What form can this agreement take? Preliminary contract?
The initial agreement between the seller and the buyer has to be entered into in writing (articles 1350 and 1351 of the Civil Code). In practice, the parties generally conclude a private agreement.
With whom must the parties (buyer/seller) formalise the initial agreement? Is a legal form imposed?
The parties can conclude their written agreement (preliminary contract) without the help of professionals (lawyers, notaries, accountants, real estate agents). When the agreement is entered into with the assistance of a real estate agent, the real estate agent usually helps the parties draft the preliminary agreement. For more complex cases, a notary is usually involved. The preliminary agreement has to be in writing (a private agreement is sufficient: articles 1350 and 1351 of the Civil Code), it does not have to be in the form of a notarial act. For the preliminary contract to be registered in the land register (which is possible under Italian law), the preliminary contract has to be concluded by way of a notarial act (article 2645-bis of the Civil Code).
What are the legal effects of this preliminary contract? Is a preliminary contract necessary?
The legal effects of a preliminary contract are generally that the parties involved have to execute the sale agreement within the time and on the conditions agreed upon (e.g.: the purchase price is set, date of handover of the property, etc.). Naturally, the parties have a lot of freedom to change the effects of the preliminary contract which may be subject to conditions precedent or subsequent: e.g. in case someone has a right of first refusal, a mortgage loan from a bank, if there is a need to check whether the property complies with town-planning laws, etc. If the parties want the preliminary contract to be registered in the land register, it has to be concluded by way of a notarial act. In that case, once it is registered, the effects of any possible mortgages or other encumbrances of the seller are void. A preliminary contract is not always registered; it is also possible to proceed directly to the notarial sale agreement, provided all elements required are available.
Are there amounts to be paid, and to whom? Can these amounts be repaid?
In general, on signing the preliminary contract, the buyer pays the seller an amount of money by way of deposit or down payment on the purchase price. The parties can agree that this amount will be returned if the sale does not go through or, that the seller can keep it, for example, if the sale falls through due to the buyer's choice or responsibility. The parties have a lot of freedom to determine the amount payable and to provide for restitution or retention of this amount.
Are there any consumer protection measures (cooling-off period, right of withdrawal)?
The law does not provide any particular protection for consumers, nor a cooling-off period for real estate transactions. The seller only has to guarantee, by way of a special guarantee issued by a bank or an insurance company, restitution of the deposit in cases of properties to be built or under construction and if the building is not completed.
How can I obtain financing? Directly from the banks? Through brokers?
Generally, financing is obtained directly from banks. Financing is rarely obtained through a broker.
What form does the financing agreement take?
Financing is provided by way of a loan secured by a mortgage. It is thus necessary to involve a notary, both to sign the document enabling registration of the mortgage and for issuing an enforceable title.
What do I need to do once I have obtained financing? Who draws up the loan agreement?
To whom will the loan be paid?Once financing has been obtained, the bank sends the loan agreement secured by a mortgage to the notary. Generally, the loan is provided directly by the bank to the seller at the signature of the notarial sale agreement.
What are the usual types of guarantee requested to finance a residential real estate purchase?
The guarantee required for financing the purchase of a real estate property is a mortgage over such property.
How do I constitute a mortgage/other type of security?
The mortgage is taken out by way of a specific notarial act, signed by the bank and the client, which sets out all the conditions of the loan (amount lent by the bank, repayment terms, determination of interests, consequences in case of late repayment or failure to repay the loan amount, etc.) and the description of the property on which the mortgage is taken. The bank may also require other collateral securities (rarely) or personal guarantees (more frequently): collateral securities are, generally, pledges of securities (shares, bonds, national debt certificates) that the client has deposited with the same bank. As regards personal guarantees, other persons (generally the parents of young people buying their home) will need to be involved.
What are the consequences of this mortgage for me?
The consequences of a mortgage are set out in the Civil Code. Hence, in case of failure to repay the loan, the bank can sell the mortgaged property at auction (auction sales are always conducted according to a specific legal procedure before the court, the bank cannot sell the property directly).
What types of information/documents are required for a real estate sale? Concerning the parties? Concerning the property sold?
The following documents are generally required in a real estate sale.
As regards the persons (both the seller and the buyer):
- documents attesting to their identity (passport/identity card);
- italian tax number (this is also attributed to foreign citizens and companies who buy property in Italy);
- documents attesting to the person's civil status (married, divorced, linked by a partnership or cohabitation agreement);
- documentation attesting to the payment of the price (payment always has to be made by bank transfer or bank cheque);
- checking on the conditions laid down by anti-money laundering measures.
As regards the properties:
- title to the property (previous purchase, succession or other);
- checking that the title recorded in the cadastral register is indeed in the seller's name and that the plans of the property are accurate;
- checking that there are no mortgages or other charges on the property by consulting the land register;
- documents regarding the property's town-planning conformity (building permit, other possible permits for work carried out, conformity of the property as residential property, etc.);
- documents attesting to the conformity of the property's technological installations (electricity, water, gas installation, etc.) and an energy performance certificate;
- other possible documents in specific cases, such as buildings subject to artistic or historic interest obligations, housing built at the expense of the state or other public bodies, rights of first refusal for social housing, rights of first refusal for agricultural buildings, etc.
Who collects the information/documents?
In general, the documents are collected upon request and on the notary's application. If the contract is concluded with the help of an estate agent or other professional, certain documents are often already available at the initiative of the parties involved.
How long does it take to obtain this information?
The time needed for collecting the documents can vary considerably depending on the case. As regards the due diligence to be carried out at the cadastre and the land register (which is always done by a notary and under his/her responsibility), the time periods are very short as the checks are done electronically and the connection is always available 24 hours a day. Due diligence on the documents regarding town-planning conformity can take several weeks, depending on the time needed to obtain the information from the public offices involved (generally the offices of each local municipality).
-----------------------
Visit ETERIA, our division dedicated to foreign clients and discover all the services provided to individuals and companies