Italy Property Buying Process (excerpt taken from the Guide)

The Italian property buying process is not as complicated as it may look. The main difference is that Italians do not use conveyancers and solicitors to do searchers and draw up contracts. All searches and contracts are divided up between the notary and the estate agent. It is possible to cut out the estate agent and do the searches yourself, with a notary checking that the certificates you have gathered are correct.

However I would not advise this path for foreigners who are unfamiliar with the paperwork required and who do not speak the language. It is also handy to have the estate agents’ services as mediator between buyer and seller, and you will be persuaded that the 3% fee they ask is worth it when they organise tax codes, bank accounts, electricity and water supply. Some even organise your first ICI payments and certificates, not to mention give you valuable advice on local builders, doctors, plumbers plus tips about local traditions and customs – many good agents do all this and more.

Unless you arrange to give a local person power of attorney to sign for you, an Italian deed of purchase requires your physical presence, as well as that of the vendor, on the day. Personally I find there is something more ‘real’ about buying a house this way than doing everything through third parties over the phone, as in the UK.

2. Prices

The prices displayed in an Italian estate agent’s window will simply be, as in the UK, the asking price for the property. However the overall cost of buying a property in Italy is around 15% of the property value. (Note: in the UK and in most European countries, buying costs are around 10%.)

This is made up as follows:-

When you choose an estate agent, make sure they are a member of a registered body such as FIAIP (www.fiaip.it) or FIMAA (www.fimaa.it). This information should be visible somewhere in the office. Do not use an estate agent without visiting their office and viewing the setup – don’t just arrange to meet in a car park somewhere. They should be experienced in the Italian property buying process.

The actual conveyancing and tax collecting is done by a notary. Notaries are people that you will find yourself consulting for many different legal services when you live in Italy. It is up to the buyer to choose a notary.

Make sure you choose a notary that is in the area of the sale, because you and the estate agent, and the vendor, will all have to meet there on the day of the purchase. A notary should be an impartial representative of the state. Their job is to:

• Check that the sale documents are correct

• Verify the identities of the people involved

• Oversee all transactions

• Calculate and collect tax on the sale

• Update the land registry
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The notary also carries out last-minute checks – even up to half an hour before the signing of the deed is due to take place – to make sure that the property being sold to you has not been the subject of an ‘ipoteca’.

If your seller suddenly incurs large debts with their bank, the bank can slap an ‘ipoteca’, a mortgage, on their property. If that ‘ipoteca’ is not paid by the vendor before the sale, it will be sold along with the house and you will be held responsible for paying that debt.

This last-minute search is essential – a friend of mine found out that a €20,000 ipoteca had been imposed on the property an hour before she was due to buy it.

Having discovered in advance about the €20,000 debt, she was able to delay the sale and demand that the vendors pay off the debt, in her presence, at a meeting between the bank’s representative, the vendor and her notary, before the deed was signed.

• Once you have decided on a property you like, contact the agent.

• Double check the fees and pricing.

• If you need professional translation, remember to add on the costs of that.

• Draw up your condizioni sospensive (see below) – these are the criteria under which you might be able to withdraw from the sale.

• Make an offer, following your estate agent’s advice – they should be able to tell you how low you can go without causing offence.

• Make sure you see the plans of the property and its land (ask to see the “cadastral” plans) before you agree to make an offer. You should be sure of the boundaries, rights of way across your land etc. A competent agent should be able to handle this for you.

• The agent will now contact the vendor and submit your offer.

• You will need to provide your passport, and later you will need to produce marriage or divorce papers and, if you are borrowing money, you will also need paperwork with details of the loan.

The whole process should take 3 or 4 months from making the offer to signing the final contract.

The estate agent will immediately draw up a preliminary contract, detailing what is being sold and the price that will be paid for it. There are two types of preliminary contract: a compromesso and a proposta di acquisto. The difference between them is simply that both parties are present at the signature of a compromesso on the same day, whereas a proposta d’acquisto can be sent to vendor and buyer by post and signed in succession, with the buyer signing first and handing in a cheque for the deposit, which only gets passed on to the vendor once the vendor has signed the contract.

Often, if there are conditional clauses written into the contract, the agent will hang on to your deposit cheque and it will only be handed to the vendor once these clauses have been adhered to. Usually the cheque for the deposit is about 10% of the purchase price. The compromesso or the proposta d’acquisto contract will specify that all the paperwork and certificates must be in order on the property or the sale is off.

Once the vendor signs the contract, the estate agent hands over the cheque. At this stage, if the vendor changes his or her mind on a whim, they will be legally obliged to pay you twice the value of the deposit. If you, the buyer, change your mind on a whim, you lose your deposit.

New rules require the estate agent to officially register the preliminary contract within a month of signing, and the cost of registering will be passed on to you, the client, though it does not cost very much - the price is judged according to the number of lines of text). Part of the cost of registering the preliminary contract will be discounted from the final taxes to pay upon signing the deed of purchase.

Condizioni sospensive permits you to withdraw from the purchase under certain circumstances. Typical reasons might include not being able to obtain finance on a mortgage or having a request for planning permission refused. You should discuss these clauses carefully with your agent at the time of making the offer.

9. Searches and surveys

Once the compromesso is signed and the deposit paid, you will need to transfer your money into Euros. Hopefully you will have talked to Smart Currency http://www.SmartCurrencyExchange.com With your account all set up and ready to go!

Then begin the searches on the property including ownership, land boundaries and rights of way. Surveys are not common practice in Italy and even banks will not usually commission a survey of the type people are used to in the UK. Having said that, you may wish to have the peace of mind a survey provides. If you do wish to obtain a survey, you should do so before the final deed of sale contract is signed. You can ask your agent to recommend a surveyor, called a geometra, or even a local builder, to have a look and give you their opinion.

10. The final signing

Before signing the final Deed of Purchase, your estate agent will have helped you open a bank account nearby and you will have to register for an Italian tax code, known as a codice fiscale. This tax code is used widely to help identify people, especially with regard to large purchases and also in administrative affairs. It is not a complicated thing to get and if you do it yourself, by going along to the local tax office where the property is located with your passport, it can take just a few minutes. However, estate agents will normally obtain a tax code for their clients as part of their services.

The final contract of sale, known as the ‘rogito’ is signed, in person, in the notary’s office, with buyers, vendors and estate agent present. In the bad old days i.e. up to January 2007, the official declared price of a property written in the final contract of sale was vastly inferior to the actual price paid. This was done to avoid having to pay more in tax. It meant that buyers had to walk over to a notary’s office with their pockets full of their life savings in cash, and at the appropriate moment, after the official cheque had been passed over the table upon signing the contract of sale, the notary would discreetly leave the room for five minutes so that the rest of the money could be paid over.

This seems incredible but was common practice, and was an extremely nerve-racking experience for British buyers unused to walking around with tens of thousands of euros in their pockets and handing them over in such unusual circumstances. Thankfully this system was abolished in the recent long-overdue reforms.

Now people who are buying a habitable dwelling, even as a non-resident, can apply the ‘doppio valore’ rule which means that they can pay tax only on the catastal or registry value of the property, which is normally quite a bit lower than the actual purchase price. This means that the actual price paid for the property can be declared in the deed of purchase - and thankfully it also means no more walking the streets with your pockets stuffed with cash! The cost of a property, minus what has already been paid on deposit, is paid with bankers’ drafts, issued on the day of the sale. Unfortunately, you cannot apply the new system with land purchases.