Property purchase agreement and contracts in Italy
The earliest formal step a potential buyer needs to take is identifying the right property, the one that meets his/her needs. This can be done with the help of real estate agents and local experts, who can offer real insight and are knowledgeable of current market trends.
Once the buyer has selected his/her preferred property the next steps to be addressed may be contacting the seller to start negotiations, or, alternatively, drafting what is known as a purchase proposal. Тhis proposal is not legally binding, and it does not mean that the offeror has secured the property in question. The proposal’s purpose is, instead, to let the seller know that there is an offeror interested in buying the property, and willing to, later on, sign a contract. It is common practice for the prospective buyer to enclose a sum of money as a deposit – usually between 5 and 10 % of the selling price to show evidence of real intention.
The seller has a limited time to decide whether to accept the offer or not. If the offer is accepted the seller is entitled to keep the deposit, and shall consecutively sign the proposal. This signing makes the contract legally binding for both parties. If, instead, the seller refuses the offer, he/she is required to return the deposit paid.
However, it must be acknowledged that purchase proposals are rarely used. This is due to the fact that at the time they should be drafted the potential buyer does not actually have sufficient information, or legal documentation, concerning the property and ownership of the seller. This step is therefore usually skipped and the offeror may consult a lawyer in order to receive legal advice.
As regards the first steps to be addressed the key one is the preliminary contract (Compromesso), which must be signed prior to the completion of the final deed. The preliminary contract is a private agreement which states the agreed sale price, the completion date of the deal and the details of the property, as shown in the land registry. This contract does not yet constitute a transfer of property ownership from the seller to the buyer, but it obliges both parties to sign the final deed before a notary. Since January 2007 Italian legislation calls for a legal registration of the preliminary contract with tax authorities. Registration fees are usually paid by the buyer, and the contract is registered by the real estate agent.
Generally, the buyer is required to pay a deposit between 10% and 30% of the total sale price. This down payment is called Caparra Confirmatoria, i.e. confirmation deposit, or Caparra Penitenziale, namely penitential deposit.
The Caparra Confirmatoria is more often used. The purpose of this payment is to safeguard both parties in case a default occurs prior to sale completion. If the buyer is held accountable for the drawback he/she will automatically lose the whole deposit. Conversely, in case the seller is to be blamed, he/she shall have to pay the buyer twice the amount of the received deposit. Finally, if the purchaser is able to prove that damages caused exceed the amount of the deposit, the seller may be required to settle an even higher amount.
On the other hand, if the deposit defined as Caparra Penitenziale is adopted,the party that decides to withdraw from the agreement must give his/her counterparty the amount, which is thereby agreed upon as a penitential deposit. Thenceforth, the counterparty that receives the deposit is no longer allowed to claim further damages.
The final and mandatory step implied in ownership transfer takes place before a notary. Usually the notary is a professional chosen by the buyer, and the notarial fees are to be paid by the latter. The due fee depends on the price of the property which, generally, corresponds to 1%. However, if the property is low-cost the percentage might be higher. The buyer and seller are both required to be present, or duly represented by a Special Power of Attorney act, at the notary’s office at the signing of the notary deed. The law lays down that deeds need to be drawn up in Italian language. However, should the parties declare they do not speak Italian, the notarial deed may be drafted in two languages, i.e. in Italian and the other language understood by the non-Italian speaking party. In this situation an interpreter is hired to facilitate the communication with the notary. Alternatively, or in addition to this, the buyer may also be represented by a bilingual attorney. According to Italian law the notary reads the contract aloud in order to ascertain there are no misunderstandings and that all the statements comprised are legitimate. Once read and confirmed, the final deed is issued in three copies, and signed by the two parties and the notary.
Finally, the seller receives the remaining balance from the buyer. It is advisable to transfer the money via a Notary’s escrow account. This is a bonded client account which enables the notary to receive funds deriving from the payment of properties and hold these until the moment to transfer them to the seller comes, subject to fulfillment of the criteria as set forth by the agreement. Upon completion of these steps and payment of the full price, the property is transferred to the purchaser.
Comprising proficient real estate agents, experienced lawyers and accountants, and skilled architects and surveyors our team is able to guide prospective investors through the whole process of purchasing property in Italy.
- knowledgeable of the local real estate market we assist and facilitate our foreign clients ingeniously by sharing our insight with them, allowing them to grasp understanding about the local real estate market and helping them contact a real estate agency, and find the right property;
- we duly inspect all preliminary documents, provide translations, and advise our clients on the content. Documents we may assist with comprise land register plans, energy rating certificates, habitability certificates;
To further facilitate our clients, easing proceedings, we:
- offer a summary of our findings in a technical and due diligence report;
- draft a first offer and negotiate the price in case of concrete interests;
- draft and negotiate the preliminary contract and all conditions related to it;
- represent our client in front of a notary public, so as to ensure that our client’s best interest is satisfied, and act on his/her behalf signing the final deed;