support, please contact us. We are here to help.

Resident or Domiciled in Italy for tax purposes?

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Are you resident or domiciled in Italy?

In this article, we compare being resident or domiciled in Italy and explore the tax implications.

According to Italian tax law, individual tax residency is pursuant to tests. An individual may find themselves tax resident although they only have relatively minor contacts with Italy. This might be property ownership, frequent visits to the country, or business interests in Italy.

If the Italian tax authorities determine that an individual is tax resident in Italy, the taxpayer is subject to worldwide taxation in Italy.

Tax would therefore be applicable for both income and estate tax purposes. It would include an obligation to report all assets wherever they are in the world. In addition to financial assets and accounts, it requires an individual to report all non-financial assets such as, cars, houses, planes, artworks.

Non-Italian nationals with interests in Italy should pay particular attention to these matters to avoid becoming an unintended Italian tax resident. Because this is a complex topic and, each case is different, we recommend that you seek advice and guidance from your lawyer and accountant.

Applicable tax laws determine whether an individual is resident or domiciled in Italy

Domicile

Domicile is generally determined by an individual’s intention to permanently or indefinitely reside in Italy. Often, an individual will physically have a presence in the country. Domicile is a legal concept. Its rules have been established by way of case law rather than a statutory definition. There are three types of domicile.

Domicile of Origin

This is usually acquired from an individual’s parents.

Elected Domicile

By actually residing in Italy, the individual demonstrates the intention of remaining permanently or indefinitely in Italy. In this way, an individual may acquire an elected domicile – also known as a domicile of choice. Where an individual later gives up elected domicile, domicile of origin is automatically re-acquired.

Domicile of Dependency

This is the domicile a minor holds. When the minor reaches 18 they then acquire elected domicile.

Residence

Domicile takes into account subjective elements of an individual’s intentions. The country where an individual habitually lives determines residence.

The EU test for habitual residence is based on an individual’s interests rather than by a particular duration of residence. In 2014, the European Commission published a practical guide on the Habitual Residence Test.

Fiscal implications

Under Italian tax law, three alternative tests determine an individual’s tax liability in Italy. The tests are registration, residence and domicile. If an individual meets one of the three tests for more than 183 calendar days per annum, this triggers an Italian tax liability.

Registration test

This is a straightforward test. If an individual has registered as a resident with their local municipal office – in the comune where the individual’s residential address is located, they are liable to pay tax in Italy.

Residence test

The residence test comprises two components.

The first component looks at whether physical presence in Italy is regular and continuous, as opposed to sporadic and occasional. If an individual spends time both in Italy and another country, periods of presence outside of Italy are compared with the periods of presence in Italy. This ascertains where presence is prevalent for tax purposes.

The second component of the residence test is more subjective. It is based on an individual’s intention to stay and live in Italy for the foreseeable future. A variety of aspects will determine an individual’s intention to live in Italy on a regular basis. In order to determine intentions, authorities will look at an individual’s conduct, social and personal habits. Authorities will also consider working relationships, family relationships, business and personal activities.

Italian tax liabilities arise if an individual’s physical presence in Italy is prevalent compared to an individual’s presence outside of Italy. For example, a regular and continuous presence in Italy is deemed to exist even if an individual travels abroad on a frequent basis. In other words, if an individual is away from Italy for extended periods of time but then returns as soon as possible. This would denote that an individual maintains Italy as the principal centre of their social and family relations.

Domicile Test

This third test aims to define the place where an individual has their principal centre of interests for business and or social reasons. In this context, ‘interests’ include personal, social, moral, familiar, economic, professional and business interests and relationships.

The domicile test revolves around an individual’s intention to establish and maintain their main centre of relations and interests in Italy.

There are tax implications based on the nature, extent and quality of the connections between an individual and Italy, compared with an individual’s connections with any other country.  As a result, an individual who primarily lives abroad but, maintains their principal centre of interests in Italy satisfies the domicile test.

The domicile test therefore requires careful and comparative evaluation to balance all the facts related to business or personal relationships and connections with Italy.

Case Law regarding the legal concept of domicile

In 2011, the Italian Supreme Court referred to a 1991 decision of the European Court of Justice relating to a non-tax matter. The Italian Supreme Court concluded that, in the case of multiple relations and ties with different countries, where the location of the principal centre of an individual’s interest cannot easily be determined, a prevalent consideration should be given to the relations of a personal nature.

However, more recent decisions suggest that extensive economic interest may outweigh personal connections in establishing an individual’s domicile. Thus, an individual may still be liable to pay tax in Italy.

In a ruling in April 2012, the Italian Supreme Court held that a tennis player living in Monaco qualified for tax residency in Italy. This, despite the family proving that they lived in Monaco. They provided proof through children’s school attendance records, household utility bills, membership of local clubs. The ruling took into consideration the fact that the tennis player maintained significant interests and management positions at several family-owned Italian companies. The individual mainly managed these matters from Italy.

In this case, residence identified the taxpayer’s habitual and regular place of living, while domicile identified the taxpayer’s main center of personal, financial and business interests.

Resident or domiciled. Tax guidance

The Italian tax authorities have issued specific guidance on determining whether individuals are resident or domiciled in Italy. Circular n. 304/E of December 2, 1997. Circular 304 provides instructions for the tax agency’s control and audit activities, which should include the collection and review of the following.

– All information contained in the tax agency data base system.

– Copies of all public documents relating to purchases. This includes real estate, gifts, formation of companies and entities, capital contributions to companies and entities.

– All information on transfers of money from or to foreign countries.

– Information regarding the taxpayer’s family relations in Italy.

– The taxpayer’s economic interests in Italy.

– Information about taxpayer’s intention to remain and live permanently in Italy.

Finally …

De Tullio Law Firm specialises in Italian and international property law. We have over 55 years of helping overseas nationals obtain Italian residence. If you need help or would like to discuss your situation, please get in touch with us.

 

You may like to read How to get a mortgage in Italy

Parental Rights in Italy – Italian Family Law

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In Italy, children have the right to a personal relationship with both parents

It is important to understand parental rights in Italy for those living or moving to the country. That way, if you have children, you can be in the best position to make decisions for the future.

All EU countries recognise that children have the right to a personal relationship and direct contact with both parents. This also applies if the parents live in different countries.

What about parental rights in Italy in the event of divorce or separation?

It is important to determine whether the children will live exclusively with one parent or alternate between parents.

If both parents live in Italy but are unable to reach an agreement, you may have to take the matter to court. A judge will then decide on living arrangements and parental rights. The court’s decision will consider the child’s best interests and determine your custody rights. It will also decide where the child resides.

In situations involving more than one country where, for example the parents live in different countries, the courts responsible for handling cases of parental rights are those in the country where the child is habitually resident. You can agree with your spouse that the court ruling on your divorce should also rule on parental rights.

Where the child has more than one nationality, the law of the country with which the child has the closest connection applies. Under section 19 of of Act No 1995/218, if the child has more than one nationality and one of these nationalities is Italian, the Italian nationality takes precedence. It is the nationality of the child at the point the case goes to court that decides this.

Parental rights in Italy: 3 types of child custody

1. Exclusive custody – one parent has sole custody and makes all day-to-day parenting decisions. The other parent has limited responsibilities.

2. Joint custody – gives both parents equal parental responsibilities and custody. However, in the interests of the child or children, they are likely to live predominately with one parent. In theory, this approach is the best for a child as they have access to both parents.

3. Alternating custody – means both parents can exercise their parental responsibilities within predetermined custodial time periods given. (This form of custody is rare).

Cases where the judge grants exclusive custody to one of the parents have become rare in Italy. Sole custody would require proof that it would be in the best interests of the child.  However, even in cases of sole custody, both parents will need to consult on major decisions relating to the child. Moreover, in cases where joint custody is applicable to disputing parents, visiting arrangements and a timetable will be established. Similar to exclusive custody cases, these arrangements give the parent that does not reside with the child or children limited access rights.

Marriage and registered civil partnerships

in order to determine parental rights in Italy, married or registered couples, will have been legally separated for six months and must have filed for divorce. They will need to go to court regarding both their divorce settlement and arrangements for their child or children. Following divorce, the child will live according to care arrangements determined by the court.

Unmarried couples and partners

In the case of unmarried couples, or estranged married couples, there is no requirement to go to court. Parents can simply agree between themselves on parental responsibilities and living arrangements. However, we strongly recommend seeking legal advice to formalise and record arrangements. Within the EU, a married father has the same rights as the mother. Where a couple cannot agree arrangements between themselves, the court in the child’s country of habitual residence determines parental rights and responsibilities.

In theory, both parents have equal parental rights and responsibilities for their child or children. In practice, however, where there is no legitimate reason otherwise, the mother’s home is more likely to be the main residence of the child.

Same-sex couples

On the subject of same-sex couples, a 2013 Italian Supreme Court decision (601) granted sole custody of a child from an earlier marriage to a mother living with another woman. The court declared that, “there is no scientific certainty proving that a minor cannot grow up in a balanced way within a same sex couple”. 

Parental rights in Italy in adoption cases

The Italian law has always stipulated that a couple must be married in order to adopt a child. Italian law 184/1983 governs adoption and foster care. The law, in principle, only permits married couples, who must be of the opposite sex, to adopt. According to the law, there are no restrictions on foster care. In a limited number of situations, the law provides for adoption in certain cases by a single person. In addition, some courts have interpreted this to include the possibility of unmarried couples adopting a stepchild.

From an inheritance point of view, no distinction is made between legitimate, natural and adopted children – all have equal rights.

Finally …

If you would like to discuss your personal situation, you can reach us here for a free consultation.

 

You may also be interested in Italian divorce law and EU regulations.

You may also like our info videos.

Buying Italian Property at Auction

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In some parts of the world, buying property at auction is routine

Buying Italian property at auction, however, is not quite so straightforward.

There are two types of auction in Italy. Vendita con incanto and vendita senza incanto. In both types of auctions, the  actioneer sets the minimum sale before the auction.

Vendita con incanto 

These auctions happen publicly and openly. The highest bidder buys the property on the condition that the bid is at or higher than the reserve price.

Vendita senza incanto

Prior to a vendita senza incanto auction, participants must submit their bids by a certain date – in sealed envelopes. Sealed bids cannot be under the reserve price for a property.

In Italy a voluntary property sale by auction is highly unusual

Unlike in the UK or USA, where voluntarily selling property by auction can be an attractive way to fetch a good sale price, in Italy a voluntary sale by auction is rare.

Generally in Italy, people sell property at auction for two reasons. Firstly, the owner declares bankruptcy and has to sell off the property to pay creditors. This type of auction is an asta fallimentare.

The second reason for an auction in Italy happens through a court order. This is an asta giudiziaria. The property is seized or sequestered by the Italian State. This happens because the owner is part of a criminal prosecution or because the State has decided to raise funds to pay off the owner’s outstanding taxes, debts and/or mortgage payments, or it could even be that the courts order the auction to resolve an inheritance dispute.

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Buying Italian property at auction requires a cautious approach

If you are considering buying an Italian property at auction, you need to take even greater care than buying property through conventional channels such as through a real estate agency or from a private vendor. 

While the owner of a seized property cannot participate in an auction, someone the owner knows can. It is not unheard of for a relative, friend or associate of the previous owner to participate in an auction.

Participation in an Italian property auction involves registering to participate, which means amongst other things that you must have an Italian tax code, codice fiscale, and you need to obtain a receipt proving that you have paid a 10% deposit on the estimated value, or starting bid price of the property that interests you. You can also elect a third party to bid for the property on your behalf. This requires giving your nominated party a limited power of attorney, procura speciale.

Top 10 tips for buying Italian property at auction


1. Bargain?

Don’t take it for granted that you are getting a bargain at an Italian property auction. Even if you purchase a property at a much lower price than its market value, it may not necessarily turn out to be a good deal. You may be better off buying a property another way.

2. Timing

Assess the timing. Consider how urgently you want to move into the property. The amount of time required to actually obtain a property at auction is not always predictable.

3. Paperwork

Read all the available documentation very, very carefully. Then read it all again. It is critically important to conduct in-depth due diligence. Study and investigate the notice of sale, the survey report, estimates, plans and maps, photographs and all the documents published on the relevant web site at least 45 days before the auction. Individual courts advertise Italian properties for sale by asta giudiziaria on their websites. www.astagiudiziaria.com is a portal providing access to judicial auction sales across Italy.

4. Due diligence

You should engage your own lawyer to put together a legal package. Make sure you understand the implications of the property’s legal status. The onus is on the bidder to obtain legal paperwork. It should specify, amongst other things, titles, covenants, liens, debts and charges attached to the property. All these legalities will become the responsibility of the purchaser.

5. View before you bid

As part of your due diligence, visiting the property is absolutely vital. View the property before the auction with a court appointed official. You should take your own professional team with you – a lawyer, a surveyor, a builder. There are likely to be issues not in the aforementioned sales and legal packs – aspects such as, environmental, zoning and planning permissions. And, do ask about anything that concerns you. If your bid is successful, you will be held legally responsible for everything.

Also, bear in mind that quite a lot of time may have elapsed between the property documentation being prepared and your visit so, the property when you visit, may have deteriorated and conditions could be worse or zoning laws might have changed. This means that the situation described in the property packs may no longer be relevant.

6. Budget

Set yourself an auction budget and stick to it. Prior to the property auction, decide the absolute upper limit of the sum you are willing to spend on the purchase. Participating in an auction requires calm rationality. Prior to tackling your auction purchase, perhaps attend a couple of other Italian auctions to understand how they work.

7. Associated costs

Always ascertain auction and additional costs before participating. Find out exactly how much you should budget on top of the property purchase price. Costs might include, registration tax or VAT charges pending, any professional fees for the title transfer.

8. Payment

Payment methods require attention. How are you planning to pay? You will have already paid a 10% deposit to participate in the property auction. You will need to be able to access the remaining funds quickly if your bid is successful, generally between 10 – 60 days of purchase.

If you need a mortgage, you will need to have a promissory note from your provider in place in advance of the auction. 

9. Tax

Take tax in to account. There may be tax benefits available to you on the purchase of a property at auction. Normally,  property transfer tax is due on top of the property purchase price. However, the rule on “price-value” does not apply to property purchased through court enforced procedures and bankruptcy. If you want to take advantage of any available tax benefits, you must express this ahead of the property auction. You must be ready to put everything in place by the end of the auction if your bid is successful.

10. After the auction

A purchase transfer signed by a judge is enforceable and allows the immediate release of the property. However, it is not unusual in Italy for the previous owner to appeal in court to have the auction annulled. In other cases, a property may be subject to adverse possession (usucapione), or a sitting tenant. As the new owner, you will have to take eviction action – at your expense.

Finally …

We have set out a few facts and tips regarding Italian property auctions. However, as this is a vast and complex subject, it really just skims the surface. There are many potential pitfalls and legal ramifications to consider when buying Italian property at auction. We would always recommend that you seek independent professional advice before participating in an Italian property auction. 

Buying Italian property at auction can be done safely but, it is definitely not for the faint-hearted. if you would like to discuss your situation, please get in touch.

At De Tullio Law Firm, we have over 55 years of experience managing all types of Italian property transactions. We have in-depth expertise of Italian and international legal systems and processes. We understand the way things work in Italy, which is often different to the way things work elsewhere. 

 

Before buying a house in Italy. What should you know?

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What you absolutely must understand before buying a house in Italy

In order to make your purchase as safe and efficient as possible, before buying a house in Italy, you should understand how the process works and who you should involve.

When you visit a country for a holiday, cultural differences are charming and exciting. This changes dramatically when you make an investment or move to that country.

Personal liability

You may have already bought a house in your own country. Maybe you are English and the estate agent passed all relevant information to your solicitor to process the purchase. Perhaps you are American and you used an independent and qualified buying agent.

In both cases, the most risk free and secure method for you, as a buyer has become the assumed. It is probably the only way you would consider purchasing a property. In the UK, USA and other common law countries, we take it for granted that our interests are so well protected that it is very difficult to unwittingly make a mistake.

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Italy is a member of the European Union so you can assume certain rights and similarities. However, when it comes to personal liability, Italy can be very libertarian. In other words, in Italy if you want to protect yourself and your interests, you can. If you don’t want to, that’s fine too.

The consequences, and ultimately the lessons, are yours alone. This mindset, for better or for worse, is practically non-existent in Northern Europe and many English-speaking nations.

Don’t assume anything

Before buying a house in Italy, you shouldn’t make any of the same assumptions that you would in your own country. You should not assume that the typical process is naturally geared to protect your interests. Nor should you assume that everyone respects the law. And, do not assume that rectifying a mistake will be a quick or cost free fix. Above all, just as you wouldn’t at home, believe everything an estate agent or vendor tells you!

Do your homework before buying a property in Italy

As you may know from your own country, you need to conduct certain checks and searches. Legally binding contracts need signing and you will have to pay deposits.

In Italy it is perfectly legal for an estate agent to provide a reservation offer contract  and a preliminary contract on behalf of buyer and seller. Following the signing of these contracts, the buyer makes deposits. The final step is to have an Italian public notary (notaio) sign-off on the sale.

Estate agency contracts are often standard pre-printed forms. Many foreign buyers assume that the notaio, who according to law  must oversee the property transaction, is the equivalent of a lawyer or qualified realtor. People believe that if anything untoward comes up, the notaio will be aware of it and inform the relevant party. This is absolutely not the case. The notaio must remain impartial and only checks the final deed of sale document.

Neither the estate agent nor the notaio are responsible for doing your due diligence – you are!

Therefore, anything omitted or glossed over in any contract will not be apparent. If the person who draws up or checks is not working for you, you are taking a risk signing it and making deposits. On top of this, you should know that the Italian language versions of contracts will prevail in a court. You can of course read and check your own contract. However, understanding depends on your grasp of Italian and/or your trust in the translator you or the estate agent engages.

Don’t take unnecessary risks

Your estate agent will of course advise you that you do not need a lawyer, which is correct. Italian law does not oblige you to engage a lawyer. However, without a lawyer you are purchasing a property entirely without independent representation. Not only that, you are choosing not to protect yourself legally in a country with one of the slowest and most complex legal systems in Europe.

In Italy prevention is always better than cure and, infinitely cheaper! If you aren’t prepared to prevent problems, you need to prepare to deal with problems that may arise later.

It is possible that a property may have debts attached to it which the seller has not disclosed. It is very often the case that the previous owner has made illegal changes to the property or, as is common, the property features an illegal swimming pool. Or, perhaps you are planning to build a pool and the seller tells you that won’t be an issue.

If you don’t have your own lawyer, no one else is going visit the property on your behalf to check plans and the actual situation. This means you could easily end up with an illegal property or a property you can’t alter. At this point, you will need to throw a substantial amount of money at the property and lawyers to try and resolve the problem.

A small amount of due diligence at the beginning of the process with someone who speaks your language will avoid risks before buying a property in Italy.

Finally …

Before buying a house in Italy, engage a local lawyer experienced in property matters. This should be someone you choose, not someone the estate agent or vendor recommends. Choose a lawyer who speaks your own language. That way, you not only get legal advice but also translation. Your lawyer should also be able to recommend a surveyor, builders and all manner of other professional services. In addition, you can appoint your lawyer as your power of attorney in case you are unable to get to Italy or attend completion. Again entrusting this responsibility to anyone with potentially conflicting interests, such as an estate agent, can be extremely risky.

Before buying a property in Italy, why not talk to us? 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. Book a Free Call with one of our lawyers. 

Defects And Noncompliances in Italian Property Purchases

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“Italian property purchases. What’s the legal position when it comes to defects and noncompliances?”

Over the years, De Tullio Law Firm has helped clients deal with all sorts of defects and noncompliances relating to Italian property purchases.

Take for example, a couple who arrived in Tuscany for their first holiday at their recently purchased dream property. They found the previous owner’s brother and family in residence. It transpired that the brother had inherited co-ownership of the property. He had no idea the property had been ‘sold’ from under his feet.

Then there was the American family whose entire kitchen ceiling collapsed one morning at breakfast. It happened a couple of days after they moved into their villa in Taormina. Fortunately, no one was badly hurt. They ended up having to take the previous owner to court. The collapse had been caused by a water leak that the vendor had hidden. After the fact, a surveyor determined the had been going on for some time.

There are many other cases where buyers end up in trouble. This is generally because the vendor has failed to disclose, or misrepresented crucial information pertaining to a property. Issues range from ownership, divorce and inheritance to planning irregularities and zoning restrictions. Then there are matters of outstanding mortgages, adverse possession, rights of way – the list is long.

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DIY conveyancing in Italy is risky

Many buyers, Italian and non-Italian, want to save money by taking a DIY approach to their conveyancing.

For most people buying an Italian property is a major investment and it entails risk.

Buyers should make sure they do their homework thoroughly. Some buyers, however, look to shave costs and cut corners here and there. Generally, this involves sacrificing professional advice such as engaging a surveyor or a lawyer.

Instead, many people rely on what the vendor or the real estate agent tells them. Both parties have a vested interest in selling the property. If buyers are lucky everything goes fine. If not, buyers end up with a property that later needs a lot of costly fixes and may even be unsaleable.

Always seek professional advice to ensure protection against defects and noncompliances

Contractual terms and conditions serve to protect buyers against defects and noncompliances. Where defects and noncompliances come to light during due diligence, the promissory buyer could terminate the contract for cause.

In the Toarmina case, if the family had known about the failure to disclose a known water leak, they could have terminated the contract. Or, if they had anyway wanted to proceed with the purchase, they could have either made the purchase conditional on the owner repairing the leak. Alternatively, they could have requested an adjustment in the purchase price to take into account the cost of remedying the defect themselves. The latter two options ensure a continuation of anticipated economic exchange between the contracting parties. In addition, they also represent a general means of protection for promissory buyers.

As a final point, article 1482 of the Italian Civil Code contains provision to protect a promissory buyer who, having signed a reservation offer or preliminary contract discovers, during due diligence, undisclosed financial charges on the property in question. For example, a mortgage, a lien, a court repossession order. In this case, a promissory buyer can request suspension of purchase payment until the property becomes unencumbered.

Finally …

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.

We can guide you through the whole purchasing process or organise the whole process, including an Italian property survey, on your behalf. Get in touch with us.

If you would like further information about buying an Italian property, you may find our buying in Italy guide useful.

Always seek knowledge about the risks entailed in property investment. If you are a promissory buyer in need of support, guidance or advice, please get in touch.

Italian Will. Why Is It Worth Drafting An Italian Will?

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Why is it worthwhile making an Italian will?

If you own property in Italy, having an Italian will can prevent all sorts of difficulties for heirs when transferring ownership of an Italian property.

In Italy, the disposal of an estate occurs in compliance with the decisions of the testator as set out in an will. Or, where the deceased was intestate, in accordance with inheritance law.

in Italy, the law requires that a public notary authenticate a will before probate can begin.

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Although, generally speaking, Italy recognises the validity of international wills, they can raise a number of difficulties. As a matter of fact, a notary cannot publish or legalise documents in a foreign language until a court-sworn translator has translated them into Italian. This entails additional cost. It can also lead to misinterpretations of the testator’s wishes regarding disposal of an estate. Sorting out any misunderstandings may end up being another costly and lengthy matter.

It is also worth bearing in mind that having an Italian will can speed up  administrative procedures. For example, with banks. In Italy, accounts and deposits of the deceased are frozen following an account holder’s death. The procedure to access funds can be a difficult and protracted process. Heirs will have to pay certain expenses from their own pockets in the meantime.

In summary. The main advantages to making an Italian will are threefold

1. Reduces the risk of conflict among heirs.

2. Creates possible inheritance tax reductions for heirs.

3. Makes the decedent’s wishes clear to Italian authorities.

A competent legal advisor can help you draft a will that complies with EU Succession Regulations and Italian law. This limits the effects of legal succession in Italy and ensures that the estate is disposed of according to the testator’s wishes, without violating EU and Italian succession regulations.

Finally …

Inheritance is a complex matter. In addition, if you own assets in more than one country, this can further compound the complexity. We recommend you seek independent legal advice regarding your personal situation. If we can be of assistance, please get in touch.

For more information about succession and inheritance in Italy, you may find our Italian Succession Guide useful.

At De Tullio Law Firm, we have over 55 years of expertise managing cross border succession and estate planning matters. We are a full member of STEP, the world’s leading association for trust and estate practitioners.

 

You may also be interested in Legitimate Heirs. Rights of “Forced Heirs” in Italian Inheritance

Wills. Do You Have A Valid Will That Covers All Your Assets?

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Are your affairs in order? Wills are important – especially if you own assets in more than one jurisdiction

The independent professional body for solicitors in England and Wales has warned that the consequences of dying without a valid will can be dire for those left behind. The research revealed that 73 per cent of 16-54 year olds don’t have wills. Whereas 64 per cent of people over the age of 55 have made their final wishes clear in a will.

The research also found that men are more likely to have a will and keep it updated than women.

Twenty-three per cent of respondents wrongly believed that without a will, their possessions would automatically go to their family.

Get Your FREE Guide to Planning Your Inheritance in Italy

Our PDF guide explains the ins and outs of preparing your inheritance under Italian law

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Dying intestate not only means your final wishes will probably go unheeded, but the financial and emotional mess is left for your loved ones to sort out. This need not be your final legacy.

Owning property in Italy adds to the complexity for heirs if you die intestate

If the deceased was resident in Italy at the time of death, Italian Inheritance law applies to the deceased’s worldwide assets.

If the deceased lived outside Italy, Italian inheritance law is only applicable to assets in Italy.

This means that foreign nationals with a second home in Italy are subject to international succession procedures.

Generally speaking, Italy recognises the validity of international wills. However, a will in a foreign language needs to be translated by a sworn translator before a notary can register and publish it. This involves cost, takes time and may lead to misinterpretation.

It is therefore advisable for non-Italian nationals who own assets in Italy to draft an Italian will to cover those assets.

Why should you have an Italian will for your assets in Italy?

Firstly, having an Italian will minimises misunderstandings and/or conflicts amongst heirs. Secondly, it facilitates legislative, linguistic and jurisdictional matters with the Italian authorities. Thirdly, having an Italian will can reduce estate tax and lastly, it simplifies the whole inheritance procedure.

Making a will is usually a relatively simple process but we urge people to use a qualified, insured solicitor because he or she will be able to spot cross-border nuances that could lead to trouble later on if not properly addressed.

You need to list all the assets that you would like to include in your Italian will . For example, Italian property, vehicles you keep in Italy, bank accounts and so on.

Estate planning should be an ongoing process, not a one-time event. You should review and update your will as your family and circumstances change. This would include when you make an international investment such as buying property in Italy.

EU Succession Regulations: choice of law in wills

EU Law 650/2012, also known as the Brussels IV Regulation came into effect on 17thAugust 2015. Brussels IV contains a provision for individuals to make an election in their wills for the country of their nationality, or where individuals have multiple nationalities any one of their nationalities, to apply to the devolution of their estate.

Interestingly, there are also potential benefits for non-EU nationals. However, again, appropriate action in the form of a choice of law clause in a will is necessary.
Nominating a country law needs careful consideration. You should take into account matters such as foreign matrimonial regimes, usufruct, tax consequences, joint ownership structures and other foreign proprietary rights with respect to your estate.

Finally …

Because each case is different, you should seek professional support and advice relating to wills.

At De Tullio Law Firm, we have over 55 years of expertise managing cross border succession and estate planning matters throughout Italy. Our firm is also a full member of STEP, the world’s leading association for trust and estate practitioners.

Please contact us if you have any questions about making an Italian will or if would like to discuss your situation.

You may also be interested in How to write an Italian Will.

To find out more about Italian inheritance, you might find our Guide to Italian Inheritance helpful.