The Real Estate Buying System in Italy: The Purchase Process
How to buy a house in Italy
The matter can be the reason for some concern and… a bit of headache. Can Americans buy properties in Italy? Yes, no doubt. The same answer is valid for the British, European part of EC, Russians, Chinese, Australians, Middle, and Far East citizens. People from all over the world have the same right to buy real estate properties in Italy as the Italians do.
However, the legal process will not be like those you are used to in your home country. Let’s see how it works.
What to do when you find your property to buy in Italy?
When you find a property that you’re keen on buying, it is important to ask your agent for for some preliminary detailed information about:
- Italian real estate transaction rules
- What property features are included in the sale
- Property title search
- Taxes on sale of property
- Energy sources and distribution systems
- Plumbing, house wiring and types of electrical certifications
- Routine maintenance average costs and taxes
- Information about vendor
Those (and many others) are all legitimate and necessary information to get before committing to a purchase and have clear in your mind the full detailed answer to the question… how much is it to buy a house in Italy?
How long does a house inspection take in Italy?
A good habit before buying a property for sale in Italy is to make a thorough inspection of the property. If you are willing to buy a property in the old town center or the countryside, you will need a complete property inspection run by a team of qualified professionals. That’s the right thing to do to avoid any future inconvenience. So, the right question to answer is not how long does a house inspection takes in Italy. The process length always depends on the inner nature of the property. The right question is: what are the professionals needed?
House Surveyors in Italy: the Geometra
Some professionals can do that with swiftness and precision. One of these professionals is the geometra, a figure that has no equivalent outside of Italy. The geometra is not an architect, nor a supervisor or an inspector, but someone in – between. He/She has the professional skills to correctly evaluate the conditions of the property you want to buy. He can check that there are not structural lacks, yieldings, or any sort of defects (plumbings, electric, heating, etc).
If, then, the property needs renovating you will also want to get quotes for labor and materials, as well as costs involved in getting planning permission (if required).
Furthermore, it could be useful to meet the neighbors and ask around locally for information about the area, services, logistics… and noisy neighbors. All this information may affect the offer you will make.
The geometra has got a 360° sight over the whole house purchase process. So, even if she/he’s not a highly qualified professional, he’s the person you can trust for the initial mandatory steps of buying a house in Italy. So that, a good geometra, will advise you regarding all the necessary professionals (engineers, architects, interior designers, plumbers, technicians, etc) you will need to complete the purchase.
Now, let’s have a summary of the procedures to buy a property in Italy, including the compulsory legal process to be taken before becoming the owner of the property.
Making an offer through a Purchase Proposal
Initially, you will negotiate the price verbally through the estate agent. You could then do a Purchase Proposal (Proposta di Acquisto), a written declaration prepared by the buyer with the help of an agent. This proposal shows the will to purchase the property at a certain price.
Once signed you are then committing to purchase. But as it is only signed by you, it doesn’t commit the seller to sell the property to you, and he is still free to consider other offers. He will be obliged only once he signs your proposal.
A Purchase Proposal can be detailed related to the properties, describing:
- the buyer documents and basic information
- the property characteristics
- the warranties
- the amount of the deposit
- the timings of the offer
- the whole payment terms.
If the seller accepts the proposal and countersigns it, then the purchase proposal has got the legitimacy of a contract from all points of view – binding both parties.s.
If, after the signing of the Purchase Proposal one of the parties decides to give up and withdraw from the deal, the law provides as it follows:
- if it is the buyer who withdraws, the buyer will lose what is paid as a deposit once the proposal has been signed.
- if the seller withdraws, the seller will have to return to the buyer what has been received as a deposit and in addition, he must pay a pecuniary penalty equal to the same amount of the deposit.
House Purchase: the Preliminary Agreement for Sale and Purchase
Once the proposal of purchase has been signed by both buyer and seller, what is the next step to be taken?
If all the necessary paperwork for selling the house is in order, you can even go directly to the final purchase act or proceed with what it’s called Preliminary Contract.
Once accepted and signed by the seller, the Purchase Proposal could be converted into a Preliminary Agreement for Sale and Purchase (Contratto Preliminare di Vendita or Compromesso). It is a real house sale contract that reconfirms the obligation of both parties to sign the final contract.
The Preliminary Agreement for Sale and Purchase is merely repeating the content of the Purchase Proposal if this proposal is made accurately. It reconfirms the main elements of the transaction such as:
- the sale price
- payment terms
- timing of the sale
- identity of the property
- land registry numbers
- a detailed description using the information from the land registry
- the precise date of the final deed.
In this phase, a further deposit is paid by the buyer to the seller and the amount of the balance is reconfirmed and will be settled at the final act.
Similar to what has already been said above for the Purchase Proposal, if, after the payment of the deposit the buyer decides not to buy the property, the seller has the right to keep the deposit. But if the seller decides not to sell, the buyer is entitled to receive back an amount equal to double the deposit paid.
The Preliminary Agreement can be drafted by a Notary or by the Real Estate Agent who, as a professionally qualified figure, guarantees the legal accuracy of the content.
Although the Preliminary Agreement for Sale and Purchase doesn’t need to be drawn up by a Notary, it can sometimes be useful for a Notary to clarify some issues or intervene to further safeguard the deal.
If the Preliminary Agreement for Sale and Purchase is stipulated with a deed of sale signed by the notary, the agreement can also possibly be transcribed in the Registri Immobiliari of the Land Registry Office, the one where the status of every immobile data is kept. The registered sale agreement can only be carried out by the Notary Public Italy and is the highest form of protection of the buyer’s rights. In this way, the buyer is protected from any problem (legal, tax, inheritance, etc., etc.) that may arise in the sale of the property, in the time between the Introduction and the completion of the deed.
The Final Act: the House Deed
Italians call this final part of the process Rogito or Contratto Definitivo di Compravendita. Buying a property in Italy is different than in the UK, USA, or any other part of the world. Many people are confused whether they need a lawyer or a notary when buying a property in Italy or even both.
We will try to explain how it works.
By law, in Italy, property transfer agreements must be signed by the seller and the buyer in front of a Public Notary.
Notary Public in Italy: Who is He/ She?
What is the Notary’s role when you buy a property for sale in Italy?
The Notary is a public officer appointed by the Italian Ministry of Justice. He/She acts as a third party who is independent of both the seller and the buyer.
He ensures that the conveyance of the property complies with all legal requirements, in the common interests of both the buyer and seller.
The role of the Notary goes much further than simply stamping and signing a document as the witness to a transaction.
Once the nature of the deed to be drawn up has been defined, the notary must by law perform a series of up-front checks specifically on the property for sale and on the legitimacy of the whole process, so that the contract will stand the test of time and be unassailable.
Before the deed can be signed and the property exchanged, there are several investigations the Notary must comply with.
What the Notary will check
- The seller owns the property;
- There are no mortgages or foreclosures recorded at the territorial offices of the taxation authorities;
- There are no constraints, such as the right of first refusal, or covenants regarding assets classified as historic, artistic, or of archaeological value;
- The previous owner has paid all service charges;
- The cadastral plan conforms to the actual state of the property;
- The property is in order regarding building/planning permissions;
- The rules specifically designed to protect those who buy a property under construction have been complied.
- The energy efficiency of a building is certified following national and regional rules.
- The seller is required by law to deliver to the prospective buyer a copy of the applicable Italian energy performance certificate (Attestato di Prestazione Energetica or APE for short).
- All regulations have been observed regarding money laundering, traceability of payments, and the commissions paid to any real estate agency.
- The correct property sale taxes are applied to the purchase.
The Notary is trained in tax matters and can suggest solutions resulting in tax savings, such as the benefits of purchasing the property as a main residence. It is part of the notary job to collect from the seller the funds to pay deed taxes and duties. Upon registration of the deed, these will be paid over to the taxation authorities.
Payments methods when you sign the Final House Deed by the Notary
On the day of the Final Deed of Sale, the seller and the buyer will go to the Notary’s office to attend and sign the public deed of sale (name in Italian as Rogito). If you, as a buyer, cannot attend in person, you can be represented by a Power of Attorney.
Buyer must come with:
- Italian tax code
- bank checks issued by the Italian bank with which you opened your private account (unless you decide on a different payment method, explained below).
The Notary will read in Italian and explain the entire content of the contract to everyone present, making sure that you, the buyer, understand its content and the legal effects.
If you don’t know Italian well, a translator must help you translate the entire document and read it together with you together with the notary.
Despite it’s not difficult to find an English-speaking Notary in Italy, the Law requires the Act be done in the Italian language.
Once read, the 3 copies of the agreement must be signed by all, buyer and seller, before the Notary, and then signed by the Notary himself.
The buyer is then asked to pay the seller the balance of the agreed price. The seller is requested to hand over the keys to the property to the buyer. It’s done, finally!
The notary will then register the contract with the tax authorities and pay the related taxes on your behalf. The sale deed must be filed with the Public Register. This is required by law so that everyone can see who owns the property and whether it is subject to mortgages or other liens. The Cadastre is also updated with the cadastral registration.
Payments methods when you sign the Final House Deed by the Notary
Once the final deed has been signed, the buyer is required to pay the balance of the agreed price, in addition to the expenses and fees of the Notary, and the Commissione, the price of the Real Estate Agency.
Payments are made by bank checks issued by an Italian bank where you will have to open your current account.
Another safer way to transfer money is through the Notary’s escrow account, which is an escrow customer account (registered by Law 124/2017) where the Notary can receive funds for the payment of the property and keep them safe in that account. until it is time to make the payment to the seller.
In Italy, only a notarial escrow account enjoys complete protection against any creditors on the funds held in it.
How long does the whole process of buying a property in Italy take?
If the buyer is ready and the house is free, and if the documentation is in order, a direct purchase can take place in six to eight weeks.
To buy a property in Italy you need an Italian Fiscal Code
If you intend to buy a property in Italy or want to open an Italian bank account, you will need a Fiscal Code.
What is that? The Tax Code is a number issued by the Tax Agency of the Italian Ministry of Economy and Finance. It will be necessary to go to the competent tax offices in each Provincial Capital City. Just bring your passport and fill out a simple form. The tax code will be issued immediately. Just one tip: ask your real estate agent and he’ll be happy to do it for you!
Why you need to open an Italian Bank Account To buy a house in Italy
On the day of the final deed, the Notary will ask you to pay the balance of what was agreed to the seller by Bank Checks issued by an Italian Bank.
So you will need to open an Italian bank account to transfer money to purchase your property. Opening an account in any Italian Bank is very simple. Just enter a bank with your passport and your tax code. With even a small amount of money, you will immediately open your account.
Finding a Notary in Italy
As a buyer, you have to pay the Notary. This being the case, the buyer is free to choose the Notary. The choice should not be imposed on the buyer by the real estate agent, mortgage provider, or seller. Although, in reality, foreign buyers often choose the Notary advised by their real estate agent, as they will have dealt with them many times before. If you prefer, you can search for a notary in the area of the property using the website of the National Council of Notaries.
Do I also need a lawyer to purchase a house in Italy?
It is not a legal obligation to hire a lawyer when buying a property in Italy. Most Italians purchase a house using only a real estate agent and a notary.
When the agent and notary do not speak the language of the buyer, it may be advisable to hire an English-speaking Italian lawyer as well.
He will be able to guide you through the purchase process and act solely in your best interest to identify any issues at an early stage. Preferably he should work in the same province as the location of the property and the Notary, as their local knowledge can be very beneficial.