Q: I committed to purchase an Italian unit in a complex where the construction work on the common areas has not been completed yet. Can I be allowed to withhold certain funds at completion until such a time when all of the complex is completed as per the original preliminary purchase contract (PPC - contratto preliminare). At the moment it is expected that no more than 70% of the whole complex will be finished by the time I complete.
Please let me know my rights under Italian law in such a situation that I completed and the builder/developer went bankrupt before any further work on the complex was done.
A: We understand your preliminary purchase contract established that you shall pay the purchase price balance and complete the transaction when all the construction work is completed. Under certain circumstances, when buyers are preparred to complete before the common areas are completed, it is not uncommon for vendors to accept to postpone the payment of a portion of the purchase price balance until the common areas have been completed.
If so, we recommend having proper written agreement to regulate such option, establishing also a reasonable deadline and a penalty in case of delay. Such agreement can be mentioned in the title deed as well as a private contract.
Under the circumstances, given that the entire complex is 70% done, it seems unlikely the builder/developer would be involved into a bankruptcy procedure. However, should this happen, it is reasonable to believe that (i) the complex or the individual units would be sold to the best bidder/s and (ii) the new owner/s would complete the work, to probably resell the units with a profit.
You position, as a buyer who would complete prior to possible bankruptcy, appears rather safe. As mentioned above, it is advisable to obtain proper formal evidence of builder’s commitment to complete the complex after completion, at his expenses, by a deadline. Such evidence might be a specific clause in the title deed and/or in a properly formalized private contract.
Under said commitment, the court bankruptcy manager would not have right to ask buyers who completed prior to the bankruptcy for (i) financial contribution to complete the common areas, nor (ii) payment of retained amount until the common areas are completed.
Upon your request, our team of Italian Lawyers will be glad to assist you through the property purchase completion process, also for the purposes of the agreement above.
Should you like to contact our Italian solicitors, please click here.