Tag Archive for: Notaio

Leasehold or Emphyteusis in Italy: What You Should Know

Emphyteusis is a type of leasehold arrangement

The closest Common Law legal term to Emphyteusis is a leasehold.

The landlord retains the ownership of property. However, a tenant has the right to use it for a contractually agreed period of time. In this type of leasehold or Emphyteutical arrangement, the tenant must both maintain and improve the property.

Leasehold or Emphyteusis is a contractual arrangement which has its roots in Roman Law. It formed part of the feudal system and has connections to the agricultural economy. Farmers had the possibility to cultivate land thereby sustaining themselves. In return, farmers paid an annual ground rent or canon in money and or in kind.

Italian leasehold or Emphyteusis arrangements are applicable to all types of physical assets

Contractual arrangements exist between two parties. On the one hand, the Dominium Directum, the freehold owner the (dominus) or landlord of the property. And, on the other hand, the Dominium Utile – the tenant (emphyteuta) who has the right to use property on a leasehold basis.

Emphyteusis is applicable to both land and buildings, including villas and apartments.

For the duration of an Emphyteusis contract, where land is involved, the tenant has the right to alter the surface of the land. This includes ploughing up pastures to cultivate a crop or plant trees.

Where the arrangement concerns buildings, a tenant may alter these. However, alterations must not cause any deterioration of the building. Therefore, if the tenant wishes to build an extension or add to existing structures, the tenant may do so.

The contract between the ‘landlord’ and the ‘tenant’ must be in writing. Rent payments are recurring and the duty to pay rent only ceases if the estate is destroyed. Destruction may either be due to human causes  such as a fire or through natural events for example, an earthquake.

Duration and obligations of leasehold or Emphyteusis contracts

Emphyteusis can be in perpetuity or limited to a minimum of 20 years. In either case, entitlements are the same.

In other words, a tenant may sublet the property, receive compensation for improvements made and even retain the property until full payment of his credit is rightfully received. These things, as well as those previously mentioned, do not require the consent of the landlord.

If the Emphyteusis has a duration of 20 years, the tenant cannot contractually transfer rights to another party. The right of pre-emption does not apply to the tenant in the same way it does to farmers. This means that the tenant in a leasehold or Empyteutical contract arrangement does not have right of first refusal to purchase land.

The tenant has a very broad right to dispose of the property held under perpetual Emphyteusis. Thus a tenant may dispose of the emphyteutical property by means of a deed in compliance with Italian Civil Code. This can either be an act inter vivos, i.e. made during the tenant’s lifetime, or causa mortis, i.e. after death. In the event of death, disposal is by means of a will.

Redemption of leasehold or Emphyteusis contracts

A tenant can acquire full ownership of Emphyteutical property through the payment of a price corresponding to fifteen times the annual rent. A tenant can make use of this redemption right at any time.

This redemption right prevails as an equivalent right accorded to the landlord in case of breach of contract by the tenant, known as the “devolution” (devoluzione).

Redemption may be settled either out of court, by means of an agreement between the landlord and tenant. A notarised deed must reflect the settlement. Where the landlord and tenant cannot reach agreement, the dispute can be settled in court.

Check the title deeds of an Italian property before you buy

A tenant must increase the productivity, the usefulness or the value of the estate, rural or urban. This obligation lasts for the duration of the term of Emphyteusis and must be in writing. Annual rents to the landlord are payable annually.

The landlord has the right to request the end of the Emphyteusis due to a breach of contract by the tenant. The landlord must refund any improvements the tenant has made. Payments should be proportional to the increase of value of the estate when it returns to the landlord.

Finally …

Acquiring, redeeming or disposing of property subject to leasehold or Emphyteusis arrangements can present challenges. Other types of leasehold arrangements also exist in Italian law. It is advisable that you contact an Italian lawyer to ensure you understand all the implications of such arrangements.

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. We are here to help.  Get in touch with us.

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.

Off-Plan Properties in Italy: Delivery Delays

Late delivery: one of the risks in buying Italian off-plan properties

This article is part of a series about the risks of buying off-plan properties in Italy. To read more on the topic, please use our search tool to look for off-plan properties in Italy.

Significant delays in delivery of Italian off-plan properties is one aspect that investors report as being particularly irritating.

Developers and builders can be very persuasive. Whatever you do, don’t feel obliged to sign anything without first seeking independent legal advice.

Penalty clause for late delivery of off-plan properties

Broadly-speaking, a penalty clause is a contractual provision which levies a monetary sum in the event of a breach of terms in the contract. It does not include any compensation payment for actual damages.

Buyers often try to insert a late delivery penalty clause into their contracts for off-plan properties in Italy. However, penalty clauses are generally unenforceable and ineffective under Italian law. 

Generally, the off-plan developer or builder draws up a contract. Often these are major companies. The buyer is therefore unlikely to be able to mutually agree a penalty clause. The agreement will therefore unilaterally favour the company.

The importance of a preliminary contract

The Preliminary Contract (Compromesso) is key in off-plan property purchases. If they are fortunate, off-plan buyers may manage to insert a penalty clause in the compromesso. This would see the refund of a buyer’s deposit. However, in accordance with binding terms of the contract, the buyer would still have to wait for the developer or builder to deliver the property.

Termination clause for late delivery of off-plan properties

A more effective legal safeguard would be to integrate an express termination clause in the compromesso. In effect, the termination of the preliminary contract would automatically occur – whether or not the buyer notifies the seller of the intention to terminate.

To make the clause enforceable and effective, the compresso must explicitly reference the length of delay.

If the seller exceeds the delivery date, either party can negotiate an extension and a new compromesso. Or, the buyer can claim a refund of deposits and/or any other advance payments.

Essential Term

Unfortunately, buyers of Italian off-plan properties sometimes sign a compromesso which promises more than it can deliver. Then, when delivery day arrives and buyers do not receive the keys to their property, the buyer discovers that the Italian law does not provide much protection.

If a compromesso does not include an express termination clause, the buyer can send the developer or builder a formal request to respect terms and conditions. Italian law calls this particular provision an, “essential term”.

The buyer’s formal request should warn the vendor that failure to respect terms and conditions will terminate the contract. The vendor must fulfil contractual obligations within a certain time, which cannot be less than 15 days.

Case law

In a recent court case, where the vendor had failed to comply with an, “essential term”, the Court of Vicenza (judgement n.187/2016) ruled that:

“whenever a delay is considered unbearable, it is possible to start legal proceedings against the builder, or the building company, and to obtain a refund of any advance payments. Furthermore but, only in the case of proven damages, the purchasing party can claim additional compensation”.

Either way, before taking legal action to resolve the situation and/or to make a claim for compensation for damages, an amicable settlement is always preferable. Because legal action through the Italian courts can take at least 5 years and can be very costly, an amicable settlement is likely to be quicker and more favourable. It is the route we would recommend.

Finally …

There are a number of risks involved in off-plan purchases. At De Tullio Law Firm, we are property law specialists. We are present throughout Italy. We would always recommend that you engage a lawyer you choose to ensure that you protect your interests. If the vendor recommends a lawyer, we would caution against it on the grounds of conflict of interest. Before signing any off-plan property-related paperwork, including a preliminary contract, you should seek independent legal advice. If you are unsure about any aspect of purchasing off-plan properties in Italy, we are here to help.

 

You may also be interested in Off-Plan Property in Italy: Insurance And Guarantee. You may also like to watch our info videos about Italian property law.

Italian House: Structural Issues. Where Do You Stand?

I bought an Italian house then discovered big cracks in the walls 

According to your email, you have just moved into the Italian house you purchased three months ago. Unfortunately you have discovered some serious cracks in the living room and kitchen walls.

You immediately called in a surveyor (geometra), who has informed you that there’s a serious structural problem. In effect, the problem means the property is uninhabitable. You expect to receive a full written report from the surveyor within the next few days. 

What legal action can you take regarding the defects in your Italian house

In this case, you have a legal entitlement to dispute the legality of the deed of sale (atto di vendita). However, you will need to take prompt action.

According to Italian Civil Code Sales Contract Law, the vendor is only liable for a short period.

Article 1495 of the Italian Civil Code provides that the purchaser must take legal action within one year from the delivery date of a product. In your case this would be the date you signed the deed of sale for your Italian house.

In addition, you can only take legal action if you, the purchaser, have declared the defect to the vendor within 8 days of discovering the issue.

What does Italian case law say about latent defects in an Italian house?

A ruling by the Court of Caltanissetta in May 2016 stated that if a vendor hides serious structural issues from a purchaser, this constitutes a breach of contract.

Structural defects, such as big cracks in the walls, significantly reduce the value of real estate property and may even render the property uninhabitable.

If a buyer discovers defects in an Italian property after signing the deed of sale, the buyer has the right to reverse the property transaction. This must however take place within the previously mentioned time frame.

Under Italian Civil Code, if the buyer and vendor cannot reach an amicable resolution, the buyer can institute legal proceedings against the vendor. This is with a view to obtaining restitution of the price the purchaser paid for the property. In exchange, the purchaser must return the property to the vendor.

The buyer has the right to rescind the transaction regardless of the cause of structural defects

In essence, a purchaser has the right to rescind the deed of sale either on the grounds of construction defects, namely the builder’s responsibility, or because of external factors such as subsidence.

This is valid even if the buyer had the property inspected by a surveyor prior to purchasing it. Structural defects are deemed latent. In other words, they are hidden or difficult to see with the naked eye. Therefore, even if a surveyor inspected the property, the defects may not have been visible.

It should be pointed out that patent defects would not entitle a buyer to rescind a deed of sale. Patent defects are those that are easy to see or visible, such as a window that does not close properly, or missing tiling.

Litigation is the traditional process for resolving legal disputes on civil matters

Litigation involves a party starting court action. The plaintiff or claimant is seeking a legal or equitable remedy. By law, a defendant must respond to the plaintiff’s complaint. If the plaintiff is successful, a court will find in the plaintiff’s favour.

In Italy, court cases are generally costly and protracted processes. We would advise you wherever possible, to settle out of court. Parties can settle at any stage. If the dispute cannot be resolved through negotiation, as a last resort, it will need to go to court.

Litigation is tried and tested with a vast body of case law. The court will impose a final decision that parties must respect. The outcomes of litigation are, without exception, legally binding and enforceable, while being subject to appeal.

Ruling by the Court of Caltanissetta

The case we previously mentioned, involved the purchase of a newly constructed apartment. Shortly after moving in, the new owners noticed some cracks on the walls and floors. They spoke to neighbours in their building and discovered that other neighbours had similar problems.

The owners got together and started a litigation against the vendors. The plaintiffs were seeking reversal of their purchase contracts and compensation for damage. The plaintiffs accused the vendors of deliberately hiding the real condition of the properties. For their part, the defendants claimed the buyers had seen the properties before signing the deed of sale.

However, the purchasing parties had only noticed, “a few little holes”, maintaining that, “the real problem hadn’t yet emerged.” Despite the defendants’ declarations, the court ruled that the vendors knew the true state of the apartments because they had participated in a meeting at the Town Hall’s Technical Office, to discuss geological issues related to the site.

The court ruled in the plaintiffs’ favour.

Vendor’s duty

Anyone who sells a good – a mobile phone, a garment, a pair of shoes, or any other item including an Italian house or property – has to guarantee that the good has no inherent flaw. In effect, this guarantees that the item is fit for purpose.

Italian Civil Code states that a vendor of any item must guarantee that the item has no faults, which would make it unusable or unsuitable for its intended use, or would significantly reduce its value.

In the Caltanissetta case, the property presented defects which could cause instability. That would entail a huge risk for the new owner’s safety.

Finally …

Italian contract law is complex. In the case of a litigation, the deed of sale is of great importance. It is vital that you understand the contractual terms and conditions. The deed of sale affects your options to make claims against the vendor. You should always seek independent legal advice when you purchase an Italian property. In order to avoid any conflicts of interest, this should be a lawyer who is not involved with any other parties (vendor, developer).

At De Tullio Law Firm, we have over 55 years of experience managing property transactions throughout Italy. We are always pleased to hear from our readers. If you have a question that you would like us to answer, please get in touch with us.

If you are looking for more information about the Italian property purchasing process, please read our free Guide To Buying Italian Property. You may also like to watch our info videos about Italian property law.

Buying Italian Property. Advice for Expats

If you are buying Italian property, never sign any paperwork without fully understanding the implications

The most important piece of advice for expats buying Italian property is that they should never sign any paperwork without getting it checked.

If you don’t fully understand all the legal implications of paperwork, your signature could result in potential financial and/or legal problems. In addition, your signature may negate any possibility of complaints at a later date.

We would always recommend that you use an experienced, independent property lawyer to safeguard your Italian purchase. A surprising number of expats buying Italian property don’t use a lawyer. Instead, they take a DIY approach or use someone unqualified such as the estate agent or vendor. It is not uncommon that this ends up being a stressful and expensive mistake.

Expats buying in Italy may encounter language barriers

If you are not a fluent Italian speaker, it’s important to engage a lawyer who speaks your language. This ensures you not only have crucial legal advice but also a someone who can act as a legal translator. As previously mentioned, the issue of signing paperwork is critical. Expats should only sign documents that they fully understand, which may mean that documents need translating. In fact, when you complete the purchase, the Italian notary may require a translation of the deed of sale. In addition, you may also have to engage an interpreter at completion. However, if you have a lawyer who speaks your language, this will not be necessary.

In order to avoid conflicts of interest, the lawyer should be independent of the estate agent and/or the vendor.

Make sure your lawyer has a license to practice. In other words, your lawyer should be a member of the Italian Bar Association. The lawyer should also have public liability insurance.

Estate Agents

It is worth bearing in mind that regardless of how charming and friendly an estate agent is, at the end of the day, an estate agent is a sales person working on a commission from the sale of the property. They are not qualified to provide legal advice and do not conduct due diligence on properties. The base their sales information on what the vendor tells them.

An estate agent may ask you to sign an agent’s brokerage contract, which could include up front fees.

Make sure that your estate agent is from a reputable company. Italian estate agents must register with their local chamber of commerce. They should have a certificate issued by the local town hall as proof of their professional registration.

Surveys

Many expats buying Italian property decide not to invest in the knowledge and expertise of a professional surveyor.

Construction quality varies hugely in Italy and you cannot know everything about a property just from viewing it with the vendor or estate agent. Buyers should ensure the property they want to purchase is actually worth the money they are paying. This means checking there are no fundamental problems. Amongst other things, structure, planning, zoning, ownership and geological location.

Certificate of Habitability

It’s also surprising how many expats buy a property that has neither electricity nor water connections. If a property has no utility connections, it may indicate a problem. It suggests that the property may not have a Certificate of Habitability. If this is the case, the property may never gain mains utilities despite what the vendor or estate agent claims. When it comes to reselling the property, later on, it is likely to be a struggle to find a buyer.

Buying an Italian off-plan property

Expats should exercise caution if buying an off-plan property. There are many risks entailed with buying Italian off-plan property. One of the major risks is that a developer becomes insolvent during the build. Never make large payments as a deposit to secure what appears to be a dream home.

Ensure, amongst other things, that the developer or building company has a building licence for the property before parting with any cash. Don’t be afraid to ask the property developer about their portfolio, their history of delivering quality buildings, on time. Ask for references. If you are buying a resale property, check that there are no hidden fees or legal complications.

Take your time. Don’t be rushed

When buying a property in Italy, don’t rush into a purchase and, never buy a home on impulse. Think long term. Always assess the pros and cons, research the area and understand all the present and future legal and tax aspects.

Familiarise yourself with the process of buying Italian property

Because the process of buying a property in Italy can move quickly and expats should be prepared for the purchase completion taking between four to eight weeks on average.

The purchasing process in Italy is completely different to the UK, the USA and many other parts of the world. First, the buyer makes an offer on the property. If it’s accepted, then the buyer and vendor will sign a reservation offer and the buyer will pay a small deposit. Second, the buyer and seller will sign a preliminary contract at which point the buyer will pay another deposit, usually a minimum of 10% of the sale price. Finally, at completion, the new owners pay the balance of the sale price, along with other costs and taxes.

It is important that expats appreciate all the financial and legal implications of each stage of the process.

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. Our particular expertise is in cross-border real estate, family law and inheritance matters. If you would like more information, or you need advice and support with your Italian property purchase, please get in touch with us.

Italian Property Survey – Need One Or Not?

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.

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

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.

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

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.

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.

Defects And Noncompliances in Italian Property Purchases

“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.

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?

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.

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

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.