The procedure of selling an Italian home is intricate. While not as challenging as actually purchasing one, it does need careful attention to detail.
That’s why it’s best to work with someone who is fluent in Italian and English and has extensive experience in both Italian and foreign property law. Considering that pre-contractual responsibility is recognized under Italian law. If one of the parties is upset by the other’s actions, that person might seek compensation for any related costs.
When a prospective buyer has shown enough interest in a property to put down a deposit with the realtor. This strategy typically backfires because the vendor lacks linguistic and cultural competence in the Italian market. Therefore, it would be far more challenging to renegotiate or change the purchase’s general terms and conditions.
Having said that, a foreign seller should be aware of the legal, technical, and practical challenges associated with selling property in Italy, and should consult with experienced Italian attorneys as soon as possible—possibly even before signing any documents—to ensure the transaction goes as smoothly as possible.
Estate Broker
A commission (Provvigione) of between 2.5% and 3% of the purchase price is customarily paid to the real estate agent by the buyer and the seller in Italy. Other legal arrangements are conceivable, where the agent is compensated only by the buyer or the seller.
Pre-purchase home inspections and other prep work
The following preparatory steps must be taken before the acquisition may be finalized:
Make Use Of A Geometra
A geometra combines the roles of surveyor and architect. They will survey the area and provide you a quote based on their findings. The best price you can get from a sale in the present real estate market may be determined using a comparable estimate. In addition, they guarantee the building meets all regulations by doing things like getting an Energy Performance Certificate ready.
How to Write a Limited Power of Attorney
If you are unable to appear in person before the notary for the final completion, you need have a specific power of attorney drawn out to authorize your chosen attorney to act on your behalf.
In a special Power of Attorney, the principal gives the agent authority to transact business on the principal’s behalf in a limited scope, such as the sale or purchase of real estate, the management of a bank account, or the execution of a limited partnership agreement.
It is possible to set a specific termination date for a power of attorney or to revoke it in writing at any time. If the power of attorney needs to be recorded (for example, in a real estate transaction), the signer often does so in front of a notary public.
A copy of the necessary Italian energy performance certificate (Attestato di Prestazione Energetica or APE for short) must be provided to the potential buyer prior to final completion as required by Italian law.
Inquiry Letter and Discussions
Each party to a property sale agreement will exchange a nonbinding pre-contractual document to establish the ground rules for the transaction. Incomplete or approximate information or substance during negotiations can lead to miscommunication and wasted time for all parties involved. Because of this, it needs to be exhaustive and exact, outlining every provision and piece of information that will be included in the subsequent preliminary contract and be legally enforceable.
It’s up to you whether the letter of intent is one-sided or two-sided. An agreement is unilateral if it is given by one party, such as a prospective Buyer, without any consultation with the other party, the Seller-Owner; an agreement is bilateral if it is discussed and signed by both sides.
The parties’ intentions may become legally binding whether the agreement is unilateral or bilateral. This is why it’s crucial to double-check the buyer’s letter of interest for particular phrases that indicate whether or not it constitutes a legally binding agreement.
Investigations – Buyer Background Checks
A successful real estate transaction is predicated on the utmost trust and honesty from all parties involved. Integrity and fair dealing are cornerstones of each business deal. The negotiating and closing processes are two points when good faith and fairness can sometimes break down. Therefore, before signing any letter of interest or preliminary contract, it is crucial to conduct some preliminary searches on the solvency and dependability of the buyer (whether a natural person or a legal person).
By doing these checks (e.g., employment, pay stub/salary, assets, solvency,debts or credits, etc.), the vendor may ensure that the completion goes smoothly, without any potentially harmful or bothersome surprises or misunderstandings.
Agreement in Principle
There is no third party involved in the preliminary sale contract save the “promising” buyer and “promising” seller. The parties to this agreement have entered into a legally binding contract obligating themselves to transfer ownership and consummate the acquisition by paying the remaining balance of the agreed upon amount on the agreed upon date.
Due to the need for a separate final contract/deed to be written at closing, this type of agreement is sometimes referred to as a “preliminary contract” (Contratto preliminare or Compromesso).
Because of the complexities involved, prospective homebuyers and sellers should always consult with Italian real estate law experts before signing any contracts.
Included in the framework agreement are the following:
- Each party’s identifying details (including complete names, birthplaces, passport numbers, nationalities, and, in the case of commercial sellers, VAT and legal registration numbers).
- Location details (commune and province) for the home.
Identification in the National Land register (NCT) or urban areas (NCEU) – this is accomplished by submitting the cadastral information of a recent title search. If the real estate transaction involves:
- The seller bears the cost of updating the national Land registry with the new parcel ID (frazionamento) for a fractional interest in real estate. This step is required prior to the notary’s official seal of approval on the deal;
- The contracts will be signed by both parties and will include a map extract from the Land Registry depicting the boundaries of the land and/or the component of the building in question.
Deposit amount notation
The deposit amount is negotiable between the parties. In most cases, a deposit of between 10% and 20% of the sale price is due at the exchange of the compromesso. After it has been signed by both parties, the price of the property cannot be changed.
The legal concept of deposit under Italian law might have far-reaching consequences for the international purchaser. The terms “Caparra Confirmatoria” and “Caparra Penitenziale” are used to denote two unique ceremonies.
Deposits classified as Caparra Confirmatoria are forfeited in full if the buyer fails to close on the acquisition of the Italian property by the agreed upon closing date. If the buyer can prove that the seller was at fault, the seller must repay the entire deposit plus interest. If the real costs of the damage are shown to be higher than the security deposit, then further compensation may be due.
If the deposit is a Caparra Penitenziale, then, depending on the specifics of the contract, either the buyer or the seller can back out of the deal and the vendor will get to keep the money (in the case of the buyer backing out) or the seller will have to give back the money (in the case of the seller backing out) depending on the terms of the agreement.
– Confirmation that no judicial or banking liabilities, inheritance or property rights, first choice of purchase rights, or other rights that diminish or restrict the right to full ownership to the property exist. The seller must promise that certain restrictions will be lifted before or at the time of the closing sale;
– Listing of all servitudes, both those that impose burdens on the property (such as roads, trails, pipelines, etc. that run through the property to be purchased) and those that confer benefits (such as rights to use water from nearby natural sources or wells, rights of passage, rights to access pipelines, etc.);
Post-1967 construction permits
In the event of the acquisition of a building that is still under construction, the agreement to acquire and full payment must be contingent on the issuing of the necessary building license.
– The purchase price, including the down payment amount, future installment amounts, and final total due at closing. It’s important to note that the down payment (caparra confirmatoria) is the initial payment (anticipo). If the sellers change their minds about selling, they must pay the buyer two times the amount of the initial deposit as compensation for any losses.
– The anticipated end date. At least 60 days must have passed after the initial contract was signed.
If the Compromesso is filed with the Inland Revenue office, it establishes the parties’ desire to purchase and becomes legally binding. After signing the Compromesso, both parties are legally bound to complete the property exchange. Such a contract is almost never voided and always results in the final deed of sale (Rogito) being signed.
Limitations on responsibility, the absence of any legal commitments on the side of the seller, etc. may also be contained in the papers presented for signature to the foreign buyer. The need for two signatures on the same document is a telltale indicator that one-sided provisions are there. This is required by Italian law for unfair, unbalanced, or unexpected terms, and it serves as a warning to the international buyer to not sign the contract before consulting legal counsel.
If the buyer backs out of the deal, the compromesso is lost and you can take legal action to get your money back. However, if you cancel, you’ll have to pay back twice as much as your initial investment.
The Home Loan
It is important to confirm with the seller that the existing mortgage will be paid off and the corresponding entry in the Local Land Registry will be cancelled prior to closing the acquisition if the property is subject to a mortgage (Mutuo Ipotecario) or if the purchase is to be completed with the assistance of a mortgage. Due to the potential complexity, expense, and length of time involved, it is recommended that you seek the advice of a local Italian real estate lawyer or notary. Another option is for the buyer, seller, and bank to come to an agreement for the buyer to “take over” (Accollo del Mutuo) the mortgage. If this is the case, the buyer should verify the status of the mortgage’s previous repayments and the conditions of the original mortgage agreement.
Completion, Final Document, and Notarization
After everything has been settled and the preliminary contract draft has been agreed upon, the seller and the buyer should each sign an original Preliminary Contract in the presence of a notary public.
The buyer often selects the notary in accordance with Italian custom, notwithstanding the notary’s dual role in the transaction. They do not take sides in any way. A notary does not represent either the buyer or the seller in a transaction.
If you don’t know Italian, the most difficult part of the buying procedure will be signing the deeds of sale (rogito) in front of the notary, along with the talks and the compilation of the preliminary contract.
This is why having a lawyer on your side throughout the process is crucial:
The notary will read the original, signed contracts from both parties to ensure that their provisions have been understood and that nothing has been overlooked.
-At this time, the buyer will pay the remaining balance of the purchase price to the seller.
You will get a banker’s draft (Assegno circolare) or a check (Assegno) for the deposit after all the necessary paperwork has been completed.
You may also pay through bank transfer if that’s more convenient for you.
As was previously noted, a specific power of attorney allowing the lawyer to represent you before the notary will be required if the seller is unable to attend the final completion.
Italian energy performance certificates (known as Attestato di Prestazione Energetica, or “APE” for short) must be included in the final deed in order to avoid fines.
FEE FOR THE TRANSACTION
The price of fees in Italy varies widely. All expenditures associated with purchasing and selling a property are included in the “round trip transaction costs.” This includes legal fees, notary fees, registration fees, taxes, agent commissions, and more.
Always ask the agent how much they charge before you start looking for properties; the cost is typically 2% to 3%, split 50/50 between the buyer and seller. The percentage of the sale price that goes toward the notary fee increases with decreasing sale price. That rate is not expected to go higher than 2-3%.
The buyer is responsible for any transaction charges, such as taxes and Notary fees. For a primary residence, the registration tax due upon completion is 3%. It will go up to 7% for non-residents and as high as 10% for agricultural land. Buyers of newly constructed homes do not have to pay transfer taxes but are subject to value-added taxes (VAT) of up to 20% on high-end properties.
There is also a land registry tax of around €130 for a primary dwelling, or 1% of the purchase price for a non-resident. The expenses of a surveyor, architect, or lawyer may also need to be included in, as well as the cost of installing or connecting utilities like water, electricity, or gas, the cost of converting currency (which may be reduced by utilizing a professional business like Smart Currency Exchange), and the cost of moving.
Take a look at the table below for a snapshot of the transaction charges.
TRANSACTION COSTS – Italian Property Sale & Purchase
| Tax | Percentage | Paid By |
| Registration Tax | 3.00 – 7.00% | buyer |
| Land Registry Tax | €168 or 1% | buyer |
| Notary Fee | 1% – 2.50% | buyer |
| Legal Cost | 1% – 2% (+ 22% VAT) | buyer |
| Real Estate Agent’s Fee | 1.5% – 4% (+ 22% VAT)
1.5% – 4% (+ 22% VAT) |
Buyer
Seller |
| Total costs paid by Buyer | 7.05% – 17.82% | |
| Total costs paid by Seller | 1.83% – 4.88% | |
| ROUNDTRIP TRANSACTION COSTS | 8.88% – 22.70% | |
