A Comprehensive Guide to Buying Italian Properties
A purchase of property in Italy will proceed 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 of an Italian solicitor on Italian real estate law is invaluable – plus he is there exclusively to look after your interests.
When buying a property in Italythe first document you will be called upon to sign is the so called “proposta irrevocabile d’acquisto” (reservation offer), which is normal practice when purchasing through an estate agent. In contrast, when purchasing directly from the seller (private sale) this document is not normally used. The implications of there either being a reservation offer, or dispensing with it, is one of the many reasons why a solicitor should always be engaged.
By signing the proposta irrevocabile d’acquisto you will be securing the removal of the property from the market for a limited period of time, normally 15 days. During this interval your solicitor, where necessary assisted by a surveyor, will make all the necessary searches to ascertain that the property is without any debts, mortgages, claims etc., thereby assuring that there will be no unpleasant and possibly costly surprises during the final phase of the purchase. At this stage you will be required to pay a small deposit, which is normally held by the estate agent or solicitor until the offer is formally accepted (signed) by the seller. Should you finalize the purchase, this deposit will be considered as partial payment of the purchase price. If the seller does not formally accept the offer your deposit will be returned to you. It is important to highlight the fact that the reservation offer is only binding upon the buyer until formal written acceptance by the vendor, at which point, (being signed by both parties), it becomes a legally binding contract.
Normally at this stage, buyer and seller having agreed to go ahead with the conveyance, they will formalize their agreement with the “contratto preliminare di vendita” (preliminary contract). Some estate agents (and especially in private sales) choose or recommend leaving out this particular essential part of the purchase process. However, this legal document really is essential because it sets detailed terms and conditions for the sale. This is why it is highly advisable to engage the services of a solicitor, as one of their functions is to draft this contract where possible and, when not, at least to examine it and advise very carefully and in detail on its implications before you are either cajoled or pressured into signing it.
One of the essential legal elements of the preliminary contract is the payment of a deposit (caparra confirmatoria), normally equivalent to a minimum of 10% of the purchase price. This deposit will not be returned if you back out of the contract without a valid legal reason. On the other hand, if the seller changes their mind about the sale he/she will have to refund your deposit in full. You also have the right, if you wish, to claim an amount equal to the deposit through the Italian courts.
In the preliminary contract the parties also set the date to finalize the conveyance in front of the Public Notary.
The Notary is a public official who has the authority according to Italian law to validate contracts transferring the ownership of a property. He is also charged with paying all registry fees and cadastral taxes and carrying out the relevant searches on the property. Only by having engaged a solicitor beforehand can you be confident that no unpleasant surprises will be revealed at this late stage of the purchase process.
The notary is supposed to be an absolutely neutral and impartial party in the transaction. This is why he cannot be a substitute for a solicitor in terms of representing the interests of the buyer and the only way to be assured of proper legal safeguards is to engage the services of an independent solicitor.
The final step of the conveyance is the so called “atto di vendita” (deed of sale). The deed is drafted by the Notary in his office, and has to be fully compliant with the preliminary contract. It is the preliminary contract which accordingly dictates all the essential elements of the transaction. Once the Deed has been signed by all those present at the signing, the balance of the purchase price is paid to the Seller and the keys are handed over to the new owners.
A copy of the Deeds will then be given to the new owners approximately one month after the signing. This is because it takes approximately one month for the new deeds to be registered at the relevant Registry Office. Italian law requires that the deed of sale must be drafted in both Italian and English should one of the parties not understand the Italian language.
If the buyer cannot be present in front of the Notary the buyer can give power of attorney to his solicitor who will sign on his behalf. The Notary will read and explain the contract in the presence of the parties, and if present in person the buyer will be able to read and check over the English version, and of course if our recommendations are followed, then with the buyer’s own bilingual solicitor being in attendance, questions and queries can be raised by or on behalf of the buyer with the support of his/her own solicitor.
Specific Steps to Buying Real Estate Property in Italy
The real estate sales and purchasing process in Italy is fairly streamlined and not particularly complex. For the most part, a foreign national stands in the same shoes as does an Italian citizen, with one exception. When it comes to the purchase of real property in Italy, a foreign national must pay a 11% purchase registration tax after the sale itself is consummated. An Italian citizen must only pay a 4% purchase registration tax.
In Italy, the first step towards the purchase of real estate is the initial agreement between the parties. Once the initial agreement is signed and executed, there are some primary tasks that must be completed by the parties. For example, the buyer must obtain appropriate and sufficient financing. The seller must work to make certain that title to the property is free and clear of any and all encumbrances so that it can be conveyed to the buyer.
When this initial agreement is signed, the seller will post a deposit in the amount of at least 10% of the total purchase price of the real estate being sold. It is not uncommon in Italy for deposits to run as high as 50% of the overall purchase price of the property. Deposits in Italy tend to be higher than what is seen in many other countries around the world.
Generally speaking, the deposit is not refundable if the buyer simply decides that he or she does not want to buy the property. Indeed, the only real circumstances in which a buyer can obtain a refund of the deposit — even a hefty deposit of upwards to 50% of the purchase price — is when the buyer backs out of the deal or in circumstances when clear title to the real estate cannot be obtained within the time set forth in the initial agreement between the parties.
The real estate purchase process is overseen by a notary in Italy. The notary actually has more duties than is normally associated with a notary involved in real estate transactions in other countries the world over. For example, the notary in Italy is responsible for carrying out title searches to work to make certain that the title to the property is free and clear of any obvious defects or liens.
Many real estate experts in Italy recommend that a purchaser take the time to hire what is known as a geometra. The geometra will survey the physical boundaries of the property for sale in Italy to make sure that it actually does comport with what is listed on the legal description that is subject to a contract for sale. (These experts maintain that this particularly is important when it comes to older properties in Italy.)
The real estate purchasing process can take upwards to six months to complete in Italy. For this reason, unlike in many other countries around the world, it is a commonplace occurrence for a purchaser to move into residential property after the initial agreement is signed. In most countries around the world, the purchaser does not take possession of the property until the final agreement is executed and the deed to the property is transferred from the seller to the buyer.
It is always recommended to use a Solicitor or lawyer.