Buying Property in Italy

How the Italian Property Purchase Process works

The two most important contracts

As you will certainly be aware of, each Country has its own rules and regulations, and they can be completely different from those of other Countries, be they European or any other continents. Let’s take the example of the UK where the common law is in force. According to those rules, there are several differences between purchasing a freehold property, a case in which neither ground rent nor any other landlord charges are paid by the owner, and a leasehold one.
As a matter of fact, in Italy most properties – not to say all – are freehold. This means that the freeholder owns it outright and this is spelled out by article number 832 of the civil code in quite crystal-clear terms.
Italy has made a bad name for itself over the years and all over the world because of its intricate red tape and we Italians know it very well and certainly are the victims that most suffer from it. So, yes, we understand you… we are with you, and we would like to reassure you about the fact that the Italian buying process is smoother and leaner than you might think. Of course, navigating the rules of a different Country can be quite difficult. That’s why we are at your side.
Let’s assume you have found a property that meets your requirements, and you are going to proceed with the sale by making an offer, without having availed yourself of the services of a property lawyer; that can also be the case if you are well informed and extremely careful. Are you aware of the legal implications resulting from the whole process? For example, have you ever heard anything about what a preliminary contract or an irrevocable purchase proposal is?

The Preliminary Contract

A prospective buyer typically conducts due diligence on a property to assess its legal and technical aspects. This includes verifying details such as the address, year of construction, ownership titles, third-party rights and obligations, building permits, certificates, registry entries, and the overall condition of the property. It is advisable to carry out this research with the help of qualified third-party experts. If purchasing from a company, it is also crucial to evaluate the company’s financial stability at this stage.
Once an offer is accepted, the parties enter into a preliminary contract (contratto preliminare) to negotiate the terms and conditions of the final deed of sale. What does signing one of these contracts mean?
First of all, you need to know they are different each other, even though, according to the Italian civil code, once signed by the seller and the buyer, they both will be obliged to sign the final contract of sale in front of the notary, as the preliminary doesn’t transfer the ownership of the property.
This rule comes from the one defining the contract, which is an agreement of two or more parties aimed at establishing, governing or terminating a legal relationship (art. 1321 of the italian civil code). In other words, when a contract is in force, if one of the parties were not to abide, he or she will have to refund the other.
With regard to the form, the Italian Civil Code affirms the principle of freedom of forms. Most of the times a sale can be concluded by “shaking your hands”, and a contract can be valid both in a written or verbal form, if there is not a legal requirement for the parties to convene their agreement in a specific form. Indeed, the law regulates when a certain form is necessary for the contract to be valid. With regard to real estates, the Italian law requires a public act or a certified private writing in front of the notary (ad substantiam form).
This said, what a preliminary is? It’s a legally binding contract, in which the parties commit to entering into a subsequent, final contract, the essential terms of which must already be defined. This contract can be bilateral (if both parties are committed) or unilateral (if only one party is committed). It should not be confused with an “improper preliminary” contract, which is essentially a final contract, but the parties agree to formalize it in the required legal form. The key distinction lies in whether the parties intend to postpone or immediately enforce the effects of the contract. Under Italian law, there is a specific remedy for non-performance of a preliminary contract: the possibility of obtaining a constitutive judgment (see Article 2932 of the Italian Civil Code). This remedy is in addition to the traditional option of contract termination for non-performance. It has to be drawn up in writing, as the law requires that “the preliminary has to be concluded with the same shape of the deed of sale”.
You could ask yourself why you should sign it, by considering that it doesn’t transfer any real estate rights. There are some benefits by doing it, on both the hands actually:
it allows the buyer to block the sale of the property to a third party,
the seller receives, on the other hand, on the occasion of the signing, a substantial deposit (caparra confirmatoria).
The preliminary can be stipulated, for example, when immediate sale is not possible, because the seller is waiting for a new home to be delivered, or the buyer is looking for a mortgage. In the last case, if you don’t block the sale by signing a preliminary, meanwhile the vendor could sell to someone else and, at the end of the day, you would have lost your time and your dream home.
The preliminary contract must be registered to the Revenue Office (Agenzia delle Entrate) within 20 days from the signing, paying the registration tax and attaching the stamps; taxes are paid by the buyer; also, the purchase proposal of immovable property when accepted must be registered. Actually, it can also be registered through the Revenue Office website, by an allowed real estate agent having the credentials for doing it.

The Final Contract of Sale (Notary Deed)

The Final Contract of Sale (also known “Atto di Compravendita” or “Rogito Notarile”) is the official document that finalizes your property purchase in Italy. It is signed by both the buyer and the seller in the presence of a Notary (a public official representing the Italian government and standing as a neutral party) with all the guarantees that a notary offers, who will also sign the deed finalizing the transfer of the property and recording it in the public registries. At this point the buyer must pay the balance to the seller, property taxes and notary fees, and the officially receive the keys.
Should you do not speak Italian, the notary deed has to be translated into your Language by an interpreter, who will have to be present at the stipulation, also signing by declaring of having the requirements stated by the law in order to be an interpreter.
If you’re in the process of buying a property in Italy but can’t make the trip, you can easily grant power of attorney to an Italian lawyer or a trusted representative who can act on your behalf to complete the purchase. With a specific power of attorney (procura speciale), a real estate lawyer in Italy can represent foreign buyers and execute all purchase contracts on their behalf. This arrangement offers significant advantages, particularly by reducing costs and eliminating the need for buyers to travel to Italy each time a signature is required. Additionally, using a Power of Attorney prevents the Notary from needing to draft the final purchase deed in two languages, arrange for two witnesses, and hire a translator. The Power of Attorney can be signed by the non-resident buyer in their home country before a local Notary, and it must then be apostilled. At the end of the day, the attorney handles all the legal tasks on the client’s behalf, eliminating the need for the client to be physically present. This is particularly beneficial for clients who do not speak Italian or are unable to be present in person at an Italian notary for the property sale.
When it comes to the costs of buying property in Italy, there are several factors to consider. Upon signing the contract, the buyer is required to pay property taxes and notary fees. Once all documents are signed and the fees settled, the buyer is handed the keys to their new property.
With regard to tax costs for purchasing a property in Italy, you need to know they are exactly the same, being an Italian citizen or a foreigner (EU citizen or non EU citizen), but they depend on if you are going to establish your residence. However, foreign citizens who are relocating to Italy can benefit from tax incentives, provided the property is designated as their “first home” in the country, and of a flat tax regime by complying with certain legal requirements.
In conclusion, while buying property in Italy may seem different from purchasing a home in your home country, it’s not necessarily more complicated. However, it’s crucial to understand that the process involves a unique set of rules and customs, and there may be language barriers that could make things more challenging.
This said, you might be wondering why it’s important to hire a real estate lawyer in Italy.
There are several situations where the expertise of a lawyer is essential. Here are a few examples:
1)To understand and properly apply business laws in Italy, especially if you intend to make your investment profitable.
2)To stay informed about property inheritance laws in Italy.
3) To gain a thorough understanding of Italian citizenship law.
4) To conduct a legal due diligence of a property, checking for outstanding mortgages, issues in the original purchase deed, or verifying the financial status of the Italian seller.
5) To ensure that the property complies with the official Urban Plan filed with the local Italian municipality, and, if there are irregularities, to determine if they can be resolved and the associated penalties.
6) To provide advice on Italian tax law and nationality laws.
If you’re considering purchasing a property in Italy, our team of experienced Italian real estate attorneys is here to guide you every step of the way – helping you navigate the process smoothly and ensuring that your dream home becomes a reality.