An Illustrated Guide to the Italian Property Market

Legal considerations must be taken into account while selling property in Italy. Investing in real estate in Italy might appear to be a lengthy and complicated process to international investors because of the country’s legal systems.

There are several layers to the Italian legal system. Risks might arise if you don’t completely comprehend how it operates. When it comes to a real estate deal, it’s best to have legal help. Choose your own counsel to prevent any conflicts of interest.

In Italy, the process of selling a home is broken down into three stages:

 

  1. Reservation and Marketing

The preliminary contract is negotiated and signed.

The transaction has been completed.

The first step in selling a home is to list it for sale.

It is possible for vendors to market their own properties on sites like esales property, rightmove or to use an estate agency to do so.

An Italian real estate agent that is qualified and registered with the local Chamber of Commerce is a must if you’re contemplating hiring one. Real estate agents must be registered in order to verify that they have professional indemnity insurance.

If an unregistered real estate agency engages in a restricted activity, it might be subject to prosecution. Fines and other penalties, such as not being entitled to commission fees, may result from this action. Both the buyer and the seller often pay the agency a commission (Provvigione). An agreed-upon percentage of the sale price can be negotiated, although it is often around 3%.

The typical conditions of engagement for real estate agents frequently include requiring foreign nationals to sign them. Prior to signing on the dotted line, they should be thoroughly analysed. Of course, the terms and circumstances of the brokerage fees must be thoroughly analysed. Although the minimum selling price, mandate length, and exclusivity are all critical considerations to keep in mind.

 

INTEREST-FREE BOOKING

A “reservation offer” is the first legally binding contract that a potential buyer would sign if they choose your home. If you agree to the terms of the offer, you must sign it and send it back to the seller. In addition, a modest payment is required from the buyer. For the time being, the property is virtually off the market thanks to the reserve offer.

 

DUE CAREFULNESS

Legal due diligence should begin throughout the time a property is off the market. This entails doing various kinds of inspections and searches. Searches for local authorities (Comune and Building and Land Registry) should be included. In addition, it is critical to look into local zoning, planning, and construction rules.

Before going on to the next step of the buying process, the buyer will want to verify the following points, among others.

It’s a fact that this property exists. As described, the property is in good condition, and it is the seller’s legal right to resell it.

There are no mortgages/charges or any rights of third parties or any encumbrances on the property.

Local planning, zoning, and building laws are all met on the land. Or, if applicable, the Local Authority has approved the building plans (Comune).

It is safe for human occupancy until the property is sold and rebuilt. In order for this to happen, you’ll need a certificate of affluence.

By lodging tax returns and paying income tax (Imposta sui Redditi) that may have been payable in past tax years, the seller has complied with all Italian tax laws. Failure to meet this legal obligation might make the property unsellable. Vendors should not be bankrupt (Fallito) if they are traders or companies, nor should they have an outstanding application to this effect.

There should be no outstanding service charges if the property is located in an apartment complex (such as Condominio).

Vendors in Italy are required to confirm that all representations made in the contract are correct to their best knowledge before signing a preliminary contract, which is known as a “Compromesso.” This indicates that the property’s details will be made public. The buyer’s particular questions should be answered accurately.

 

PRE-CONTRACT DEPOSIT.

A deposit is typically required when a buyer signs a preliminary contract. Between 10% and 30% of the property’s selling price can be used for this purpose. This means that if the buyer later decides to back out of the preliminary contract, they will be liable for the whole amount of the deposit. When a seller backs out of a pre-contract agreement, they must pay back the buyer double the deposit amount. As a result, if damages exceed the deposit, further payments may be required.

Under Italian law, both parties to a prospective transaction must act honestly.

In order to sign a preliminary contract, the seller must deliver a copy of all property papers to the buyer or their legal counsel. Any information that might influence the buyer’s choice to acquire the property must also be provided by the seller.

It is critical that the property adheres to all applicable construction and planning rules. The purchase contract may be rescinded and hefty fines imposed if this statute is violated. Sellers applying for planning amnesty should provide copies of essential papers to potential buyers.

 

CERTIFICATE OF RESIDENCE

The certificate of habitability (Certificato di abitabilità) must be provided by the seller prior to or at the latest upon completion of the transaction. A certificate is issued by the local government. It demonstrates that the property’s systems are in full conformity with Italian law and health and safety requirements. A copy of this certificate is required for employment. Obtaining this certificate in advance of signing a preliminary contract and paying a deposit is, of course, highly recommended for the seller. Sellers that don’t take this precaution face the danger of the deal falling through. As a result, the seller might be held liable for breach of contract.

It is imperative that a certificate of habitability be made available prior to signing a preliminary contract to avoid possible claims or penalties. The contract should state either that the buyer is renouncing receipt of this certificate, or alternatively, that the seller must obtain this certificate to complete the purchase.

 

MORTGAGES

If the property is being sold with a mortgage, the seller must pay it off and remove the entry from the Local Land Registry before the transaction may be completed. If the buyer intends to use a mortgage to purchase the home, it is best to get all the details worked out before signing a preliminary contract. However, this method may end up costing the buyer a lot of money and time.

 

Pre-Employment Rights in Italy When Selling Real Estate.

If the property 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, special care should be taken. Farmers, renters, and neighbours in Italy are entitled to know whether a property is about to be sold to a third party under Italian law. They get first dibs on any nearby farmland that comes up for sale. After signing a preliminary contract, the seller will need to deliver a copy of the contract to all parties with a right of pre-emption, so that anybody who has an interest can declare within the statutory time period (usually 30 days).

It is necessary to guarantee full compliance with this regulation. Preemption rights may be violated, which might lead to an ownership claim on the land. One year from the date of purchase, anyone can file a claim. As a result, the buyer would be able to sue the seller.

 

Consequences can be dire for even minor breaches.

Essentially, the seller should disclose any violations of the property and evidence of corrective action at this stage. Missed tax payments, as well as any violations or letters from the appropriate authorities, are included in this.

These are only a few considerations to keep in mind; there are many others. The vendor could face serious consequences if any of these events occur. As a result, it’s critical that the seller upholds its half of the bargain. Misrepresentation claims for damages are simply one of the outcomes that the seller should try to prevent.

In Italy, you may buy and sell property. The final step is to complete the transaction.

Typically, this occurs at the office of a notary public (Notaio). Vendors and buyers frequently employ the same notary in Italy, although it is entirely up to you whether or not you do so.

 

Italian property transactions must be overseen by a notary public.

It is the duty of an Italian Notary public to transfer the legal ownership rights to Italian real estate, as assigned by the law. Their responsibility is to prepare the Sale Agreement (Rogito) accurately to guarantee that it is properly executed and registered. Additional to this, they collect all of the Italian taxes that are related to the completion of the transaction.

Italian law prevents notaries from acting on behalf of any of the parties engaged in a transaction, even when they are licenced attorneys. They must maintain their objectivity. Legal advice to safeguard your interests can only come from your own lawyer.

The vendor should deliver the title deeds before the project is complete. As a rule of thumb, this is either a Purchase Deed or an Italian Inheritance Tax Return. If the property is being sold, the seller will also need to provide any required paperwork. Planning and construction permits are two examples of this. A Certificate of Habitability and an Energy Performance Certificate are also required if the property is being sold as a building.

The notary is required by law to be informed of the selling price and the name of the estate agency that has been hired. In the Deed of Sale, a solemn statement under oath (Dichiarazione sostitutiva di atto di notorietà) will be used to provide this information. A more onerous method of taxing on the sale of the property, as well as significant fines, are all possibilities if this information is erroneous, missing, or incomplete.

 

CONCERNS RELATED TO THE FISCAL STATE

There will be a penalty to pay if the vendor benefits from “prima casa” (first-home) fiscal discounts, and the resale occurs within five years. However, if the seller purchases a new Italian residence within a year following the transaction, they can escape fines.

 

The seller may be subject to Italian capital gains tax when the transaction is completed. However, if the vendor has held the property for more than five years, no tax is normally imposed.

Finally, it’s a good idea to familiarise yourself with the legal framework that governs foreign real estate sales as a general rule…….. If you’re considering selling a house in Italy, contact us today.

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