Choice of Property

Choice of Property, Searches and Negotiations

To begin with, you will need to select the area in Italy in which you wish to buy your property, decide which type of property you wish to buy and whether to operate directly on the open market or to seek the assistance of a local agent (“Mediatore or Agente Immobiliare”). It is important to use an agent with a good reputation, preferably one who is familiar with foreign purchases and one who will provide comprehensive and clear information about the property.

If you do not have a property in mind already, a property finder can locate property to meet your specification, however, he may charge a fee between 3% and 6% ofhe purchase price.

Under Italian law the agent is paid a commission (“Provvigione”) both by the buyer (3%) and the vendor (3%). It is possible to agree other legal arrangements, whereby the agent is paid by the buyer or the vendor only. Usually, the agent has a duty to put, both parties to the contract, in touch with each other and to inform each of them of anything known to him, which may be material or relevant to his clients.

Under Italian law, an agent must be registered with the local Chamber of Commence and should also lodge with the Chamber of Commerce a specimen of his draft terms and conditions. This will involve a form of supervision and ensure a minimum of professional qualifications. Where the agent is not registered, he will be liable to fines and other penalties and, more importantly, will not be entitled to the commission and cannot sue a client for unpaid commission.

Frequently, when dealing with an Italian agent, you will be required to sign a standard contract, which should be carefully considered before signature. This applies especially to the term relating to the amount of commission and the time when it will become payable. As mentioned earlier, this or other documents offered for signature, frequently include a “booking” for the particular property (“Prenotazione”) and the payment of a deposit (typically 3,000€). Should the purchase does not proceed, the purchaser is contractually entitled to a refund of the deposit however, this is not always the case. If the purchase does not proceed because the purchaser changes his/her mind, the deposit will usually be lost. On the other hand, should the fault be that of the Vendor, the deposit will be returned. If the purchase proceeds, the deposit is treated as part of the purchase price. Following the “Prenotazione”, the agent will generally take the property off the market for a few weeks, to enable the lawyer to carry out the appropriate checks, provided the paperwork is in order and the deposit paid.

The signing of these documents, at such an early stage is to be avoided, if possible, but if payment is made, the contract should expressly state that any payment effected by you is on account of the purchase price for the property in question. Other restrictive clauses may be included, such as limitations of liability, lack of any commitments on the part of the seller etc. The presence of these one-sided clauses, is usually shown by the tell-tale request to sign the same document twice. This is a requirement of Italian law for unfair, unbalanced or unusual clauses and should be a warning to you.

When purchasing a property in Italy the checks and searches are not the same as in the UK. The checks conducted are only those, which are considered normal in the area where you are buying the property from. Local procedures can be safer than our system or sometimes better, however each location is different.

Italian law requires both parties to a prospective transaction to act in good faith. Thus, before any form of legally binding obligation is accepted, it is normal for the vendor to pass to the buyer or their legal advisers, a copy of all the documentation relating to the property and to inform them of any material fact, which may affect your decision to proceed with the purchase. At the same time, and before considering any draft contract, you should organise a survey of the property and effect all the searches required to satisfy yourself that the property is what has been described to be and is legally saleable.

In particular and with the assistance of independent professionals, you will need to check that:

  • the property exists, it is as described and belongs to the prospective seller or
  • sellers who, in turn, must have a valid title to sell it, and
  • there are no third parties’ rights (“diritti di prelazione”), mortgages (“mutui/ipoteche”) or other undisclosed/encumbrances affecting the property (“servitű”) (or, if there are any, they should be considered with great care) and
  • There are no pre-emption rights. These can give certain people the right to buy in preference to you
  • the property complies with all the applicable local planning and building regulations and with any relevant building plan approved by the Local Authority (“Comune”). The property must also be fit for human habitation and a certificate to this effect (“Certificato di abitabilita”) should normally be available and
  • the boundaries are clear
    Whether Planning Permission exits or if not that there is a possibility to obtain planning permission
  • the vendor has complied with all the relevant Italian tax legislation by lodging tax returns and paying income tax (“Imposta sui Redditi”), which may have been due in the previous tax years (now no longer necessary). In default of this requirements, the property may be legally unsaleable and
  • where the vendor is a trader/sole trader or a company, he / it should not have been adjudged insolvent (“Fallito” or “in Fallimento”) and no application to this effect should be pending against it
  • that the property is not affected by debts
  • where the property is in a block of flats (“Condominio”), all service charges due should have been paid to the Administrator (“Amministratore”) and you should request previous years’ balance sheets and accounts (preferably audited) together with the relevant receipts showing payment of these charges etc
  • the seller and agent are telling the truth about the documentation to be signed
  • seller is not requesting unlawful “black money payments”

It is important to ensure that the property complies with any planning or building regulations, applicable, and this should be considered with great care. Breach of this legislation may result in the avoidance of the purchase contract and heavy penalties. In case of breach, if the vendor has applied for the benefit of a Planning Amnesty (“Condono Edilizio”) as introduced by law in 1985, it will be necessary to obtain copies of all the documentation, and to check that it is complete and in order. All required returns should have been lodged with the authorities and charges registered within the statutory deadlines.

It is important not to sign anything, except perhaps for the Reservation Contract, until the documentation has been checked by a Lawyer. If you sign something, which you do not understand, there is a risk that you may become committed to a contract, which is unfair, unsafe and structured financially in a way unsuited to your tax needs and is tax inefficient.

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