Recently, the purchase of real estate abroad, and especially in Italy, has become a phenomenon not only as part of the purchase of a summer residence, but also as an object for business purposes. Due to the low property prices, more and more foreigners are also moving to Italy permanently, as the local climate is more welcoming than ours and the sight of a residence by the sea is tempting for most of us. However, property purchases in the Alps are no exception, where many Czechs go in the winter for perhaps the best ski slopes in Europe and in the summer for the beautiful nature and mountain views.
But how does the whole process of buying a property in Italy work? What to watch out for and what are the Italian specifics for a real estate purchase contract? The following article will answer that.
Legal framework
The requirements of a real estate purchase contract are governed by the Italian legal system in § 1470-1549 of the (Italian) Civil Code.
Citizens of the Czech Republic, as citizens of a member state of the European Union, have the same rights as citizens of Italy when buying real estate in Italy. However, it is necessary to realize that many matters regarding the purchase of real estate in Italy work differently from the Czech Republic. As an example, the entire process of transferring ownership rights to real estate is done through a notary. He is in charge, in cooperation with the real estate agency, of the correctness of the documentation and procedure. Another difference is, for example, the moment when the property right is acquired.
In addition to choosing a property, it is also crucial for buyers to have their tax number and mailing address in Italy.
Preparatory phase
In the preparatory phase before the real estate purchase in Italy, the real estate agent is a key figure. As a professional, he undertakes to mediate the conclusion of a purchase contract for the seller, in our case, and also enables contact between the parties, who are the seller and the buyer. A real estate broker should also perform search and assistance activities. He must perform all these activities independently and impartially. He is then entitled to a commission for the proper execution of the above.
A real estate agent should be able, subject to the right to claim a commission, to provide both parties with all information about the property, not just what the parties request. This is, for example, an extract from the real estate cadastre, which the broker provides. It is important to put considerable emphasis on these obligations of the broker, as in Italy in general everything is less formal than in the Czech Republic and it could happen that we might not get everything we paid for. As for the broker's commission, it is usually paid by the buyer, but it is possible for both parties to pay it. However, there is no general criterion for the choice of the obliged entity, and the obligation to pay the commission to the broker therefore depends exclusively on the agreement of the parties.
As regards the origination of the broker's right to commission, the Civil Code states that it arises as soon as the deal is closed as a result of his activity. The Italian Supreme Court in its decision Cass.civ., 30/11/2015 No. 24397 states that the termination of the business is the moment when a binding relationship is established between the parties.
Purchase proposal
While in the Czech Republic a contract on a future contract or a reservation contract has become the standard in many cases, in Italy a so-called purchase proposal is used to save on administrative fees. Under the purchase proposal, we can imagine a form that is usually prepared by a real estate company, or real estate broker. The proposer, i.e. the seller, proposes to the buyer the purchase of real estate at a certain price. With regard to § 1329 of the (Italian) Civil Code, such a proposal has an irrevocable nature, and thus becomes irrevocable the moment the proposer learns of the acceptance of the proposal by the addressee. Once the proposal is accepted, the parties are obliged to conclude the purchase contract at the price they agreed upon in the purchase proposal. We therefore perceive the purchase proposal as a document establishing a legal obligation to close the deal.
In the purchase proposal, in addition to information about the purchase price, we will also find the date when the purchase contract will be concluded, data from the real estate cadastre and information about the owner, or about the owners. This document also mentions the obligation of the obligated party to pay the commission to the real estate broker.
At the same time as signing the purchase proposal, the acquirer pays the down payment for the purchase of the real estate, its amount will then be deducted from the total purchase price. We can understand the deposit as our deposit or reservation fee. The lien also underlines the obligation to conclude a purchase contract. In the event that the buyer withdraws the proposal made by him, the lien is "lost" to the seller. If it is the seller who withdraws from the proposal, the buyer will be refunded the deposit in double the amount. While we in the Czech Republic would probably be dealing with the transfer of the financial amount via escrow at this moment, in Italy the real estate broker is still key at this moment. The down payment is usually paid by means of a check, which the real estate agent has with him until the conclusion of the purchase contract.
Conclusion of the purchase contract
After signing the agreed purchase proposal, a notary is involved in the entire process of buying real estate. The purchase contract must contain, as a public document:
- identification of the parties, date and place of birth, permanent residence and fiscal code (or tax number), which can be perceived as the Italian equivalent of a birth number,
- designation of the property according to the information from the land registry, while it is up to the notary to certify the correctness of the given data,
- real estate tax regime,
- declarations and guarantees of the seller provided for by Italian law.
Both the seller and the buyer can participate in creating the wording of the purchase contract, although according to the law it must be drawn up by a notary public. This obligation does not prevent the parties from including additional statements or guarantees in their purchase contract.
The purchase price is paid in the same way as the promissory note at the stage of the purchase proposal, i.e. by check. This check can be issued either by the buyer himself or by a notary after the buyer has sent the purchase price to him for safekeeping.
The conclusion of the purchase contract is subsequently carried out in such a way that the notary reads its text in Italian and the parties who declare that they understood the notation sign it. Here, then, there is a difference compared to the adjustment of the acquisition of real estate in the Czech Republic, when in Italy the transfer of real estate takes place precisely by signing the purchase contract, not by registering it in the real estate register, as is the case in our country. The exception is the north-eastern part of Italy, where the ownership right is transferred only by registration in the real estate cadastre, as here, for historical reasons, when this part belonged to Austria-Hungary until World War 1 and still retains some features of the legal system of Central Europe .
Although registration in the real estate register does not have the effect of acquiring ownership, it is of course necessary to do so. It is carried out by a notary approximately two weeks after the conclusion of the purchase contract, and then all documentation is handed over to the purchaser.
The notary's fee is paid in full by the buyer's side (unless the parties expressly agree otherwise). For that reason, the buyer's side can choose a notary with whom to negotiate the purchase of real estate. The buyer will also deposit in the hands of the notary an amount that includes fees to the tax office, the land registry and mortgage fees that are associated with the transfer of ownership to the property. With the notarial registration, the real estate agent will also receive the payment of his commission, which is again paid either by check or by bank transfer. It is common for a real estate agent to be present at the execution of the notarial deed to "see" that the commission is paid. He often even intervenes in the very wording of the notary record.
záver
In conclusion, we can perhaps only add that the entire process of buying real estate in Italy should not be underestimated in any way. This means not necessarily choosing the cheapest notary just to save a few hundred euros in the whole process, but investing in someone who you know will lead the whole process responsibly and properly. It is also important to know the legal framework and especially your dream property, so that you know what you are buying, ideally already when you sign the purchase proposal. Buying real estate is not easy even in the Czech Republic, where we know the language and have an approximate idea of the legal framework, and we should be more careful when buying real estate abroad.
We wish you a smooth shopping experience and lots of happy moments at your destination.
Source: epravo.cz
Pierluigi Nudo, LL.M., a settled European lawyer
Mgr. Lucie Špičková, a lawyer
