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BUYING PROPERTY IN ITALY

20 Oct 2017

BUYING PROPERTY IN ITALY

The purchase of real estate in Italy, be it residential, business or in the tourism sector, is an excellent and secure investment nowadays.

Many foreign private and business investors are in fact focusing their attention on this market, attracted by the opportunities to make a “return” on real estate.

That said, it is more than important to consider that foreign investors who want to purchase real estate in Italy should not do so without engaging the services of a lawyer who will handle the entire purchasing procedure: from the negotiations right through to the notarial deed.

So, the first step to purchasing property in Italy is to hire a real estate lawyer, in order to protect your interests.

Usually, the purchase of a real estate is broken down into a number of successive “Stages” that together form an actual procedure.

The transition through these different Stages is not however compulsory, given that the “seller/vendor” and the “buyer/purchaser” can meet in the presence of a notary and draw up a deed of sale.

As mentioned previously, however, the final deed of purchase is, in general, preceded by at least four stages and this is due to the ever increasing complexities of the operations of purchasing real estate.

A)First of all, you should keep in mind that Italian law provides for pre-contractual liability.

In the event that you feel aggrieved by the seller’s unfair behavior, you can file charges to be reimbursed for expenses.

That said, however, once you have chosen the property, you should make an offer in written. Doing that, you could offer an amount around 1% of the purchase price as a gesture of good faith. Unfortunately, an offer of purchase is only binding on the buyer; the seller may still consider other offers. It is best to specify a time limit in the offer document, so as not to be left hanging by the seller.

This first Stage, at the end, consists in the negotiation and drawing up of letters of intent or expressions of interest, that must be both comprehensive in their content and yet concise and have a non-binding effectiveness.

It should be pointed out that in the last few years this first Stage normally ends with a real contract that binds the parties to repeat their consent to a notary and gives the real estate agent the right to receive the commission.

B)Stage two consists in carrying out of legal and technical due diligence.

Due diligence consists of the investigative activities required for the purpose of acquiring all the material needed for assessing:

1)  the expediency of the investment;

2)  the suitability of the price;

3)  the appropriate setting out of the wording of the contract with the inclusion of the specific clauses;

4)  all the situations of potential risk.

The activity of due diligence in relation to an investment in real estate, even though it may be always broken down differently, in general consists of the following assessments:

-legal;

-fiscal;

-technical;

-urbanistic;

-administrative;

-environmental.

C) The negotiating and signing of the preliminary sale agreement, which must be comprehensive, detailed and effectively binding.

A preliminary contract (also called “compromesso”) is drawn up by the seller, his attorney, or real estate agent, containing the sale price, the amount to be paid as deposit, the completion date, the land boundaries and details of the property, and any other relevant clauses (i.e. water rights and rights of passage).

In this Stage you must consider that the standard agency fee is payable at the signing of the preliminary contract.

Regardless of the type of property (commercial, residential, or land sales), the fee could be between 3% and 8%, and it is usually shared between buyer and seller.

By the way, upon signing of the compromesso, the deposit is raised to 10% to 20% of the sale price, depending on what has been agreed. In the event that you decide not to pursue the purchase, the compromesso will be forfeited or the seller may seek legal action to enforce the purchase. On the other hand, if the seller backs out, he will be liable to pay double the amount you have given as deposit.

The purpose of the preliminary agreement is not just of “holding” the deal, but also that of immediately anticipating appropriate negotiated guarantees to the benefit of the investor – like for example the specific guarantees about the administrative regularity of the property – which will remain in effect following the drawing up of the notarial deed.

D) The last Stage consist in drawing up, before a notary (generally chosen by the purchaser), of the final deed of sale (also called “rogito”).

With regard to the notarial deed, it is important to point out that this is not compulsory. Indeed, under Italian Law, the ownership of a piece of real estate can be transferred by the signing of a private agreement between the vendor and the purchaser. Normal practice, however, is that in almost all cases a notary’s deed of sale is drawn up, in order to subsequently record the agreement with the real estate registry for the purposes of safeguarding the purchaser against a possible further sale of the same property by the vendor to other parties.

As required under the articole 1475 of the Civil Code, the costs of the sale and any other additional costs will be paid for by the purchaser. These costs include the notary’s fee, the registry fees or the value added tax. Any other brokerage expenses will be divided equally between both parties.