BUYING AND SELLING PROPERTY IN ITALY
A Team Endeavor
By: Donald Carroll and Christine Marciasini
A dynamic couple from Chicago found a villa in Montepulciano, Italy they wanted to buy. Their real estate agent there had them sign an Proposta di Acquisto (offer to purchase) to send to the seller giving the price they wanted to pay and had them make out a check for Euro 5000 in the name of the seller. The seller accepted, collected her check, and the deal became irrevocable. The agent asked the couple for his fee of 3% of the purchase price and they paid.
The couple then learned that the lovely upstairs study with fireplace had been added to the main house without a building permit. There would be fees to pay to the geometra (surveyor) and tax to the local municipality to get the permit and the study would need to be torn down if the permit was not granted. The seller had no intention of taking care of this and there was no recourse for the couple. They were stuck and yet the outcome could have easily been avoided.
Buying a property in Italy can be either a gratifying or distressing experience. As a foreigner seeking the former, there is no substitute for having the right team of advisors working for you.
A geometra will let you know about the integrity of a building’s structure, whether permits have been obtained and the costs for putting things right if needed. An attorney will examine title, review all contracts, help you negotiate the deal and make sure your rights are protected. Italian law requires that all land sales be completed before a notary. A notary will ensure that the transfer of title is made according to law, that all state and city fees are paid and that the deed of sale is properly recorded in the land evidence registry.
Phase One: Preparing for the purchase and sale
Seller: Gather ownership and other key documents, including:
A. Atti di provenienza: demonstrating how you obtained the property and showing your good title.
-Atto notarile (notarial deed)
-Dichiarazione di Successione (estate tax return): if received by inheritance
-Sentenza di usucapione: court judgment awarding title to property through adverse possession
B. Additional documents
1. Demonstrating compliance with registry and zoning:
-Planimetria: map of property as it appears in the catasto fabbricati (registry for buildings)
-Condono edilizio: certificate showing grandfathered permission on works originally done without a permit
-Certificato di destinazione urbanistica: certificate showing the "use", e.g. residential, agricultural, etc. designation for the property
-Certificato di Abitabilità: certificate acknowledging the habitability of the property
-Certificazione energetico: certificate showing the building’s energy use
-Visura catastale: land registry certificate showing a lack of encumbrance or liens on the property
2. If also selling land:
-Mappe catastali: inventory of all parcels of land comprising the property with tax coefficients
-Coltivatori Diretti: list of any tenant farmer(s) who work the bordering land
Phase Two: Proposta di Acquisto (offer to purchase) and Contratto Preliminare di Vendita, (preliminary purchase and sales contract also commonly referred to as the “Compromesso” )
This is a critical legal phase of the transaction. Buyers are often instructed that a purchase should be a two step process. That they should first make an offer with a purchase price that becomes binding on them upon acceptance by the seller; and second, enter into a preliminary purchase and sales contract which details the terms of the deal.
This traditional approach may be followed. However, without proper legal review of the offer, there is a risk of consequences similar to those suffered by our Chicago couple.
An efficient alternative to this approach is an offer that includes all the terms of the deal including conditions to be met before the offer becomes binding. Such an offer, once the conditions have been met, will constitute the preliminary purchase and sales contract (“preliminary contract”) and allow the parties to proceed to the final deed of sale with one unified agreement.
Conditions may include the examination of seller’s title, having all buildings checked for structural integrity, absence of any encumbrances or liens, or obtaining a waiver of the state’s preemption rights on buildings on the Ministry of Cultural Heritage culturally protected list. If a condition is not met then the buyer will have the right to ask for his or her deposit to be returned.
The preliminary contract should also include a full legal description of the property, including rights of way, sale price, terms and method of payment of deposit(s) and the final payment, date by which the sale is to be closed and identification of the notary.
Execution of the preliminary contract legally binds the parties to go forward to complete the sale assuming all conditions are met. Failure to close after this point is considered a breach a can be resolved through the deposit provisions in the contract as discussed below, or by filing suit in court to enforce specific performance.
The terms of the preliminary contract are the basis upon which the notary will draft the deed to be signed at the closing.
Deposits: a deposit is paid by the buyer to the seller at the time of signing of the preliminary contract in an amount ranging from 10% to 30% of the sales price. The deposit which may be paid at the time of signing the preliminary contract of sale is technically referred to as a “Caparra Confirmatoria”. Should there be default on the part of the buyer, that party loses the entire deposit. Should instead the seller default, the seller must pay the buyer twice the amount of the deposit.
Commissions: Many realtors also seek to receive their full commission at the signing of preliminary contract, or if the traditional approach is used at the acceptance of the offer. Seek to negotiate the timing of the commission payment with the realtor at the time of entering into a realtor contract so that 50% of the commission is paid at the time of the signing of the preliminary contract and 50% at closing.
Phase Three: Closing
Both parties appear before a notary to sign final deed of transfer. However, either party can be represented by a third party pursuant to a power of attorney. Attorneys regularly act on behalf of their clients at closings.
At this time the seller is paid the balance of the purchase price and title to the property is transferred to the buyer. If the buyer is taking out financing to purchase the property a bank representative may also be present.
A real property purchase in Italy is a serious investment and often the fulfilment of a dream. Italy’s unique real estate, tax and immigration laws and local customs all lead to the recommendation to having the right team of advisors assist in making those both successful realities.
Donald Carroll (email@example.com) and Christine Marciasini (firstname.lastname@example.org) are attorneys with Pirola Pennuto Zei and Associati, Viale Castro Pretorio 122, Rome 00185, tel: 06 570281.