Tag Archive for: Off-Plan

Italian Property Transaction? Seek Legal Advice

Don’t Leave Your Italian Property Transaction To Chance …

When buying or selling a property at home, most people wouldn’t dream of doing so without the assistance of a qualified and independent lawyer. Yet in Italy, many buyers and sellers, particularly foreigners, decide not to instruct a lawyer and instead rely on an estate agent to advise them about their Italian property transaction.

Many foreign property buyers find their way to our law practice after encountering serious problems during or after their property transaction. Sadly, some have lost everything.

The reality is that buying an Italian property is an investment. You may not be familiar with the Italian language. Add to this unfamiliar legal, tax and administrative systems and procedures and you are looking at a very complex situation.

Essentially, the need for an experienced, independent lawyer is far greater for your Italian property transaction than when buying property at home.

Italian real estate agents are not qualified to provide legal advice

In many instances, an estate agency will offer to handle all the paperwork for a buyer. With registered and reputable agencies, the intentions are genuine and the conveyancing may well complete satisfactorily. However, estate agents are not trained lawyers. Many have no professional liability or indemnity insurance to cover you in case your property transaction goes wrong or if they miss something crucial.

Real estate agents act on a vendor’s behalf in an Italian property transaction

Also bear in mind that an estate agent is not independent. In fact, they have a potential conflict of interests in offering you advice. Remember that the estate agent is acting for the vendor.

The agent’s primary goal is to sell the property on the seller’s behalf in order to earn their commission. If the sale doesn’t go through because somebody spots an irregularity or a legal problem, the estate agent earns nothing. You, on the other hand, may face a potentially costly and time-consuming ordeal to sort out the issue. You may even expose yourself to prosecution.

Appoint a lawyer in your home country?

As an alternative, some clients look to instruct a lawyer in their home country. However, it is unlikely that the lawyer will have local knowledge of Italy. In addition, it is costly to fly a lawyer to Italy several times in order to conduct searches and checks and to attend completion at a notary’s office.

A lawyer overseas will in all likelihood subcontract the work to a local lawyer in Italy. This may be a lawyer who lacks experience and/ or expertise in cross border and Italian property law.

Because everything needs to go through a number of people, there will inevitably be delays with information and documentation. On top of this, both the foreign and local lawyers will expect to get paid, so in essence, you end up paying twice for the same service.

Finally …

De Tullio Law Firm specialises in Italian and cross border property, inheritance and family legal matters. We are regulated by the Italian Bar Association and a full member of STEP (Society of Trust and Estate Practitioners), the leading worldwide professional body for practitioners in the fields of trusts, estates and related issues.

Our knowledgeable, experienced and multilingual team of professionals manage client cases throughout Italy.

Our clients also benefit from De Tullio Law Firm’s Professional Indemnity Insurance. This is in place should something go wrong during an Italian property transaction due to negligence by our firm. Our clients can however rest assured that in more than 55 years of operations, we have never had to make a claim.

Why leave your property transaction to chance? Get in touch with De Tullio Law Firm. We are here to help make sure your Italian property transaction is a safe and smooth experience.

 

You may also be interested in Buying property in Italy

Property buying in Italy Can Be A Nightmare

When buying a property in Italy, before you sign any paperwork, seek professional advice

Property buying in Italy is a serious investment and often the fulfilment of a dream. Italy’s unique real estate laws and local customs all lead to the recommendation of having the right team of advisors in place to make your experience successful.

A couple from Bristol found a house in the Abruzzo that they wanted to buy. The vendor’s real estate agent got them to sign a Proposta di Acquisto (reservation offer).

The estate agent passed the reservation offer to the vendor. The offer basically stipulated the price the couple was willing to pay for the property. It included the couple’s cheque for a €5000 deposit, made payable to the vendor. The vendor accepted the couple’s offer, took the cheque, and the deal became irrevocable. The estate agency also asked the couple for their brokerage fee of 3% of the purchase price, which they immediately paid.

The couple then discovered that the charming outbuilding with self-contained accommodation had no planning permission. Getting the building regularised would entail fees for a geometra (surveyor) and tax to the local municipality. The outbuilding would be subject to a demolition order if the permit was not granted. The couple even faced the risk of prosecution for illegal construction. The vendor had no intention of remedying the situation and there was no recourse for the couple. The couple was stuck in a nightmare scenario and yet, the whole thing was easily avoidable.

Teamwork makes the dream work

As a foreigner buying a property in Italy, before you sign any paperwork which may be legally binding, make sure you have the right team of advisors working for you.

Choose your own geometra to assess the integrity of a building’s structure. Check whether planning permission exists and, if necessary, what the costs would be for putting things right. You may also want to ask a geometra about the geology of the location. How prevalent are natural hazards such as landslides or earthquakes?

Engage your own lawyer. Your independent legal advisor will examine titles, zoning matters and review all paperwork associated with buying a property. A lawyer can save you money by helping you negotiate the deal and will ensure your rights are protected.

Italian law requires that all property and land transactions complete through a notary. Notaries work for the Italian State to ensure that transactions happen in accordance with Italian law. They ensure that purchasers pay all the relevant fees and taxes and register the deed of sale. Choose your own notary.

Independence is key when buying property in Italy

We cannot emphasise enough the importance of seeking independent advice. Choose your own professionals. While the estate agent or vendor may recommend professionals with whom they cooperate, you should bear in mind that estate agents and vendors have a vested interest in selling the property to you.

Finally …

At De Tullio Law Firm, in addition to full conveyancing services, we offer a property background check. This is a  pre-purchase service, which identifies and prevents problems such as the ones encountered by the couple from Bristol.

Likewise,  for those looking to sell their Italian property, we can help you prepare a pre-sales package that includes all the paperwork potential buyers will be looking to gather prior to making a purchase decision.

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 Insider Tips for Buying A Property in Italy

Selling Property in Italy. A Short Guide

The Italian sales process and possible issues for vendors

When selling property in Italy, certain legal issues need serious consideration. Due to differences in legal systems, a real estate transaction in Italy can appear like a difficult and protracted process for foreign investors.

The Italian law is complex. If you don’t fully understand how it works, you may expose yourself to risks. Considering the high stakes involved in a real estate transaction, you should seek legal advice. You should always choose your own lawyer to avoid possible conflicts of interest.

Selling property in Italy is organised in three stages:

1. Marketing and Reservation offer

2. Negotiation and signature of the preliminary contract

3. Completion of the sale

The first stage is to put the property on the market

Vendors can market a property themselves or through an estate agency

If you are considering appointing an Italian real estate agent, it is important to ensure that the agent is qualified and registered with the local Chamber of Commerce. Registration not only guarantees the professional qualification of real estate agents but also ensures they have professional indemnity insurance.

Unregistered estate agencies could be liable to prosecution for carrying out a reserved activity. This carries the risk of fines and other penalties such as not being entitled to commission fees. The agent is in fact, usually paid a commission (Provvigione) both by the buyer and the vendor. Such a commission is negotiable but generally equivalent to 3% of the sale price.

Frequently, real estate agencies require foreign nationals to sign their standard terms of engagement. These need careful evaluation before signing. It is of course key to assess terms and conditions of the brokerage fees. In addition, however, it is important to understand minimum sales price, duration of the mandate and its exclusivity.

Reservation offer

If a potential buyer chooses your property, they would generally sign the first legally binding document called a, “reservation offer”. If you accept the offer, you need to sign off on it and return it to the buyer. In addition, the buyer should pay a small deposit. The reservation offer effectively removes the property from the market for a period of time.

Due diligence

During the period the property is off the market, the buyer should start the legal due diligence process. This means carrying out checks and searches. It should include surveys, planning and local authority (Comune, Building and Land Registry) searches. Checking local planning, zoning and building regulations is also important.

Amongst others, the buyer will want to ascertain the following points prior to moving on to the next stage of the purchase process.

– The property exists. It is as in the description and, the seller has the legal right to sell the property.

– There are no mortgages/charges or any third party rights or other undisclosed encumbrances affecting the property.

– The property complies with all local planning, zoning and building regulations. Or, where relevant, building plans have consent from the Local Authority (Comune).

– The property is fit for human habitation, unless selling to reconstruct. A certificate to this effect (Certificato di abitabilità) should be available.

– The seller has complied with all the relevant Italian tax legislation by lodging tax returns and paying income tax (Imposta sui Redditi), which may have been due in the previous tax years. In default of this requirement, the property may legally be unsaleable. If the vendor is a trader or a company, they should not be bankrupt (Fallito), and no application to this effect should be pending against them.

– Where the property is in an apartment building (Condominio), all service charge payments should be up to date.

The second stage is negotiating and signing a preliminary contract (Compromesso)

When selling property in Italy, the vendor must ensure that all the statements contained in the contract are true to the best of their knowledge. This means full disclosure regarding the property. Any specific enquiries raised by the buyer must be addressed truthfully.

Preliminary contract deposit

Generally, signing a preliminary contract entails the buyer paying a deposit. This can range between 10% and 30% of the sales price of the property. The implication of such a payment is that in the event the purchaser subsequently backs out of the preliminary contract, the purchaser will automatically lose the whole deposit. Should the seller breach the preliminary contract by backing out, they are required to refund the buyer double the amount of the deposit. In addition, further sums may be payable, if there is proof that damages exceed the amount of the deposit.

Italian law states that both parties to a prospective transaction must act in good faith

Prior to signing a preliminary contract, the seller must provide the buyer, or their legal advisers, with copies of all documentation relating to the property. In addition, the seller must inform them of any material fact which may affect the decision of the buyer to proceed with the purchase of the property.

It is important to ensure that the property complies with all applicable planning and building regulations. Any breach of this legislation may result in the rescission of the purchase contract and heavy penalties. Where the seller has applied for a planning amnesty (Condono Edilizio), the prospective buyer should receive copies of the relevant documentation.

Certificate of habitability

Note that before or at the latest upon completion,  the seller must produce the property’s certificate of habitability (Certificato di abitabilità). The local municipality is responsible for issuing a certificate. It confirms compliance of all the systems installed in the property with Italian law and in respect of the relevant health and safety regulations. This certificate is mandatory. It goes without saying that it is, therefore, advisable for the seller to obtain this certificate prior to signing a preliminary contract and payment of the relevant deposit. Otherwise, the seller may run the risk that the transaction falls through. This would put the seller in a position of breach of contract.

To avoid possible claims and penalties, should a certificate of habitability not be available on exchange of contracts, the seller should disclose the issue prior to signing a preliminary contract and the contract should state either that the buyer is renouncing receipt of the certificate of habitability or alternatively that completion of the purchase is conditional on the seller obtaining this certificate.

Mortgages

If the property is subject to a mortgage, the seller has a duty to redeem the same and cancel the corresponding entry on the Local Land Registry before completion of the sale.  If the buyer is purchasing the property using a mortgage, it is advisable to finalise all the arrangements before signing a preliminary contract. However, this process may become expensive and protracted for the prospective buyer.

Pre-emption rights when selling property in Italy

Particular care should be taken if the sale is a villa or land with statutory farming pre-emption rights (Prelazione agraria) by owners or tenants or immediate neighbours in agricultural areas in Italy. According to Italian law, farmers, tenants and neighbours are entitled to be notified of a proposed sale of a property to third parties. They have first option on buying agricultural land in their immediate neighbourhood. Therefore, immediately before, or if this isn’t possible, after signing the preliminary contract, it will be necessary for the seller to serve a copy of the contract on all parties having pre-emption rights, so that any person with an interest can declare within the statutory term (usually 30 days).

It is important to ensure full compliance with this legislation. A breach of statutory farming pre-emption rights may result in a claim on the property. Anyone making a claim can do so up to a year after the sale. This in turn, would give the buyer a legal claim against the seller.

Breaches can have serious consequences

Essentially, at this stage, the seller should disclose any breaches pertaing to the property as well as proof of remedial action.  This includes any missed tax payments and outstanding breaches or notices from relevant authorities.

These are just some of the points to take into consideration, but there are many others. All have potentially serious consequences for the vendor. It is therefore important that the vendor acts in good faith. A claim for damages based on misrepresentation is just one of the consequences that the seller should aim to avoid.

Selling property in Italy. The third stage: completing the sale

This usually takes place in the offices of a notary (Notaio). In Italy, vendors and purchasers often use the same notary, but you are perfectly within your rights to have your own notary.

A notary must oversee completion of Italian property transactions

Italian Notaries are officials entrusted by the law to transfer the legal title of an Italian real estate. They have a duty to correctly draft the Deed of Sale (Rogito), to ensure its proper execution and registration. In addition, on behalf of the Italian State, they collect payment of all Italian taxes ancillary to the completion.

While notaries are qualified lawyers, Italian law prohibits them from acting on behalf of any of the parties involved in a transaction. They must remain impartial. Only your own lawyer may offer legal advice to protect your interests.

Before completion the vendor should provide the Title Deeds. This could be the Purchase Deed, or the Italian Inheritance Tax Return lodged with the tax authorities. The vendor will also need to produce all the relevant documentation pertaining to the property. This includes for example, planning and building licenses. And, if the sale is of a building, rather than land, an Energy Performance Certificate and a certificate of Habitability.

All parties have a legal duty to provide the notary with information regarding the sale price and the appointed estate agency. This information will appear in the Deed of Sale, in the form of a solemn affirmation under oath (Dichiarazione sostitutiva di atto di notorietà). If this information is missing, incorrect or incomplete, the parties risk a harsher form of taxation on the sale of the property, plus substantial fines.

Fiscal matters

If the vendor benefits from “prima casa” (first home) fiscal reductions, there will be a penalty to pay if resale takes place within five years of the original purchase. The seller can however avoid penalties if they buy a new residential property in Italy within one year of the sale.

Following completion, the seller may be subject to Italian capital gains tax. However, no tax is usually levied if the vendor has owned the property for more than five years.

Finally …

As a general rule, it is wise to familiarise yourself with the legal framework regulating international property sales. If you are thinking of selling property in Italy and would like more detailed information, you might like to read the full version of our Selling Italian Property Guide.

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.

If you are in need assistance selling property in Italy, we are here to help. We can guide you through the whole process or even organise the whole process on your behalf. Get in touch with us for a free preliminary consultation.

 

 

 

Buying An Italian Property. A Short Guide

This short guide aims to cover the key elements of the Italian purchasing process

For a more in-depth explanation, you may wish to read our comprehensive Italian Property Buying Guide.

Buying an Italian property proceeds through 3 key stages:

– Proposta irrevocabile d’acquisto (Reservation offer)

– Contratto preliminare di vendita (Preliminary contract)

– Atto di vendita (Deed of sale)

Once you have chosen your property you should engage the services of a solicitor, whether you buy through a real estate agent or directly from the vendor.

The knowledge that an Italian solicitor has about Italian real estate law is invaluable – plus, your own solicitor is there exclusively to look after your interests.

The first stage. Reservation offer

When buying an Italian property, the first document you will have to sign is a, “proposta irrevocabile d’acquisto” (reservation offer). This is normal practice when purchasing through an estate agent

In contrast, when purchasing directly from the seller (a private sale) a reservation offer is unusual. The implications of dispensing with a reservation offer is one of the many reasons why you should seek legal advice.

By signing the proposta irrevocabile d’acquisto, you secure the removal of the property from the market for a limited period of time, normally 15 days.

It is important to highlight that a reservation offer is only binding upon the buyer when formal written acceptance of the offer has been received from the vendor. Once the agreement has been signed by both parties, it becomes a legally binding contract.

First deposit

You will need to pay a small deposit, which is normally held by the estate agent or solicitor until the vendor has formally accepted the reservation offer.

Should you finalise the purchase, this deposit becomes a part payment of the purchase price. If the seller does not formally accept the offer, your deposit will be refunded.

Due diligence

While the property is off the market, your solicitor, assisted by a surveyor, will make all the necessary searches to ascertain that the property doesn’t have any debts, mortgages, claims etc. Due diligence checks and searches ensure there will be no unpleasant and possibly costly surprises during or after the purchase.

The second stage of buying an Italian property. Preliminary contract

Normally at this stage, buyer and seller having agreed to go ahead with the conveyance, will formalise their agreement through a “contratto preliminare di vendita” (preliminary contract)

Some estate agents (and especially in the case of private sales) choose, or recommend, leaving out this part of the purchase process. However, this legal document really is essential. It sets out the detailed terms and conditions of the sale.

Estate agents often use boilerplate preliminary contract templates. These may not be suitable for your personal situation. Your purchase may be subject to certain terms and conditions. For example, you may have come across some structural issues during due diligence and want to make your purchase contingent on a surveyor’s report. This condition would need to be in the preliminary contract. A solicitor can draft the contract, or at least to examine the estate agent’s template and advise you on any implications before you sign it.

Second deposit

One of the essential legal elements of the preliminary contract is the payment of a deposit (caparra confirmatoria). This is normally equivalent to a minimum of 10% of the purchase price.

If you back out of the contract without a valid legal reason, you will lose this deposit. On the other hand, if the seller changes their mind about the sale, they will have to refund your deposit in full. You would also have the right to claim an amount equal to the deposit through the Italian courts.

In the preliminary contract, the parties also set the date to finalise the conveyance in front of the public notary.

The third Stage of buying an Italian property. Completion of the sale

By law a notary must oversee Italian property transactions. The notary is a public official who has State authority to validate contracts transferring the ownership of a property. The notary is also responsible for paying all land registry fees and cadastral taxes.

A notary must remain absolutely impartial

A notary may not therefore offer legal advice to any party involved in a property transaction. The notary cannot therefore act as a substitute for a solicitor in terms of representing the interests of the buyer.

In order to ensure you have proper legal safeguards, the only way is to engage the services of an independent solicitor. Only by having your own solicitor, can you be confident that no unpleasant surprises will be revealed at this late stage of the purchase process.

Deed of sale

Buying an Italian property concludes with the, “atto di vendita” (deed of sale).

The deed of sale is drafted by the notary and has to be fully compliant with the preliminary contract. In other words, the preliminary contract dictates all the essential elements of the transaction.

Translation

Should any of the parties not understand the Italian language, Italian law requires a translation of the deed of sale. Unless you have an Italian solicitor who speaks your language, the notary may also require that a qualified translator be present at the signing.

Unlike a translator, the advantage of having a solicitor with you is that should any last-minute legal issues arise at the signing, your solicitor will be able to immediately resolve these.

You should be aware that the Italian version of the deed will prevail in a court of law if any issues arise at a later stage.

Signing day

On the appointed signing day, all parties to the transaction convene, usually at the notary’s office. The notary reads the deed aloud and all parties then sign it in front of the notary. Once signed, the buyer pays the balance of the purchase price to the seller and the new owner receives the keys of the property.

New owners can collect a copy of the deed from the notary approximately one month after the signing. It takes approximately one month to register the deed at the relevant land registry office.

If the buyer cannot be present to sign the deed of sale in front of the notary, the buyer can give a power of attorney to their solicitor. This will permit the solicitor to sign the deed of sale on the buyer’s behalf.

Finally …

As a general rule, it is wise to familiarise yourself with the legal framework regulating international property sales.

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.

If you would like further information about buying an Italian property, we are here to help. We can guide you through the whole process or even organise the whole process on your behalf. Get in touch with us for a free preliminary consultation.

Buying an Italian property. Glossary
  • Proposta irrevocabile di vendita: An initial formal offer with a small deposit. It contains the price you are willing to offer and any conditions.
  • Contratto preliminare di vendita: This contract sets out, in detail, the terms and conditions of the sale and also all the relevant cadastral and land registry information. Also called a, “Compromesso”.
  • Caparra confirmatoria: Italian Civil Code regulates this deposit under art.1385 of the. If a deposit is defined as a “caparra confirmatoria” its payment gives rise to legal rights and obligations on both parties.
  • Atto di Vendita: All parties sign the deed of sale in front of a public notary. The buyer makes outstanding balance of payment and receives the keys to the property. Also called a, “Rogito”.

Holding Accounts in Italy. Property Completion funds

Keep your property completion money safe

On 29th August 2017, Italian legislation saw the introduction of holding accounts. The legislation governing payment for the purchase of Italian residential and commercial real estate is part of the Italian Law of Competition.

The law aims to provide better protection to both property buyers and sellers.

Holding accounts are applicable to funds for the completion of the purchase of Italian property. Deposits connected with a reservation offer and preliminary contracts are not subject to this legislation.

The buyer and/ vendor must request their chosen notary to use a holding account. In other words the notary doesn’t automatically use holding accounts.

In addition, the buyer can request the notary to keep funds in a bonded account. Again, the onus is on the buyer to specifically request that the notary use bonded holding accounts. As this may generate problems with the seller, we would recommend that the preliminary contract include a clause that all parties authorise the notary to hold completion funds in bonded holding accounts.

How do holding accounts work?

The buyer acquires legal ownership of the property at the signing of the deed of sale. However, by using a holding account, the notary will delay payment until after registration of the deed.

Following signature by all parties to the transaction, the notary has 30 days to register the deed of sale with the relevant land registry authorities.

Once registration of the deed takes place, the buyer can be certain that the purchase has been completed smoothly. Tranfer of funds to the vendor can then take place.

Keeping funds in holding accounts therefore provides protection to the buyer between signing the deed of sale and its registration.

Between signing and registering the deed, adverse entries pertaining to the property can come to light. Issues might include outstanding debts, mortgages, encumbrances, court applications for seizures and foreclosures.

The Law of Competition states that when purchasing property, all outstanding payments by the buyer to the seller should be kept in dedicated holding accounts belonging to a notary. This sum also includes any amounts the vendor may require to settle liabilities. For instance, the vendor may still be paying off a mortgage on the property. In this case, the buyer would pay the entire balance of payment for the property into the notary’s holding account. However, a part of this will serve to redeem and cancel the vendor’s mortgage lender once the purchase is complete.

Do all notaries have holding accounts?

The Law of Competition stipulates that a notary must have a holding account in which the notary can receive funds from clients for the delayed payment of real estate property.

A notary has no entitlement to any interest accruing to these holding accounts. Nor can a notary use funds for any other purpose than the payment of a particular property.

Furthermore, if a notary has debts, creditors can not foreclose on money deposited in holding accounts. Should the notary die, any funds in holding accounts do not constitute part of the notary’s estate. And in the event of death, funds do not form part of the notary’s matrimonial property regime.

Finally …

If you are looking for further information about the Italian property purchasing process, you might find our comprehensive guide helpful, or if you need independent legal advice,  please get in touch for a free consultation.

 

You may also find Buying Property in Italy useful.

Off-Plan Property in Italy. Preliminary Contract Checklist

Investing in an off-plan property in Italy

Investing in an off-plan property in Italy entails a buyer commiting to buy a property from developer that has not yet been built or that is in the process of construction.

This type of investment hides a number of risks, the major one being that the developer goes into administration during construction of your property and you lose any money you have already invested.

Off-plan property in Italy. Checklist for preliminary contracts

Legislative decree 122/2005 introduced very strict rules concerning buying an off-plan property in Italy. Article 6 of the above mentioned legislative decree states that the preliminary contract for an off-plan property in Italy should contain key elements. A preliminary contract is a legally binding document. Before you sign one, make sure it contains all of the following items.

A full description of the parties to the transaction

Not only the buyer but also the builder and/ or developer.

Property details

Identification details of the property including cadastral plot references.

Property description

A description of the property including outbuildings for the exclusive use of the buyer.

Building permits

Details relating to the building permit or application for a building permit. In addition, the law explicitly requires the mention of any issue associated with the building permit.

Technical specifications

All technical data relating to the building. The law requires a summary of technical specification in the preliminary contract. Full data must be in an attachment (capitolato). These specifications cannot be modified without the agreement of both parties.

Completion

Deadline date for when the construction will be complete.

Payments

Method of payment. Not only the total price but also a payment plan for deposits and installments. Buyers should only use bank transfers or other traceable methods of payment.

Bank guarantee

Full details of the bank guarantee. Buyers should receive the bank guarantee when they sign the preliminary contract. The guarantee should therefore be in place prior to, or at the latest upon signing the preliminary contract.

Loans

All mortgages or other types of loan for the development. Where a mortgage for the whole development is in the name of the construction company or developer, the company must divide it among all the buyers. Unless this is the case, the notary will not legally be able to sign the deed of sale.

Contractors

A full list of the contractors involved in the construction along with proof of their identities.

Checklist for preliminary contract attachments

As attachments to the preliminary contract buyers should also have the previously mentioned full technical specifications of the property. This should detail all the construction materials as well as listing all the agreed finishes and fittings. In addition, there should be a copy of the plan submitted to request building permits.

What if the preliminary contract lacks one of the elements set out in art. 6?

A preliminary contract not in compliance with the requirements of article 6 may be null and void because it breaches Italian legislation.

Since the above mentioned legal requirements are set out in order to protect the interests of the buyer, only the buyer can object to the validity of the preliminary contract.

Finally …

There are a number of risks involved in off-plan purchases. We have written several articles  about off-plan property purchases in Italy. You can use our search tool to find more on the subject of buying an off-plan property in Italy.

At De Tullio Law Firm, we are property law specialists. We operate throughout Italy. We would always recommend that you engage your own lawyer to ensure that you protect your interests. Before signing any off-plan property-related paperwork, including a preliminary contract, you should seek independent legal advice. If you are unsure about any aspect of your off-plan property purchase in Italy, we are here to help.

You may also like to watch our info videos about buying property in Italy.

Off-Plan Property in Italy. The Italian Law

The main risk with off-plan property purchases in Italy

Another in our series on the important issue of off-plan property purchases in Italy. Use our useful search tool to find our other articles on off-plan property purchases.

Investing off-plan is where a purchaser makes a commitment to buy a property from a developer that has not yet been built or is in the process of being built.

This type of investment can hide any number of risks.

The main risk is that if the developer becomes insolvent, the buyer may well end up out of pocket.

Guarantees for Italian off-plan property

Italian legislation provides a number of measures to protect buyers if the developer goes bankrupt. However, the onus is on the buyer to ensure that these protections are in place.

Guarantee on deposits

Law 122/2005 declares the obligation of the developer to offer a surety bond. This provides a guarantee to the buyer for deposits prior to the transfer of ownership of the property.

Furthermore, in accordance with art.1 of Law 122/2005, the developer must offer the surety bond at the latest when the preliminary contract.

All Italian off-plan property purchases must have a preliminary contract. A surety bond must be in place by the time buyers sign the preliminary contract. The developer must clearly reference the surety bond in the preliminary contract. If there is no mention of a surety bond, the preliminary contract is invalid unless, the buyer explicitly expresses that it should prevail.

According to article 2 of Law 122/2005 surety needs to be a bank, an insurance company or a financial broker authorised by the Bank of Italy. The surety bond guarantees the buyer repayment of all money paid as deposits.

In order to request an excussion of the guarantee, the buyer must first formally withdraw from the preliminary contract. A buyer’s written request to withdraw, together with evidence of deposit payments, is sufficient to activate the guarantee. Italian legislation stipulates that the surety provider should refund all deposits within 30 days.

Guarantee for building defects

According to art.3 of Law 122/2005 the surety bond also covers damages arising from building defects. This includes any damage the buyer discovers after signing the deed of sale.

Article 1699 of the Italian civil code covers building defects. The guarantee for defects has a statute of limitations of ten years from the finalisation of the building work in question.

Where the seller is a different legal entity from the developer of the property

The seller is legally required to request a copy of the surety bond from the developer and provide this to the buyer. This is part of the seller’s contractual obligations and must be referenced in the deed of sale.

Finally …

If you are considering investing in off-plan property in Italy, our advice is to engage your own independent legal adviser. Bear in mind that a lawyer recommended by a developer or seller may have a conflict of interests in this matter so we advise you to choose your own lawyer. If you need any help, 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.

 

Off-Plan Properties in Italy. Advice


This article was originally provided by De Tullio Law Firm to the British Consulate in 2011. While the article pertains to a Calabrian case, information is relevant to off-plan properties throughout Italy.

If you are looking for additional information about off-plan properties purchases in Italy, you will find a series of articles on the subject if you use our search tool, including a post here about your legal position regarding delivery delays.

Buying off-plan homes in Calabria

A large number of British citizens who have bought holiday property in Calabria have recently contacted the British Consulate in Naples. Many of these transactions have been completed to the satisfaction of the purchasers but, a significant number have run into difficulties with the lawyers involved or with the developers. The Consulate has drawn the matter to the attention of the Italian authorities who are investigating, but we strongly advise purchasers encountering problems of this sort to seek legal advice about obtaining redress.

Advice for anyone purchasing off-plan properties in Italy

Seek legal advice before signing a contract and paying any money upfront

Once you have signed a preliminary contract, it may be too late. Choose your own independent lawyer. We advise you not to use lawyers recommended by the developer or contractor so as to avoid possible conflicts of interest.

Use an independent Notary Public

You do not have to use the notary proposed by the developer or contractor for the deed of sale. In fact, to avoid possible conflicts of interest, we would advise against this. Choose your own notary.

Remember that the Italian version of the contract will prevail in an Italian court

So, either commission the translation yourself from an independent translator or, get any translation you receive checked by an independent qualified person.

Deposit

The amount you pay as a deposit for an off-plan development should be up to around 10%. Seek legal advice if you are asked for more than that.

Stato avanzamento lavori

As the building work progresses, the developer should accompany any request for further payments with a list of the work done (‘stato avanzamento lavori’). Ask an independent surveyor or architect to check the list before you make any payment. The preliminary contract should include a payment plan.

Surety and guarantee

When you buy an off-plan property, you should receive a bank loan guarantee. This must be an annex to the preliminary contract. If the developer becomes insolvent, this bank loan guarantee will often represent the only protection you have for your investment. If you have already received a bank loan guarantee, have a qualified professional check that it complies with Italian law.

Finally …

At De Tullio Law Firm, we are Italian and cross border property law specialists. We operate throughout Italy. If you are considering investing in off-plan property in Italy, please get in touch with us for a free consultation. We are here to help.

Building Defects in Italy. Who Is Liable?

A professionally drafted contract is your best protection against any faults with Italian construction work


Building defects include the use of shoddy materials, poorly executed work, deviations from an agreed plan or a request for additional money.

The best advice we can therefore offer before you enter into any arrangement with a construction, building or renovation company is to call your legal advisor.

A professionally drafted contract in both English and Italian will prevent a lot of problems, reduce stress and often save you a considerable amount of money.

A summary of Italian legislation covering building defects

The contractor is responsible for defects and unauthorised variation of construction work. If there are visible defects, you should not accept the work. If you do, you lose the right to claim on the guarantee (art. 1667, first paragraph of the Italian civil code).

In order to formally contest the construction work, you should request your legal advisor to notify the contractor through a formal letter of default. If you accept work with visible defects and/or unauthorised variations of work, you will lose the right to trigger the guarantee unless the defects and variations were caused with malicious intent. A contractor is considered to have acted with malice if, despite being aware of the defects and/or variations, the contractor fails to point these out to the client.

Hidden building defects

The acceptance of work does not compromise your guarantee in the case of hidden defects. You can contest hidden defects when you discover them. A client will need a lawyer to take action in order to make a claim on the guarantee. 

– Report the hidden defects within 60 days of their discovery.

– Take legal action within 2 years from the completion of the work.

If a client does not comply with both of the above mentioned obligations the client will lose the cover of the guarantee. In cases where the contractor not only neglects to point out the defects but also acts in a malicious manner to hide the faults, the time limit for legal action extends to 5 years.

Fault of the contractor 

Once the client proves the defects and/or the unauthorised variations, there is a presumption of fault against the contractor. It is then the contractor’s responsibility to prove any absence of negligence.

Guarantees

According to article. 1668 of the Italian civil code, in the case of visible or hidden defects the client has 4 possible courses of action.

– Request correction with the contractor bearing the total cost.

– Request a price reduction.

If variations or building defects are serious the client can:

– Request the termination of the contract and,

– Request compensation for damages.

Responsibility of the contractor for new build properties

Article 1669 of the Italian civil code provides particular regulations for new buildings. For new builds, the contractor is liable for collapse (total or partial), evident danger of collapse or serious defects in construction.

Jurisprudence extends liability to renovation work which can be expected to be durable. This, for example would include roof waterproofing and floor and wall tiling. The contractor’s responsibility increases to a period of 10 years from the date of completion of the work. Any faults should be contested formally with a letter of default drafted by your lawyer to the contractor within 1 year of discovering them.

Italian Law stipulates that the client has one year from the recorded delivery of a letter of default to starting legal proceedings against the contractor. Once the client has highlighted serious defects, there is a presumption of liability against the contractor. The contractor must prove the contrary.

Examples of serious building defects 

There is significant jurisprudence defining the meaning of “serious defects”. In broad terms, the definition of serious defects is work that seriously compromises the use of the property or has a significant impact on essential structural elements such as stability, efficiency and duration of work. Here are some examples of serious building defects classified in Italian jurisprudence:

– Detachment and rupture of a significant number of tiles.

– Defects concerning the roof of the property causing infiltrations of water.

– Faulty heating system.

– Inadequate thermal insulation.

– Faulty plumbing system.

– Defects of the chimney or flue.

Inspecting construction work 

Article 1665 of the Italian civil code provides the client with the option to inspect completed work before signing-off on it. This right of inspection also extends to work in progress. We would recommend that you involve your lawyer and an independent surveyor in this process before accepting any work.

Article 1665 par. 4, states that where the client accepts the work at the point of signing-off without requesting an inspection or without contesting work, there is a presumption that the client has accepted the work. If the client accepts the work without any formal objection, this constitutes an implicit acceptance. As a consequence, the client loses the guarantee for visible defects or unauthorised variations. There is however an exception for malicious or undeclared issues. In addition, acceptance of work means the client must pay the contractor for the work.

Finally …

For problems concerning your Italian property renovation or construction work, please do not hesitate to contact De Tullio Law Firm. We are Italian property law specialists. We offer legal assistance throughout Italy. While it is always best to engage independent legal services prior to starting a renovation or construction project, contacting a lawyer as early as possible in a dispute can often lead to a settlement thus avoiding lengthy and costly litigation in the Italian courts.

 

You may also be interested in Off-Plan Property in Italy: Insurance And Guarantee. In addition, we have a number of info videos that you may like to watch.

English-Speaking Italian Property Lawyer

How Can An English-Speaking Italian Property Lawyer Advise with The Purchase of A Property in Italy?

Buying a home anywhere, including Italy, is probably one of the largest and most significant investments you will make in your life. Italian property law is complex. It raises special issues of practice as well as points of law not present in other transactions and or jurisdictions. An English-speaking Italian property lawyer is a trained legal specialist, experienced at dealing with these problems.

The Italian property sales and purchase process

Briefly, in the typical Italian home purchase, the buyer enters into a brokerage contract with a real estate agent, usually in writing. Negotiations with the vendor go through the real estate agent, who acts as an intermediary.

In the first stage of the Italian property purchasing process, the buyer and seller enter into a formal written contract for the sale, a reservation offer. The buyer pays a small deposit. Once the reservation offer is in place, the buyer undertakes initial due diligence. Amongst other things, this includes checking title deeds and ascertaining the property has all the correct planning permits.

The second stage in the Italian purchasing process is to sign a preliminary contract. This contains all the terms and conditions of the transaction and is a legally binding document. Another deposit is due at this stage.

The third and final stage is when all parties to the transaction sign the deed of sale in the presence of a notary. In effect, this is the transfer of ownership when the seller receives the remainder of the purchase price.

The Italian property sales and purchase process may seem straightforward. However, having a specialist Italian property lawyer specialised in Italian property on your side will help you avoid some common pitfalls. 

Estate agency agreements

For example, a buyer may sign a brokerage agreement with a real estate agent that does not deal with a number of legal matters. This is a common occurrence. Estate agents often use standard forms, expecting that they will cover all circumstances. However this ‘one size fits all’ approach is not easily customisable for unusual circumstances.

In the absence of an agreement to the contrary, the buyer may be liable to pay a brokerage commission even if a sale does not occur, or to pay more than one brokerage commission. An English-speaking Italian property lawyer can explain the implications before you sign a brokerage agreement. In addition, your lawyer can negotiate the agent’s rights if the seller withdraws the property from the market, or can’t deliver a marketable title.

Due Diligence

An English-speaking Italian property lawyer can execute title searches, explain the title, determine if the legal description is correct and whether there are problems with co-­owners or prior owners. A lawyer can also explain the effect of easements, agreements or restrictions imposed by a prior owner.

In addition your lawyer can ascertain whether there are any legal restrictions. For instance zoning legislation may impair your ability to change use or make alterations to the property.

The title search does not tell the buyer anything about existing and prospective plans in the area. Having your own Italian legal advisor will enable you to obtain this type of information more accurately, thoroughly and easily than trying to do it yourself.

You may have plans to alter, renovate or extend the property. It is important to ascertain that your plans are possible from a legal point of view. Your lawyer can help this and can engage a surveyor or architect to inspect the property to ascertain  whether your plans are possible.

We would advise buyers to have a survey of the property. Not just structural but also measured. In addition, the survey should check for materials such as asbestos and lead-based paint and check the land for hazardous waste.

A buyer or seller may also find it useful to consult with a lawyer regarding purchasing structures, tax and inheritance implications of a cross-­border transaction.

The preliminary contract is the single most important document in a property transaction

Because a preliminary contract is so important, it is crucial that it reflects the buyer’s wishes. Again, Italian estate agents tend to use standard printed forms for preliminary contracts. Although these are useful, we would advise you to consult a lawyer for an explanation and clarification of the form.

You may need to make changes or add tailored conditions to reflect your personal circumstances. For example, is your purchase contingent on being able to get a mortgage? Are there any alterations to the property? If so, are they lawful? Does the whole property have full planning permission? What are the legal consequences if completion is delayed or doesn’t take place? What happens to deposits? This also raises related questions. Who will hold the deposits? Will they held in escrow by the estate agent?

Again, it is important to remember that printed contract forms are generally inadequate to incorporate the real understanding of the buyer and seller without significant changes. Once you sign a preliminary contract, it is not easy to back out of it and remember, you have paid deposits that you risk losing.

Deed of Sale

Completion is the most important event in the purchase and sale transaction. When you purchase a property in Italy you must do so through a notary. A notary is a government official. As such, the law requires notaries to remain impartial in all property transactions. They cannot therefore offer legal advice to any party to a transaction. A notary’s main tasks are to ensure that all documents are authentic. They also deal with registration and tax matters on behalf of the Italian State.

Although the role of notary is to ensure that the transaction meets all legal requirements, this does not mean that the notary is acting on the buyer’s behalf to ensure the buyer gets the best deal. Furthermore, contrary to what many people believe, the notary cannot guarantee the absence of legal issues such as any unlawful work to a property – (abusivi). While a notary will check planning permission, a notary will not make a site inspection of the property to ensure there are no additional illegal work.

The notary will require the presence of a translator if any party to the transaction is not a fluent Italian speaker. Having an English-speaking Italian legal advisor means buyers benefit not only from translation ability, but also legal know-how and expertise.

The closing process can be confusing and crowded. Those present include the buyers and sellers, their respective attorneys, and the real estate broker. There may be last minute disputes about delivering possession and personal property or the adjustment of various costs. If you are the only person without a lawyer, your rights may be at risk.

Conflicts of interest

Perhaps the most important reason to engage a lawyer is conflicting interests of the parties. Throughout the process, a buyer’s and seller’s interests can be at odds with each other.

The estate agent generally serves the seller. Both the seller and estate agent want to close the deal since this is how they will get paid. Because of this, we would advise you to choose your own English-speaking Italian property lawyer rather than one recommended by the estate agent or vendor.

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.