The Italian buying process is often presented and carried out in a routine manner, where the property is first locked in with a bid and then proceeds to a meeting with the notary for the final contract signing.
The process for purchasing a property in Italy is well structured and its formality makes each transfer of ownership safe, but as with any negotiation, regardless of whether it is a property or a car, it is necessary to carefully analyze the circumstances and the property for sale, make an agreement that safeguards the parties and try to foresee every possible scenario.
It’s important to note that an Italian bid is a binding contract, where the loss of the deposit is not the only legal consequence that can arise if the buyer decides to cancel the purchase.
If the buyer cancels the purchase due to a reasonable cause, such as discovering illegal renovations or serious defects in the property that make it uninhabitable, they will not face any penalties. However, if the buyer cancels the purchase due to situations or aspects that make the investment no longer interesting (i.e. for personal reasons that are not the fault of the seller), they may lose the deposit and be required to pay the entire commission to the broker. In some cases, the seller can take legal action against the buyer to force them to complete the purchase.
It’s also essential for the buyer to be aware that the time frame to report discovered defects is limited.
It’s important to note that the buyer is not protected merely by meeting the Notary when signing the final purchase deed. Usually, the buyer involves the Notary only after signing the bid, during the final phase of the purchasing process. Unexpected events may occur if the Notary discovers something during their final check at the signing of the purchase contract, and these issues may take time to be solved and lead to additional costs and misunderstandings between the buyer and the seller.
To ensure the investment in Italy is secure and to avoid risks, it is advisable to associate legal and technical checks with the work of the real estate agency.
With the aim of minimizing the risks related to the uncertainty of the operation in the preliminary phase, the real estate agency can suggest to the buyer and seller to make the bid (contract) conditional on the fulfillment of some harmful situations that may arise. Our real estate agency for example often plans to state in the contract that the buyer has the right to cancel the purchase or demand that the problem is resolved before the purchase process is completed (i.e. before the meeting with the Notary).
Below we list some of the most common risks that may occur when buying a property in Italy:
OCCURRENCE OF MORTGAGING
When buying a property in Italy, it is not uncommon to use it as collateral for a loan. This type of mortgage is called “ipoteca volontaria” and is requested by the parties involved as a form of guarantee in connection with the loan approval. However, there are different types of mortgages in Italy, including “ipoteca legale” and “giudiziale”. It is important to pay special attention to the latter, as it is registered by creditors in accordance with a judge’s ruling or a decision from another legal authority.
OCCURRENCE OF FORECLOSURE
Buying a property in Italy can come with the risk of encumbrances as a foreclosure. In Italian, this is known as “Pignoramento immobiliare”.
It may happen that the buyer have already signed a preliminary contract (bid) and everything appeared to be in order with the property’s ownership. However, a few months later, while waiting for the signing of the final purchase contract, the Italian notary informs you that the purchase must be cancelled because occurrence of a real estate foreclosure process, i.e. the property cannot be sold.
PROBLEMS WITH BUILDING PERMITS, OCCUPANCY CERTIFICATES, ILLEGAL BUILDINGS OR RENOVATION WORK
Many of the properties for sale in Italy are old and have undergone multiple renovations or modifications. The Italian building law requires certain administrative procedures and permits to be obtained from the local municipality and other regional authorities before any construction or renovation work is carried out. These factors should be evaluated and checked before committing to a purchase.
It may happen that the cadastral or building documents provided during the purchase process may not accurately reflect the current state of the property. This could be due to unpermitted renovations or extensions, despite the seller unknowingly stating that all technical documents are in order. National and local building regulations have also changed over the years, with many inconsistencies that the current owner may not even be aware of. Such issues are often discovered only after the purchase, when renovation work is being carried out.
To avoid unpleasant surprises it is advisable to verify the building documentation, including permits, certificates of occupancy, and other approvals, which are typically stored in the municipality archives or other regional authorities.
To ensure that the building is compliant with Italian building regulations, our real estate agency helps the buyer by involving a trusted technician to assess the property before or after the bid is signed.
TAX LIABILITIES
If the seller of the property has tax debts, there is a risk that the sale of the Italian house may be rescinded. These legal actions can be carried out by the Italian tax authority “agenzia delle Entrate” in the presence of the following conditions:
the seller has tax debts;
the seller’s assets (other than the sold property) are not enough to cover all tax debts;
the buyer is aware of the seller’s debts .
In the event that the Italian tax authority takes action to rescind the purchase of the Italian house, the buyer can turn to the seller in order to request compensation, but it should be noted that the likelihood of recovering the money is very low.
SELLER’S OWNERSHIP ACQUIRED BY GIFT OR INHERITANCE
When buying an Italian property, it’s important to assess the previous transfer of ownership. Risks may arise and affect the future transfer of ownership or a granting of a bank loan, when the seller acquired the ownership through a gift. Similarly, risks may arise when purchasing an Italian property that has been inherited by the current seller through a will.
Under Italian law, heirs (children, spouse, but also grandchildren, etc.) can never be left without an inheritance. Italian law actually protects heirs’ legal share against gifts given by the testator.
This means that heirs could have the right to file a legal action in order to restore their portion of the legal share.
Therefore, our real estate agency always conducts checks on the origin of the ownership. Based on such assessments, we draft our preliminary contract.
PREEMPTIVE RIGHT BY NEIGHBORING FARMERS
This situation often arises when buying an Italian country house with associated land. In these cases it is important to be aware of any preemptive right held by neighboring farmers, which is called “prelazione agraria.” These situations may arise under certain conditions and may affect the purchase of land if the seller fails to inform the neighbors about the sale within a certain period of time.
If the seller forgets to inform the neighboring farmers in time (i.e., before the completion of the sale), it means that the neighbors who hold the preemptive right have one year to assert their rights.
LIABILITIES AGAINST THE CONDOMINIUM OR UPCOMING COSTS FOR RENOVATION WORK
A “condominium” according to Italian law is a type of property ownership where multiple individuals each own a portion of a building (usually an apartment or unit), along with shared ownership of common areas such as hallways, elevators, and the building’s exterior.
The owners collectively make decisions and share responsibilities. The Condominio has certain rights and responsibilities, such as collecting fees from the apartment owners to cover the maintenance and repair costs of the shared facilities, managing any disputes between residents, and enforcing the building’s rules and regulations.
However, issues can arise if the seller has not paid some of the Condominium’s fees or if the Condominium has already decided on renovation work that will start (and be paid for) in the future, after the completion of the buyer’s purchase.
Therefore, our real estate agency always contacts the administrator in advance to request a certificate of the current financial situation regarding the Condominium and to ensure that the seller’s payments are in order.
The above risks are some of the risks that our agency takes into consideration in its checks on a property for sale and in the choice of the clauses to be included in the contract to protect its client.
If you are thinking of investing in Italy we are happy to assist you.
