In recent years, the Italian real estate market has attracted increasing interest from both investors and those wishing to buy property in the Bel Paese, especially in Sardinia, Sicily, Lake Como and Tuscany. Contrary to what one might think, the buying process is very accessible to those who are well informed.
After the end of the negotiation phase (which can be very quick if the parties agree quickly), it is possible to proceed directly to the conclusion of a public deed of transfer of ownership (sales contract) at a notary.
However, it is important to consider and not neglect two preliminary steps, often recommended and implemented in practice, designed to protect the buyer from possible post-purchase disillusionment.
The first step is to perform a Real estate due diligence, a type of acquisition audit that includes a series of legal, technical and administrative checks in order to evaluate the suitability of the purchase in order to determine all the properties of the property that is the subject of the planned transaction, whether they have a positive or negative effect. points.
In other words, it’s research before you buy. The goal is for the buyer to agree to enter into a purchase agreement with full knowledge of the matter, as the acquisition of real estate represents a significant investment and can lead to significant consequences.
The implicit goal is to protect the buyer from an unpleasant surprise at a time when the purchase contract has already been concluded and the buyer is a prisoner of contractual obligations. The very essence of Due Diligence lies in guaranteeing the safety of the investment.
This process, which is supposed to be extremely careful, aims to eliminate the uncertainties that can surround the acquisition of a property in a country where the client does not know the language, the procedures, the market or the obligations, and therefore is not aware of the exhaustive list of elements to check. The purchasing process can quickly turn into a real mess or even a nightmare for a foreign buyer.
The help of a lawyer at this stage allows you to protect yourself and your interests. This Due Diligence can be done by a lawyer. Real estate agents can also fulfill this role of broker in real estate transactions and perform preliminary inspections. However, because of their apparent interest in closing the sale, they cannot inspire the same confidence as a lawyer, a legal professional serving only his client and his interests.
As part of the second phase, it is appropriate to conclude a irrevocable offer to buy or a preliminary contract (known as a “contract of sale”), both of which have the same legal value. These private contracts make it possible to agree in advance the terms of the final act of purchase in a manner similar to French practice.
It is also possible to verify this contract with a private signature (only between the parties) or to conclude a contract in front of a notary to deposit it in the real estate cadastre with the blocking of a possible sale to third parties (this is more protected, because in the first case, if the buyer is a third party in good faith, it will be possible to demand compensation for damages only for the disappointment of not closing the sale and for bad faith on the part of the seller).
Usually a deposit is paid at this stage, which is between 7% and 10% of the sale price. Under Italian law, if the prospective buyer does not respect the preliminary contract, the prospective seller has the right to retain the deposit as damages for the bad faith of the prospective co-supplier. On the contrary, if the potential seller is in default, the prospective buyer can demand to obtain as damages for the seller in bad faith double what was paid as a deposit (Article . 1385 Italian Civil Code).
In order for a preliminary contract to be valid, it must contain certain essential elements. Therefore, it must be concluded in writing and contain data identifying the buyer and seller, cadastral data and description of the property and, of course, the purchase price.
The final act of purchase can take the form of a certified private document or, more often, an official document drawn up by a notary (so-called “notary record”). In order to sign the notary, he must have a signed Italian tax identification number (the so-called “fiscal code”, which can be requested from the Italian consulate in France, but can be requested by a lawyer to be issued for a customer account).
This procedure includes the payment of notary fees and related tax fees (registration fees, cadastre and real estate transfer fees). The notary will check the documents related to the proposed contract: the previous title deed, cadastral plans and administrative documents such as the certificate of habitability and the certificate of urban designation.
The whole process can be completed in less than a month, including registration in the real estate register, which enables a quick purchase of real estate.
Although it is possible to proceed independently, it is strongly recommended to consult a professional company about the purchase. In particular, due diligence carried out by lawyers allows timely verification of details such as the real estate that is the true property of the seller, title to the purchase of the real estate, the presence of urban and administrative irregularities, the real estate cadastre, building permit, certificate of occupancy, mortgage register, possibly co-ownership regulations, energy performance certificate etc.
The aim of this inspection is to check the compliance of the property, its planning permission, its use, the protection it uses or transfers of guarantees, land charges, any easements and rights of way, security such as rights of way, liens or mortgages, including in the event that the property was subject to potential seizure.
A team of experienced Italian real estate and tax lawyers can:
– perform legal and tax due diligence;
– conduct negotiations;
– drafts a preliminary contract in such a way that it includes all provisions necessary for the legal and financial protection of the potential buyer and provisions adapted to the specific situation of foreign buyers;
– collect and verify the necessary documents so that the sale can be closed as quickly as possible;
– replace the client before the notary on the basis of a power of attorney;
– provide tax advice and assist in all aspects of real estate management, even after the final contract has been signed.
The help of a lawyer is not mandatory, but it is necessary. In Italy, the majority of real estate buildings are affected by defects: crude constructions, absence of a building permit, constructions that do not respect the rules of spatial planning, absence of a declaration of change of use of premises.
The problems are numerous and very common, sometimes cumulative. However, in the event of an inspection, in addition to administrative and financial sanctions, criminal sanctions may also be imposed: in addition to a fine, the destruction of the structure affected by the defect may be ordered. Therefore, continuing to acquire real estate under such conditions is risky. It is therefore more appropriate to contact a specialized company, especially when helping French buyers in Italy.
Tax information after purchase
Like France, Italy applies a tax system based on global taxation based on tax residence: if a person establishes his tax residence in Italy, he will have to pay taxes in that country. If the purchase is made for a primary residence and not a secondary residence, tax benefits apply.
In Italy, the notary plays a less central role in the purchase process than in France, only handling the registration of the transfer of ownership. The time required to obtain an appointment is therefore shorter, ranging from 1 to 2 weeks. The choice of notary is the prerogative of the buyer, unless otherwise agreed with the seller.
Giambrone & Partners specializes in tax law and will be able to best advise you on how to avoid double taxation and fiscally optimize your real estate.
Giambrone & Partners
Studio Legale Associato
Ave. Giorgio Bianco (registered at the Bar in France and Italy)