Buying a property in a foreign country whether for lifestyle reasons or as an investment is usually a new experience for a buyer so we have prepared a two-part brief note to explain the main steps involved in purchasing a property in Italy.
What are the first steps? Identifying a property and signing a proposta.
The first step is to find the ideal property, which can be done either with or without the assistance of a registered estate agent. Once the buyer has found the ideal property, the buyer should communicate his/her interest to the estate agent who will revert to the seller. When the property market is booming it is not uncommon for the seller to request that a buyer sign an offer to buy ( proposta).
An offer to buy ( proposta) in Italy is usually a non-binding document signed by the buyer to reserve or to take the property off the market. However, in order to avoid any unpleasant surprises, it is always best for any buyer to obtain independent legal advice prior to signing any offer ( proposta), even if the buyer feels under pressure to do so.
What searches and enquiries will be necessary?
Once the property is reserved or off the market, the vendor will provide the buyer with basic information for review. at which point the buyer will need to instruct duly qualified professionals to carry out necessary due diligence activities, much like in a conveyancing in England & Wales.
The scale of such a due diligence exercise will usually depend on the type of property a buyer wants to purchase and more searches may be necessary. If a property is located in a rural area, for instance, it will be necessary to verify whether a notice to purchase needs to be served on neighbouring farmers who may have been granted pre-emption rights over the land a buyer wishes to purchase.
What is the effect of signing the preliminary contract and will a deposit be necessary?
Once the due diligence exercise is complete and the buyer is happy to proceed, the next step in the purchase process is to negotiate, draft, sign and exchange the preliminary contract (the compromesso).
The preliminary contract is a contract by which the buyer and the seller undertake to buy and sell a specific property to each other on the terms negotiated. The preliminary contract is a binding document and as such, obliges both the buyer and the seller to complete by and no later than the date specified within. It is not uncommon for special terms to be inserted in the preliminary contract to deal with particular issues or irregularities revealed in the searches or in the documents submitted by the vendor. Any remedial action by the vendor and relative deadlines should be clearly defined and agreed accordingly.
Payment of a deposit ( caparra confirmatoria), usually between 10% and 30% of the property purchase price, will also be required by the buyer to the seller upon exchange of the preliminary contract. As with the rest of the terms in the preliminary contract the percentage of deposit should also be clearly defined and agreed. Once the deposit is paid, the buyer must keep a full record of the payment, as this information will be required by law at the time of completion.
Once the preliminary contract is signed and exchanged a copy of it must be registered at the Agenzia delle Entrate (Italian Tax Agency) within 20 calendar days. The registration cost is Euro 200.00 and it is usually paid by the Buyer, unless otherwise agreed in the preliminary contract.