Navigating the real estate Maze

5 steps to educated buying

Elizabeth Hannah
January 12, 2006

Italy has a reputation of being a bureaucratic minefield, and voluntarily involving oneself in its system of laws and taxes may be a daunting prospect for a foreigner purchasing property here.  Doing so is, however, no more difficult than in any other country, although the procedure is, generally speaking, less streamlined than in Anglo Saxon countries, and the whole process may take longer. 

 

THE PROCESS – STEPS TO YOUR PURCHASE

 

1. The Estate Agent

Your first point of contact is likely to be with an agent, who should be properly registered with the local Chamber of Commerce and a member of either the ‘Federazione Italiana Mediatori Agenti d’Affari’ or the ‘Federazione Italiana Agenti Immobiliari Professionali’.  Agents are entitled to a commission from both the seller and the buyer (usually between 2% and 3% from each), irrespective of whether or not a formal mandate has been given by both parties. 

 

2. The Purchase Proposal (‘Proposta d’Acquisto’)

 

Once you have identified your dream property, you will, in most cases, be asked to make a ‘proposta d’acquisto’. This is a formal written offer made by the prospective buyer, including a deadline within which the seller is must accept and accompanied by a nominal down payment (usually 2-3% of the purchase price). Once accepted by the seller, and even though the purchase proposal lacks the detail of the entire agreement between the parties, it has all the necessary elements of a contract and, as such, technically binds the parties.

 

To protect the buyer, the down payment should be specifically stated to be paid as a ‘caparra confirmatoria’. As such, should the seller pull out, he will be bound to pay the buyer a sum of money equivalent to twice the sum handed over as the down payment.  If the buyer fails to proceed in accordance with the provisions of the purchase proposal, he will lose his down payment.

 

3. Investigation of Title

 

The seller will be required, by law, to give the buyer various guarantees.  Such guarantees are incorporated in the final transfer deed executed before the notary on completion, who will check that the title and planning history of the property are in order at that stage.  The most common of such guarantees are that:

 

- the seller has good title and the property is free from encumbrances;

 

- the property, as it stands, complies with the plans and records of the same held by the Cadastral Register;

 

- all taxes in respect of the property have been paid.

 

In practice, the seller will usually instruct a geometra (a hybrid between a surveyor and an architect) to prepare a technical report, which covers the above issues (please note, however, that this will not extend to information regarding the structural condition of the property).  Although the seller is under an obligation to provide such information, there is no legal obligation to instruct a geometra to produce a technical report. However, in some areas, such as Florence, the notary is likely to refuse to complete the transaction without a technical report prepared by a geometra.

 

4. The  Preliminary Contract (‘Contratto Preliminare’)

 

This is not obligatory, but as transactions take longer in Italy, a preliminary contract which binds both parties with more onerous financial consequences than the purchase proposal may be desirable. At this stage the buyer will usually be required to make a further down payment, this time of between 20% and 30% of the purchase price. Like the initial down payment made, this too should be specifically stated to be made as a ‘caparra confirmatoria’. Whilst from the buyer’s point of view, this means greater financial exposure should there be a problem, from the seller’s point of view, it is a very real deterrent from entering into a transaction on the basis of conditions which he is not going to be able to meet or from pulling out of the transaction as if he cannot, or does not proceed, he will usually be required to return double the amount received by way of down payments.

 

In Italy, the down payments made at purchase proposal and preliminary contract stage are paid direct to the seller rather than to an independent third party such as a lawyer. Consequently, in the event that the seller should fail to proceed, and the down payment should therefore be repaid to the buyer, there is, in practice, a risk that it will be difficult to actually extract the sum due from the seller. 

 

5. Final Transfer Deed (‘Rogito’)

 

The actual transfer of the title to the property from seller to buyer must be affected by public deed under the seal of a notary public in order to be registered, and valid and binding as against third parties.  The notary is impartial (he does not act for either the buyer or the seller) but represents the Italian state.  He is responsible for the registration of the land in the name of the buyer and the payment of taxes due from both parties. 

 

So to conclude with the old adage  ‘When in Rome, do as the Romans’, if you are buying property in Italy, bear in mind that superficial similarities between the laws and procedures for the transfer of property of your country of origin and those which apply in Italy may be misleading.  The best advice is to trust the local laws and procedures, and to instruct appropriate professionals who will guide you through the purchase process.

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