How to sell an Italian Property
Top-20 legal tips
The process, what to do, how to proceed, legal requirements, involved subjects, things to know, costs, how to transfer the proceeds abroad etc.
TOP-20 tips to safely and effectively sell an Italian property:
1) How to Determine the Sale Price: In Italy there is no way to easily find out what properties sold recently or are for sale in the area and for what price. There is not a national database, similar to the MLS in the USA. Local real estate agents and surveyors (“geometra”) estimate property value based on their professional experience. List to the public a price 15% to 20% higher than your target price, to allow negotiation.
2) Record: There are two property registers: "Catasto" and "Conservatoria". All the records need to be in order. Record inconsistencies, for example due to previous omissions or recording errors, need to be addressed prior to listing the property for sale. Record consistency rules recently got stricter.
3) Title: review your title before listing for sale. Check your entitlement, sale or use restrictions, first offer rights and any other limitation. If possible check also the title of the subject you acquired the title from. Disclose relevant information to the real estate agent and/or the prospect buyer prior to sale commitment, especially if you were not assisted by a lawyer when you acquired the property or if you inherited it.
4) Plans Compliance (“conformità catastale”): In force since 2010. Verify that the property plan ("planimetria catastale") filed with the local municipality ("Catasto") is consistent with the actual property status (position, shape and use of internal rooms, bathrooms etc.). Many Italian properties build prior to 2010 do not meet compliance requirements, even if the owner never did any renovation work on the property. This is mainly due to low attention to this aspect before 2010. A property can be sold only if Plans Compliance is confirmed.
5) Habitability (Certificate of Occupancy – CO - "agibilità"): residential properties must have habitability certificate in place (released by the local municipality) or at least meet the requirements to successfully apply for it. This means all systems in order, sound structure, healthy inside, building code compliance etc. However, the parties can agree otherwise. If your property does not have CO or does not meet the requirements, disclose it and avoid severe liability and to save substantial costs to obtain a CO.
6) Energy Efficiency Certificate ("Attestato di Prestazione Energetica" – "APE", fka "ACE"): It certifies the energy efficiency rate of your property. It needs to be in place when you list the property for sale. Appoint a local surveyor to prepare it (cost ranges from EUR 150 to 450, depending on property specifications, size, location etc.).
7) Condominium Rules and Obligations: If the property is part of an apartment building disclose pertinent information, such as (i) condominium association rules and restrictions (“Regolamento di Condiminio”), (ii) condominium expenses contribution shares (“tabelle millesimali”) which establishes how much each owner shall pay with respect to common expenses, (iii) extraordinary common expenses already approved by the residents but not fully paid yet.
8) Real Estate Agent (or Relator) – “agenzia immobiliare”: In Italy a real estate agent represents both the buyer and the vendor. Rarely each party has a real estate agent. Standard commission due by each party is 3% + VAT (currently 22%). Commission is due upon purchase offer acceptance, even if the sale does not go through. Once you involve an agent, a commission is due even if you find a buyer yourself without agent’s help. Negotiate better terms: lower commission, subject payment to final completion etc.
9) Purchase offer - Preliminary Contract ("proposta di acquisto", "preliminare" or "compromesso"): When you sign a document regarding property sale you are under contract, bound to complete the sale. Whatever the parties have not expressly agreed on, is governed by default rules set by the Italian legal system, which are typically in favour of buyers. Once the vendor signs there is little room to avoid default duties and obligations. Take care of due diligence, disclosure, disclaimer, limitations prior to going under contract.
10) Deposit: Agree on a deposit to cover your costs in case of buyer’s breach. In most cases it is vendor’s interest to qualify the deposit as a pre-established compensation measure in case of buyer’s breach of contract (“caparra confirmatoria”). This allows the vendor to retain the deposit without proof of damages or loss.
11) Contract Registration: if you accept a purchase offer (“proposta di acquisto”) or sign a preliminary purchase contract (“compromesso””) ask for its registration. Buyer shall pay for it unless otherwise agreed. it is a legal duty, it protects more your expectations and helps for Anti Money Laundry regulation purposes.
12) Property Possession: The vendor gives the property keys to the buyer on completion. Parties can agree on early or late possession. For example, if the property is rented, the tenant is entitled to stay in until the lease contract is over. Disclose pending lease agreement or occupancy. Regulate early possession terms since residential rental is subject to rules that are more favourable to occupants.
13) Furniture: Common practice is to sell a property without furniture, kitchen, appliances or withe goods. Buyers might pay an extra for content in usable conditions. If you cannot deal with empting the property, leverage what has a value and disclose what you will leave to the buyer when accepting an offer.
14) Notary: The law requires a notary to certify property sales. Italian notaries are law professionals who, in property transactions, act as public officers, with a neutral role between buyer and vendor. They carry out several formal checks, such as on title, parties identities, capacity, entitlement and powers. They also advise about legal and tax aspects. The buyer choses the notary, unless otherwise agreed. Typically the parties meet the notary only on completion, to finalize the deal. Prior to the meeting ask for a draft of final sale agreement to review it and address your concerns with the notary in advance.
15) Sale Taxes and Costs: property sales are subject to several taxes and costs, in addition to the ones above, such as (i) transfer taxes, on the buyer unless otherwise agreed; (ii) notary fees, on the buyer unless otherwise agreed; (iii) up to 20% capital gains tax (only if less than five years passed from your purchase); (iv) perhaps capital gain tax in your own country and/or the country where you live (check this with your local accountant).
16) Means of Payment: Payments are typically done through banker’s draft (cashier check, certified check, “assegno circolare”. You are not required to have an Italian bank account. You can use escrow account service through a real estate agent, a notary or a lawyer you trust for them to manage money transactions on your behalf.
17) Currency Exchange: If you expect to receive the sale price to your home bank account in a different currency (not a EUR account), look in advance for better currency exchange options and save up to 5% of transferred amount in bank exchange rate commissions and international money transfer charges.
18) Pending Mortgage: If you have still a loan with a mortgage on the property, this can be an appealing aspect for a buyer: a buyer could take over the residual loan without any cost nor mortgage institution authorization. Otherwise coordinate the sale with notary, bank and buyer for early loan termination and mortgage cancellation upon final completion.
19) Power of Attorney (“procura”): It is a document through which you give power to another subject to appoint an intermediary, accept offers and take all steps up to completion without the need to be physically present in Italy. You can formalize it in your own country.
20) Lawyer: the involvement of a lawyer is not required by the law. It is advisable involving an independent lawyer with large experience to look after your exclusive interest, to limit your exposure and liability, leverage opportunities, increase protection and guarantees, negotiate lower costs, receive and make payments, maximize results and, in general, to pursue a safer and more effective transaction.
In our international real estate practice our team of bilingual lawyers every day assists foreign clients buying and selling properties nationwide.
With the assistance of large networks of surveyors, real estate agents, notaries and associates throughout Italy we offer a comprehensive and competitive service from start to finish. We negotiate price and commissions, carry out checks and searches, liaise with involved parties, prepare documents, act as Power of Attorney, make and receive payments, offer escrow account service with a competitive international currency exchange program.
The transaction with us can be fully completed with no need for you to travel to Italy. All documents and information can be exchanged via email or courier. No need to involve consular offices.
CONTACT US - A partner will be glad to discuss your case, needs and expectations without obligations.