The purchase/sale of real estate is stipulated in a formal agreement whereby one party, (the seller) transfers to another, (the buyer) the ownership of a given property against the payment of a price. There are various steps to this process. The judicial system requires that the agreements regarding property transfer are in written form and must comply to specific rules with some fundamental requirements and the fulfilment of certain obligations.
FORMAL PURCHASE PROPOSAL
The formal purchase proposal is a signed offer listing the conditions of the sale which is binding to the parties once countersigned for acceptance by the seller. A deposit of (usually) Euro 10,000 is paid at this stage. Once the purchase proposal has been accepted the property is withdrawn from the market.Once this is in place the parties can proceed directly to the completion deed with the Notary or opt to sign an intermediary contract, the compromesso.
Compromesso (Preliminary Sale Agreement)
The Preliminary Sale Agreement is the contract whereby the parties undertake to stipulate the definitive sale contract by a certain date at given conditions. The Preliminary Sale Agreement gives rise to commitments that are legally binding and may be enforced by the courts. The definitive contract must be stipulated by a Notary (notaio).
The Preliminary Sale Agreement will contain the exact identification of the buyers and the sellers, the exact description of the property with relevant cadastre identification numbers, the guarantees and obligations of the vendor and of any problems to be resolved by completion. In addition, the price of the sale and method of payment including details of the deposit, details of the history of the property as well as details of planning permissions. Details of any encumbrances such as mortgages and the date by which completion must take place. To comply with Italy’s financial transparency laws payments must be by bank draft, bank cheque or bank transfer.
If necessary, it is possible to draw up a shorter version containing only the essential elements which are the details of the parties, the subject of the contract, which is the future transfer of the property in exchange for the price, and the deadline by which the final transfer must take place.
The Preliminary Sale Agreement is generally drawn up by the Estate Agent.
The law provides that the Preliminary Sale Agreement must be registered for fiscal reasons within 20 days of the signing against payment of a small tax (see section on taxes).
The Preliminary Sale Agreement may also be drawn up by the Notary. In this case the agreement will be authenticated by the Notary and can be transcribed at the Property Registry. The transcription renders the contract ‘assetable erga omnes’ i.e. it becomes public and can be asserted by third parties. This protects the purchaser from any prejudicial event that may affect the property (e.g. mortgages or debts) between the date of the Preliminary Sale Agreement and the final deed. The Notary will charge a fee for this and a tax for the transcription.
On signing the Preliminary Sale Agreement a deposit which is normally 20 – 30 % of the price, although the parties may agree a different amount, is payable. There are fundamentally two types of deposit known as caparra confirmatoria ‘earnest money’ or ‘good-faith money’ and caparra penitenziale ‘penitential or compensation deposit'. The significance of the two different deposits is described below and is also subject to the wording of the contract.
In the event of default in completing on the agreed terms the buyer will lose the deposit paid and if it is the vendor that will not complete he has a legal duty to pay the buyer twice the amount received as deposit. However, it is possible to also force the sale through the courts and to apply for damages in excess of the deposit amount.
It is not possible to force the sale through the courts and damages are restricted to the deposit paid and if it is the vendor that does not complete to twice the amount received as deposit.
In addition, further sums may be payable, if it is proved that the damages actually exceed the amount of the deposit.
A word on spouses
On marriage, and unless an explicit declaration to the contrary is made at the time of the ceremony, spouses enter into a shared property arrangement in Italy. This means that any purchase made by either spouse during the marriage is common property. For those who have opted for assets to be governed separately, the purchase of a property by just one spouse is excluded from the common property arrangement.
The law excludes property received by donation or inheritance and properties acquired prior to the marriage.
For those married outside of Italy (Art.29 of Law 218/1995) it is the law of the country of residence that applies. The notary will ask you whether you are in common or separate property regime or, as the case may be, will specify that you were not married in Italy.
A codice fiscale is a unique identification code issued by the Agenzie delle Entrate (Inland Revenue office) or Italian Consulates. To apply you will require to show your passport, and visa for non EU citizens, and fill out the appropriate form. It is possible to delegate this to someone to apply on your behalf.
The codice fiscale is required to deal with Public Authorities and needed to open a bank account, purchase property, pay your taxes and even for the purchase of a SIM card.
The Notary and completion deed
The civil law notary is a public official and an expert in the judiciary field. He is a figure of absolute integrity with considerable technical expertise. He/She is appointed to an area by the Ministry of Justice. The choice of the Notary is generally left to the buyer as they liable to the payment of his/her fees.
The Notary is responsible for ensuring that the transfer of the property is carried out in the correct and legal form and prior to the completion must check that the owner has title, that the property is available for sale and that there are no encumbrances (outstanding debts/mortgages, third party rights, etc) . The Notary will reconstruct the changes of ownership over the last 20 years to ensure the continuity of the transcriptions and will check the plans and identification of the property.
The deed of sale will include a list of the town planning authorisations regarding the construction or restoration of the building, details of the method of payment of the deposit and balance as well as the details of payments to the estate agent, the energy performance of the building (as provided for by law) and details of tax (vat or registration tax and any tax benefits applicable) on the purchase.
The notary will calculate the taxes due on the transaction, collect them and pay them on behalf of the parties.
The language of the deed will be Italian as the jurisdiction and laws that govern the contract are Italian. For foreigners who do not speak the Italian language the deed should be translated by an interpreter which we will provide for you.
Lastly, the notary handles the formalities subsequent to the deed, such as registration (for payment of taxes) and transcription (to make the deed opposable to third parties).
Once these deeds have been finalised the transaction is officially public.
The Notary will keep the original deed in his files and the buyer and seller will receive an authenticated copy.
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PLEASE NOTE :
Information is provided in good faith and refers to general aspects of a property purchase. L'Architrave Immobiliare is not responsible for errors, omissions, improper use or changes to legislation. We would always recommend discussing with a Notaio or accountant your specific purchase requirements or for more personal information or clarifications.