Buying a new property can be a daunting prospect at the best times but even more so in a foreign country! Once you’ve made the decision to purchase a property in Italy you’ll have to understand the system and how it works so that you can complete the necessary steps to make the purchase legally and in line with state and municipality regulations.
You will probably need to hire a lawyer, or a real estate firm, in Italy to help you navigate the purchasing process, particularly if it’s your first time buying a property in the country. When looking for a lawyer to help you, try to find one that offers bilingual services including translations for documents, contracts and paperwork.
Overview of the Property Purchasing Process in Italy.
Although buying a property in Italy is no more complicated, technically speaking, than it is in America, there are different rules and regulations that you need to be in compliance with and what’s more, the documentation is all in Italian!
This means that the process can feel quite confusing since many of the laws that you have to follow are quite unique to Italy. For instance, local municipalities and regional authorities have a much greater influence on the housing market, including regulating the buying and selling of properties than in the United States; and within the European Union there are also many safety and environmental codes that might be surprising for Expats when they first come across them.
There are also local Italian customs that you have to contend with; and as well as the language barrier that exists there is different terminology that is used in contracts so it’s always better to get some help and advice from a local lawyer.
Brief Overview Of The Three Phases.
The process of purchasing a property in Italy, much like elsewhere, will involve working with multiple professionals as you complete the required legal and regulatory stages.
- The Initial Property Purchase Offer – This is when you make an offer for a property that is advertised for sale, and is known as the ‘Propostale Irrevocabile di Acquisto’ or the ‘Propostale d’Acquisto’.
- The Preliminary Contract of Sale – This is when you begin creating a formal agreement with the property seller that prevents the seller from offering the property to another potential buyer, and is known as the ‘Contratto Preliminare’ or the ‘Compromesso’.
- The Final Agreement – Similar to “Closing” in the United States. This is when you sign the legal agreements for the sale once all the details are worked out. This agreement, also known as a ‘Rogito Notarile’, is signed with an Italian Notary Public witnessing the agreement after which they countersign the documents to legally finalize the purchase.
The Property Purchase Offer.
This is the first stage of the buying process and involves a written contract which states the amount that you are offering for the property and will often include a small deposit, usually about 5% to 10% of the total value of the property. The property is then removed from the market while you and your lawyers do the necessary checks and due diligence.
I purchased the property in Volterra for Euro 55,000. I made a deposit of Euro 5000. There was some delay from my side when it came to getting the apostillation. The seller asked if I could increase the deposit. I did not have to but I did not want to lose the property either. I wired another Euro 5000.
There is however, no obligation on behalf of either the buyer or the seller to follow through with the sale at this stage; which means if you discover something in the property’s paperwork that you don’t like you can still withdraw from the agreement.
Before signing this document make sure to check that if the sale falls through you will have your deposit refunded in full.
The Preliminary Contract of Sale.
During this second stage of the process you sign a preliminary contract of sale which is legally binding and lays out the conditions for the property sale. This describes the property rights you will gain, rights of way around your property and the method of payment for the sale.
The agreement should always include:
- A clear definition of the property that is being sold, including any adjoining land that is attached to it.
- Confirmation that the property complies with all regional and municipality regulations and codes, including environmental and health and safety standards.
- Statement of the agreed price for the sale of the property including the deposit to be paid and the complete payment plan for the remaining balance.
- Documents that clearly identify the details of both the buyer and the seller.
A confirmation of the seller’s unconditional guarantee to sell the property by, or on, the agreed closing date for the sale. Remember though, that this agreement does not finalize the sale of the property but it does have legally binding effects. It does not transfer the ownership of the property to the buyer but it does have other effects which are very important.
Firstly, in Italy, real estate agents are legally entitled to their fees once the Preliminary Contract of Purchase is signed, regardless of whether the sale is eventually finalized.
Secondly, according to Italian tax regulations, this contract must also be registered at the Tax Office. The person registering the contract with the Tax Office must then pay a part of the fees owed to the Tax Office – which will then be deducted from the final amount due when the Final Contract is signed in front of an Italian Notary Public.
When this contract has been signed the purchaser must pay a deposit. The deposit can range from between 10-30% of the property’s total value.
Under the Italian legal system, this deposit can serve different purposes. When the deposit is defined as a ‘Caparra Confirmatoria’, then if the purchaser fails to fulfill the obligations that have been laid out in the contract then the seller can cancel the sale and keep the entire deposit. If the seller defaults on the sale for any reason or fails to live up to their obligations then the purchaser is entitled to receive a full refund of their deposit with the seller.
Alternatively, if the deposit is called a ‘Caparra Penitenziale’ then either the buyer or the seller can terminate the agreement at any time regardless of whether the conditions in the contract have been met by the other party. However, as before, if the seller terminates the agreement the purchaser is entitled to a refund of their deposit while if it’s the purchaser who cancels the purchase they will lose their deposit.
After the Preliminary Contract has been signed it is up to the purchaser, and their lawyer or the real estate firm, to conduct the necessary due diligence. This can be quite an arduous task but it is absolutely essential to complete the sale. The property must be in compliance with a whole range of national and municipality regulations and codes and it’s your responsibility as the buyer to confirm that it does, although you should have done most of this before you signed the Preliminary Contract of Sale.
The Final Contract
This is the last stage of the purchasing process and legally passes the ownership of the property from the seller to the buyer.
Are you buying a property directly from a construction company? It is important to find out if they do have the right to sell the property. You need to ask to see an official certificate from the Chamber of Commerce, which is known as a ‘Visura Camerale’. This document will include all the necessary information to establish the construction company’s rights to sell the property and under what conditions.
Before signing the final contract you or our representative should perform due diligence on the the following:
- If the property you are buying is owned jointly by a couple you need to obtain the consent of both parties before the sale can go ahead.
- If the property was inherited by several heirs, you need to get the consent of all the heirs to the property before you can complete the sale.
- If the property has been leased to a third party, then they must be given the option of purchasing the property before you can buy it.
- All the approvals for the renovations and extensions are in place.
These last few checks are usually just formalities however they must be done to be in compliance with the law.
At this point in the purchasing process you will need to appoint a Notary Public, or a ‘Notaio Pubblico’ in Italian. A Notary Public is an independent state official who will help to coordinate the legal aspects of your purchase as well as drafting up the Final Contract of Sale. The Notary’s role is to act on behalf of both the buyer of the property and the seller to ensure that the process is satisfactorily completed in compliance with the law.
Once the Final Contract has been drawn up both the buyer and seller must sign it and then lastly it is countersigned by the Notary Public. The buyer also has to pay the Notary the required property taxes and fees for their services.
After all the documents have been signed and the Notary Public has countersigned them and all the taxes and fees have been paid; the buyer officially owns the property and can move in whenever they are ready! NOTE: You do not have to be physically present for the final signing. You can issue a power of attorney to your lawyer who will sign on behalf of you.
Property Taxes And Fees For Purchasing A Property In Italy.
There are taxes that are associated with buying a property in Italy which can vary between about 5% right up to 20%. However, foreign buyers can enjoy significant tax benefits when purchasing their first home in the country.
For instance, if you move to Italy and buy a home you may only have to pay between 1% and 2% of the property value in taxes; however, if you are buying a holiday home and do not plan to live in the country you will face a property tax of around 9% of the property value when you buy it.
Value Added Tax (VAT) only needs to be paid by companies and so if you are buying a home as an individual you will not pay this. VAT in Italy on property can be as high as 10% of its value.
The Notary Public fees will generally stand at between 1% and 5% of the final agreed price of the property, and your legal fees for a solicitor will usually be 1% to 2% of the property price as well as real estate agent’s commission, which is approximately 1% to 3% of the property value.
It’s Always Better To Get Legal Assistance.
It can be quite confusing to buy a home in Italy as a foreigner; and with all the various stages to work through, the layers of state and municipality bureaucracy and the complex web of codes and regulations, it’s always best to hire a local lawyer or real estate firm to handle the process on your behalf.
An Italian real estate agency, particularly one who specializes in delivering a bilingual service, will be able to deal with all the local regulations, help you safely move your money into a local bank account and draw up the relevant legal documents for you.