Contractual assistance for purchasing properties: real estate lawyers in Italy
Purchasing a property is a momentous life event and frequently an expensive investment. Using the property for commercial purposes and generating a profit adds to the challenge. When buying a property in Italy, it is highly advisable to contact a qualified, bilingual legal advisor proficient in Italian law and knowledgeable about the real estate market. The legal advisor is there to assist in navigating the difficulties foreign buyers often encounter due to the difference in legal systems and language barriers, and inform them of any potential risk factors. The legal advisor can also act as the power of attorney (procura speciale) to act on their behalf. The attorney does all the legal work on the client’s behalf without the need of the client to be physically present. This is especially useful when the principal does not speak Italian or when they cannot be present in front of an Italian notary for the property sale.
There are different types of commercial properties allowed for by Italian law, including leisure real estate, industrial properties, office and commercial spaces, and retail real estate. The valuation of commercial properties is determined by the average market value of similar properties, expected generated income, the value of the property (per square metre), and on the property’s location and commercial size.
The most effective way to find a desirable property without wasting valuable time and money is to work with a real estate agent. Real estate agents and agencies are licensed, qualified, and registered with the local Chamber of Commerce. They are usually paid a commission called Provvigione, which is generally between 2.5% and 3% of the purchase price and is to be paid by both the buyer and the seller (unless the parties agree otherwise). Frequently the purchaser signs a standard terms of engagement detailing the agent’s fees, the duration of the mandate, and potential exclusivity. In addition, contracts may provide for a “clientele indemnity” in case of termination of the agreement by the principal without any material default on the part of the appointed agent. All documents should be carefully evaluated before signing, particularly due to the fact that such documents are usually in Italian.
Once the prospective buyer has chosen the property to purchase, the first step is to contact the seller to make an offer and enter into negotiations. This offer is not legally binding but is used to indicate the offer price, the amount of time desired to close, and to specify the terms of the transaction, including whether it would be subject to financing. The purchase proposal is binding once both parties sign. At this time, the seller must provide the following documents:
- An energy rating certificate (APE – attestato di prestazione energetica) summarizing characteristics of the energy systems in the building. This document is issued by an architect, surveyor, or engineer.
- Land registry certificate – maintained by Agenzia del Territorio – providing information on deeds of transfer of ownership, existing mortgages, and other property rights to ensure the legal compliance of the deal and realization of the full property rights.
- Certificate of habitability (Certificato di agibilità) confirming the building is fit for occupancy.
- Planning permission building certificate (to be issued after 1967) testifying it was built in accordance with Italian law.
The prospective buyer will generally carry out due diligence investigations on the property to establish the property from both a legal and technical point of view (address, year built, ownership titles, third party rights and burdens, building permits, certificates, registry entries, and technical state of the real estate unit). Such research should be conducted with the assistance of external experts. When purchasing a property from a company, an analysis on the company’s solvency status should also be completed at this stage.
After an offer has been accepted, the parties enter into a preliminary contract (preliminare) to negotiate the terms of the future deed of sale. The contract consists of the negotiated price of the property and the parties’ mutual obligations to be realized prior to the execution of the deed of sale, and the deadlines for satisfying these obligations (also called condition precedents). The preliminary contract does not have a translational effect and no notarisation is required; however, it is legally binding. All registered Italian real estate agents are obliged to register preliminary contracts. The cost of registration is usually paid by the buyer. The transaction process may entitle the seller to request a deposit, although this step is less common in the case of commercial properties.
The final step is the signing of the deed of sale (rogito) before a notary, typically chosen by the real estate agent or attorney representing the buyer. The notary fees, commonly paid by the buyer, usually amount to 1% of the purchase price. It is mandatory that the seller and buyer, or a Power of Attorney representing the party, be present at the notary’s office for the signing of the notary deed. By law, the notary reads the contract aloud, so as to ascertain that the statements made are legitimate and that there are no misunderstandings between the parties. Once read and confirmed, the contract is signed in three copies by both parties and by the notary. The seller receives the remaining purchase amount from the buyer, generally through an established Notary’s escrow account. At this point, the property ownership is transferred.
Several documents must be presented for the deeds of sale:
- Planning permission building certificate issued after 1967
- Certificate of habitability (Certificato di agibilità)
- An energy rating certificate (APE – Attestato di prestazione energetica)
Failure to provide the above documents affects the validity of the deed of sale and prevents its completion.
Merger and Acquisition
When it comes to commercial real estate, purchasers may have interest in buying the property’s former managing company in addition to the property itself. It is important to emphasize that in these cases the sale is not a property sale, but a corporate one. The sale of a company includes all the assets, including non-personal contracts, even if they are not explicitly described, unless excluded by the buyer. The counterparty in each contract has the possibility to withdraw from it within 3 months of the company sale’s notification date, and in presence of a just reason for withdrawal. The law protects the right of employees to keep their jobs even with a new owner of the company.
In this type of purchase, due diligence is also necessary and may include an analysis of the company’s solvency, shareholders’ rights, assets and liabilities. The investigation is to determine the company’s ownership and ascertain the existence of any parties who might possibly hold rights over the given property. The company’s recent balance sheets and income statements should be also examined in order to provide information about the corporate capitalization, reliability and solvency index of the company. The prospective purchaser, after analysing the financial capacity of the company, may once again evaluate the benefits of signing the deal.
Our team of qualified real estate agents, surveyors, architects, accountants, and lawyers is able to assist you through the entire process of purchasing real estate in Italy. We offer insight on the local real estate market and help you source the right property and negotiate a price. We inspect all documents, ascertain property rights and burdens of the property, draft a due diligence and technical report itemizing our findings, provide translations where needed, and advise our clients on their content. We will draft all necessary documents including offers and preliminary contracts and can act as the power of attorney to sign the final deed in front of a notary public. In case of a corporate acquisition, we additionally analyse all publicly disclosed documents and complete an exhaustive survey of the seller’s rights and solvency and summarize our findings in a company due diligence report, thereby commenting on the company’s corporate capitalization, reliability and solvency index. Our goal is to ensure that our client’s best interest is met throughout the entire process.