Tag Archive for: Law Firms in Italy

Hidden Defects. Buying An Italian Property

Hidden defects. Buyer beware!

Where exactly do you stand if you discover hidden defects with your Italian property following completion?

You move into your dream Italian home to find a nightmare situation.

This is exactly what happened to the Wright family in Lazio. The day after moving in, they discovered there was serious water penetration in several rooms in the house, notably the kitchen and living room.

Disclosure of hidden defects in Italy

Following their discovery, the Wrights raised the matter with the estate agent and the previous owners. They denied there was a serious problem. The notary who had overseen the sale said the Wrights had signed a legally binding preliminary contract declaring that they were purchasing the property ‘in condition as seen’. As such, there was nothing the notary could do.

Well possibly, but Italian law on this issue is not quite so clear cut. In general, the principle of, ‘caveat emptor’ – buyer beware, applies as much in Italian law as it does elsewhere. The onus is therefore on the buyer to conduct thorough due diligence relating to a property before buying it.

In Italy the seller has an obligation to disclose to the buyer all ‘important information’ concerning the property. However, there is nothing in Italian law that specifically defines these disclosures to the buyer. The law states that important information must be of a profound nature. Something which the seller was aware of at the time of the sale. An issue that if the buyer had known about it, would have halted the purchase, or they would have offered a lower price for the property.

Litigation

A vendor is obliged to disclose any ‘hidden defects’ (“vizi occulti“) in the property. If the vendor fails to disclose hidden defects, then it is possible for a court of law to annul the sale, or at least reduce the price of the property.

The Wrights ended up in litigation in order to obtain compensation. However, if the Wrights had sought advice from a lawyer before signing the preliminary contract, they could have avoided a lot of heartache not to mention a costly and time-consuming court case.

A strong preliminary contract is your best protection against hidden defects

Real estate agents generally offer a standard, one size fits all preliminary contract form. The form contains a legally binding, standard exclusion clause pertaining to ‘sight as seen condition’.

If you are in the process of buying a property in Italy before you sign a standard preliminary contract, check to see if it contains a sight as seen clause. The wording may vary but would be something like this: “L’acquirente dichiara di aver preso visione dello stato di fatto in cui attualmente si trova quanto promesso in vendita, di averne valutato le caratteristiche e le qualità (anche ai fini della determinazione del prezzo di vendita) e di accettarle integralmente”.

In practice whether a court of law upholds this clause depends on the circumstances of the case. If the court considers that the vendor has deliberately misled the buyer, then the judge may annul the clause.

Our advice to buyers is that you should always seek legal advice before signing any legally binding document. You may request removal of the sight as seen clause from a preliminary contract. The vendor may well refuse to do this. If so, you should question why.

Finally …

Purchasing a property in Italy is a major investment for most people. The preliminary contract in Italian property purchases is key to buying safely. As Italian property law specialists, we recommend that you seek legal advice. Unless you understand exactly what you are buying and the commitment you are making, you should be cautious about signing anything.

If you are looking at a real estate investment 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 property, family and inheritance matters. Get in touch.

 

For more comprehensive information on Italian conveyancing process, you might like to read our Property Buying Guide or look at our Property Buying Checklist.

Reverse Mortgage. Italian Equity Release Scheme

Reverse mortgages provide an alternative to selling an Italian property

In December 2015 the Italian Ministry of Economic Development introduced a reverse mortgage scheme. This is a form of equity release financing.

The reverse mortgage allows home owners over the age of 60 to convert part of the value of their property into cash. The property acts as security for the loan. The owner remains the legitimate owner and retains the right to live in the property.

A reverse mortgage therefore represents an alternative to selling the property. As with any other loan, when a home owner takes a reverse mortgage, it includes a repayment plan.

Another feature of the reverse mortgage regards interests, which can be refunded either at the time the loan expires or at fixed deadlines. If a borrower chooses the refund upon expiry formula, no sum is due to the bank during the term of the loan. A refund of interest payments and any related costs occur when the borrower dies.

The amount a borrower can release as equity depends on a borrower’s age. The older the borrower, the higher the percentage of equity release. In addition, the lender takes the value of the property to secure the loan into account.

Heirs inherit reverse mortgages

Should the property owner die before repaying the loan, the decedent’s heirs inherit the debt. In terms of repayment, heirs have three options.

1. Repay the debt to the bank to clear the reverse mortgage.

2. Sell the property.

3. Allow the lender to sell the property at market value.

If the property is sold at market value, the heirs have the right to recoup any difference between the sale price and the outstanding reverse mortgage. The  lender cannot ask heirs to repay the debt, if the property fails to sell.

Finally …

If you are need help with equity release in Italy, why not talk to us? De Tullio Law We have over 55 years of experience working with clients on their Italian and cross border property, family and inheritance matters. Get in touch.

You may also like our Guide To Selling Property in Italy. You may also like to watch our info videos about Italian property law.

Rent-Free Property Agreement: an Overview

A rent-free agreement is not for financial gain

Italian law defines a rent-free property agreement as a party lending an item they own to a borrower. The borrower may use the item for a given period of time or for a specific reason. The borrower then has the obligation to return the item to the lender. As the name implies, a rent-free agreement is not for financial gain.

Italian law does not restrict a rent-free agreements to property. Third parties might borrow all sorts of items.

For example, if you loan your a car or some gardening equipment to someone, this constitutes a rent-free property agreement. In general, it is not necessary for the agreement between the parties to be in writing. An oral agreement is legally valid.

Validity of rent-free property agreements

One of the most common examples of a rent-free property agreement pertains to a parent allowing a child to live for free in a property. And, as far as homes or properties are concerned, this type of agreement must be registered with the Italian tax authorities.

With respect to registered agreements, the 2016 Law of Stability has introduced a tax benefit. This takes the form of a 50% discount on IMU. However, the agreement is subject to three conditions. Firstly, the property must be the main residence of the occupier benefitting from the rent-free agreement. Secondly, there must be first degree kinship relationship between the parties of the contract (typically parents and children). Thirdly, the property owner can own only one additional property. The rent-free property and the other property must be in the same comune.

Other types of property rent agreements in Italy

A word about two other types of property rental agreements in Italy.

A free market agreement (contratto a libero mercato) allows the tenant and landlord to agree financial terms and conditions between themselves. This kind of rent agreement is valid for four years and renewable for an additional four-year period.

Then there is a convention agreement (contratto convenzionato). This is valid for three-year contract and has a two-year renewal option. However, the initial period can be increased to five years without a renewal option.

Finally …

We recognise that letting a property in Italy can be confusing and there are legal risks of allowing somebody into your property without an agreement. If you are planning to let an Italian property, you should always seek legal advice beforehand. we can draft a bi-lingual rental agreement for you. Likewise, if you are planning to have your land managed, you need to protect your rights.

De Tullio Law Firm has over 55 years experience of cross border and Italian property law.  We can negotiate appropriate rental agreements to meet your needs. We can also liaise between property owners and tenants. If you would like further clarifications regarding property rental, or want to discuss your situation, please contact us for a free consultation. We are here to help. 


You may also like to read about buy to rent in Italy.

Unclaimed Italian Property

What is unclaimed Italian property?

Between 1861 and 1985 over 29 million Italians emigrated to other countries. About 18 million Italians permanently settled abroad. Today several tens of millions people living abroad have Italian heritage. When Italian emigrants went abroad, they often left property and land in Italy. This is now unclaimed Italian property.

Many people think that the Italian State confiscated unclaimed property. This is a myth. The reality is that the property is still here in Italy and the original owners are still on the title deeds.

There are many thousands of unclaimed properties and parcels of land  throughout Italy. In many cases, the descendants of emigrants living outside Italy could still claim these properties.

Beware!

Over the years, descendants of Italian emigrants have contacted us for help and advice. They are trying to find their ancestors’ property in Italy. Sadly, in some cases, people have spent considerable time and substantial amounts of money before contacting us.

We have heard about people receiving letters from organisations asking for an upfront fee and promising help with locating and retrieving an unclaimed Italian property.

Needless to say, many people never hear anything once they have paid the fee. So, if you get a letter like this, be cautious. Look up the company and check credentials before you part with any money.

Seek qualified help with unclaimed Italian property

In the first instance, legitimate researchers will seek unclaimed Italian property through sources made available under freedom of information laws. For example, since 2014, the Italian Tax Authority has made it possible for the public to search online for land registry records and titles. You will need to register an account, then supply information such as:

– Name of presumed owner, even if deceased (maiden name, if female).

– Exact town of birth in Italy.

– Name of father of the presumed owner.

– Date of Birth (year) of the presumed owner (records only available post 1880).

Some people try to take a DIY approach. However interpreting search results can however make this difficult. In addition, land registry results may not always be accurate. They could, for example, be out of date or show the name of a previous owner.

If you know, or believe that your family has unclaimed property in Italy and you need help, make sure you engage the services of reputable and experienced professionals.

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, residency, family law and inheritance matters. If you would like to discuss your situation, we are here to help. Please get in touch with us.

Italian Property Services. Background Checks

Check the legalities before you start viewing Italian properties

You’ve seen a number of Italian properties online that you really like. You want to book flights to Italy, organise a rental car and accommodation to see the properties for yourself. But, how do you know if the properties you’ve set your heart on seeing are legally safe? Use our Italian property services. We can check the legalities before you decide whether it’s worth viewing.

Pre-purchase Italian property services

We can provide an independent and professional pre-purchase property background check. It’s simple. You give us the list of properties you want to view, we check all the legal details.

That way, you can save time and money as well as avoid problems such as properties with shared title deeds, other legal and financial complications, adverse possession or planning permission issues.

Knowing exactly where you stand before you view properties, you increase your chance of finding the right property first time. This prevents wasted trips and the expense of repeat visits and false starts.

Pre-sales Italian property services

We can also provide a pre-sales background check service for owners preparing to put their Italian property on the real estate market. Ensuring you have all the legal details in place as part of your property sales package offers vendors a competitive advantage when they market their property.

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, residency, family law and inheritance matters. If you would like to talk to us about out Italian property services, please get in touch with us.

 

You may also find our Guide to Buying Italian. Guide to Selling Italian Property and Property Buying Checklist useful. We also have a number of info videos which aim to help you avoid pitfalls when buying and selling Italian property.

First Property Purchases in Italy. Fiscal Benefits And Rules

Tax benefits for first property purchases are contingent on transferring residence

Property buyers in Italy often decide to take advantage of tax reductions available for first property purchases. These consist of a reduced registration tax of 2%, a
fixed cadastral tax of €50 and a fixed mortgage tax of €50.

Delaying transfer of residence other than for force majeure means losing first property purchase benefits

To benefit from fiscal reductions, buyers must transfer their residence to the municipality where the property is located. This transfer must take place within 18 months of signing the deed of sale. Missing the residence transfer deadline entails the loss of tax benefits.

Delays in transferring  residence may also involve a hefty fine unless there is an extraordinary event or circumstance that constitutes a force majeure. Examples of a force majeure event might be an earthquake, seaquake, flood, landslide. In general, an event beyond anyone’s control, which renders the property uninhabitable.

Buyers must prove force majeure to retain benefits of first time property purchases

In judgement n. 864, dated 19th January 2016, the Italian Supreme Court ruled that the purchaser should not lose the fiscal benefits granted to first time property purchases.

However, this is only applicable where a purchaser is able to prove that failure to comply with the 18-month residence transfer deadline is with cause. In other words, the delay is justifiable because of an unavoidable and unpredictable event.

Summing up then. In order to maintain fiscal benefits related to first-time property purchases, a delay in transfer of residence must be due to an event or circumstance beyond the control of the buyer. As such, the buyer must prove that the delay is unavoidable and unpredictable. If transfer is due to a general impediment, the purchaser loses fiscal benefits.

Finally …

Property buying in Italy is a serious investment for most people and, often the fulfilment of a dream. Navigating Italian real estate laws and local customs can be complex. For more comprehensive information about the Italian property purchasing process, you might like to read our Guide to Buying Property in Italy. If you would like to discuss your situation or, if we can be of assistance, please get in touch.

De Tullio Law Firm provides specialist legal advice in all areas of Italian law. Our particular expertise is in cross-border property transactions and inheritance matters in Italy.

 

We also have a number of info videos on the subject of how to buy Italian property safely.

No Certificate of Habitability for An Italian Property?

Buyers can back out of a sale if there is no certificate of habitability

A certificate of habitability or certificato di abitabilità in Italian, attests that a property is legally habitable. The Italian Supreme Court of Cassation ruled that buyers can refuse to sign the final deed of sale if a residential property has no certificate of habitability. (Court of Cassation., section II, 26th November 2015-8th February 2016, n. 2438).

Property owners obtain a certificato di abitabilità from their local municipality. Local municipalities should check that a property and its systems comply with health, safety and building regulations. In other words that the property is up to code. In addition, municipal authorities should check that the property complies with planning permission.

A certificate of habitability is also useful for obtaining utility connections and municipal services such as refuse collection.

The Italian Supreme Court of Cassation has ruled that buyers can back out of a purchase if a municipality refuses to issue a certificate of habitability.

The responsibility to provide a certificate of habitability lies with the vendor of an Italian property

This is pursuant to article 1477,  paragraph 3, of the Italian Civil Code. Where there is a delay or a failure to supply the certificato di abitabilità, there is a clear case of non-execution of a contractual obligation (breach of contract). In order to remedy this, the purchaser may request a reduction in the sales price, or request a refund of deposits. A purchaser may also decide to back out of the transaction.

Where there is no certificate of habitability, a buyer can still buy the property. However, the buyer must expressly consent to the lack of certification. In addition, the lack of certification must be included in the notarial deed of sale.

Due Diligence

While the vendor is responsible for supplying a certificato di abitabilità, the onus is on the buyer to verify its existence. Buyers should receive the certificate before completion. It should form part of the buyer’s legal due diligence.

It is also vital to check that the certificate pertains to the entire property, not just part of it. While the issuing municipality will check land registry plans, if the owner has undertaken any unauthorised work on the property, this may not appear in plans.

Not having a certificate of habitability can have long term repercussions

A vendor’s failure to provide a certificate of habitability represents a liability for buyers. Purchasers will need to obtain a certificate following the purchase. However, this is not always possible. Properties with no certificate of habitability have a lower market value. Purchasers should therefore be aware that not having a certificate will have repercussions on the resale price and saleability.

Finally …

If you are looking at a real estate investment 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. Get in touch.

You may like to read about the preliminary contract or you may like to watch our info videos about Italian property law.

Property Leaseback Scheme in Italy

Italian property leaseback scheme: buying a house in instalments

In 2016, the Italian Stability Law introduced a property leaseback scheme. In effect, this allows buyers to purchase an Italian property without a mortgage.

The property leaseback scheme is available to those whose annual income does not exceed 55,000 Euro. and who do not already own another property.

As this is a financial product, only banks and leasing companies offer property leaseback contracts. The bank or leasing company commits to buy, or to build, a property on behalf of a client, who then becomes the property lessee. The lender therefore owns the property and the lessee has the right to use the property. The lessee pays of an initial instalment and a monthly rent thereafter.

Residence rules apply to the property leaseback scheme

The lessee must be resident at the property. This means the lessee or the lessee’s family must live at the property and use it as their main residence. The lessee must take up residence at the property within one year of taking possession of the property.

Costs and buy back rights

Annual interest payments and fees apply to the Italian property leaseback scheme. These are calculated on the basis of the property purchase price and the duration of the leaseback contract.

When the leaseback contract expires, the client can exercise the right to buy the property through payment of a final instalment. This final payment is established at the outset of the leaseback contract. If the client has a change of heart, the lessee can relinquish the property without any penalty payments.

If the lessee is unable to make the monthly rent because of a loss of employment, there is a one-off right to suspend payments. Rent suspension lasts for a maximum period of twelve months.

Tax incentives to promote uptake of property leaseback

The 2016 Stability law also introduced a series of tax incentives on both direct and indirect taxes. This aims to boost the uptake of the property leaseback scheme.

More specifically, people under the age of 35, can benefit from income tax deductions in the form of a 19% deduction on expenses incurred for leaseback rents, as well as related ancillary costs. This is available for an annual sum not higher than €8.000. In addition, lessees under the age of 35 can benefit from a 19% deduction on the buy back cost, if the lessee decides to exercise the right to buy the property. This benefit is applicable to sums not exceeding € 20,000.

People over 35 years of age can also benefit from income tax incentives in the property leaseback scheme. A 19% deduction on expenses incurred for leaseback rents, as well as related ancillary costs. This is applicable to an annual sum not higher than €4.000. A 19% deduction on the buy back cost is also available should the lessee decide to exercise the right to buy the property. This benefit is available on sums not exceeding Euro 10,000.

Finally …

The key to making your Italian property project as safe and smooth as possible is to appoint a legal team that speaks your language. De Tullio Law Firm has a thorough understanding of Italian property law and decades of experience managing all types of Italian property transactions. Get in touch with us: info@detulliolawfirm.com

You may also like to read about the Italian buy to rent scheme. We also have a range of info videos about Italian property transactions that might be of interest.

Italian Property Buying Process

At what stage of the Italian property buying process should you contact a lawyer?

The Italian property buying process is quite complex. At the very least, it differs from what buyers may have experienced at home. The question about contacting a lawyer is one overseas buyers frequently ask us.

On the one hand, people worry that contacting a lawyer too soon, may be a waste of time or costly. The concern is that they might not actually proceed with a property purchase immediately or ever.

On the other hand, people fear that if they don’t contact a lawyer soon enough, they may find themselves in trouble. Perhaps with a request to pay broker’s fees or a deposit on a property. They worry about committing themselves and their money, without appropriate, independent legal advice.

We would recommend getting in touch with a lawyer before you view any property in Italy

Most experienced property lawyers in Italy appreciate that you will not necessarily find your ideal property during your first trip. They will also understand that you don’t need their help immediately. A reputable lawyer will recognise that it is helpful to have some initial guidance and their details at hand just in case you do. Many Italian law firms, including ourselves, offer a free consultation for this purpose.

If you contact an Italian property lawyer before your trip, they can outline the Italian buying process and provide details of legal fees. There is no obligation to appoint them just because you have sought some advice about your particular situation.

The lawyer will also be able to confirm other costs associated with a property purchase. That way, you can factor these additional costs into your budget before you negotiate a purchase price with the vendor or estate agent.

Getting in touch with a lawyer early also gives you the opportunity to speak to them on the phone or even to meet during your trip to Italy. This will allow you to  decide whether they are the right lawyer for you.

Once you have had contact with a lawyer you should feel more confident about moving forward with your property purchase. You will know that you have someone at hand who can assist you with all aspects of your property purchase in Italy.

Finally …

Having a home in Italy is a dream for many. It is also a major investment. There are many aspects that need careful consideration before taking the plunge. For example, the Italian buying process, buying structures, tax and inheritance to name but a few.

If you are considering buying a property in Italy, think long-term. Make sure it’s for the right reasons and that you have done your research absolutely thoroughly.

De Tullio Law Firm has been guiding overseas buyers with their Italian property investments for over 55 years. If you need any advice, an independent second opinion or, if you would just like to discuss your options with a specialist we are here to help.

For more information on buying property in Italy, you may like to read our comprehensive guide on the subject. You may also find our info videos useful.

Buying properties in Italy: avoid pitfalls

Buying properties in Italy is a major decision. You must proceed with caution, always do your research and seek independent legal advice.

Continued slow economic growth in Italy helps to keep property prices low and therefore is attractive for those looking to invest. Interest rates show no sign of substantially increasing in 2016 either in The UK or in the Eurozone. 2016 is therefore looking to be another year with many Brits purchasing Italian property.

Buying properties in Italy can go from dream to disaster…

Every year, clients contact us, whose Italian property purchase started out as an impulse decision. However, at some point during the purchase, the dream turned in to a nightmare. All sorts of additional costs appeared. That could easily have been avoided if they had sought legal advice prior to purchase.

At the very least, mistakes made during the purchase process can cause legal headaches, uncertainty and stress – the last thing anybody buying a home wants.

Recently, some clients contacted us to resolve a case where they had purchased a property without a Certificate of Habitability. The new owners didn’t realise that this certification was essential until they tried to get water and electricity supplied to the property. Utility companies refused to hook up the property because the owners didn’t have the relevant paperwork.

The ramifications can be serious. Take for example, a client who didn’t have a survey and now finds his roof collapsing, or the owners of a property that lacks planning permission for some of the outbuildings on their recently acquired land.

Authorities such as the Financial Conduct Authority (FCA) do not regulate property purchases in Italy. You are not protected if things go wrong, even if you use an FCA-registered financial adviser or mortgage broker in the UK to make the deal on your behalf.

Don’t succumb to pressure to sign anything. You may find yourself liable to pay fees or a deposit before you’ve had a chance to think carefully. Make sure you check all the paperwork. That the titles are correct and that you have all the necessary permissions, licences, certificates and planning consents. Furthermore, you must make sure you account for all the tax you’ll be liable to pay, both in the UK and in Italy.

Finally..

Before you sign any kind of paperwork relating to an Italian property purchase, always seek independent legal advice. Ensure your lawyer is fluent in both English, and Italian and that they have a good understanding of Italian property law.

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.

You may also be interested in Buying A Property in Italy. Insider Tips from Our Clients