Real estate law

Property purchase agreement and deeds in Italy

What Italy Law Firms can do to safeguard your purchase?

Our team is composed of the multidisciplinary professionals needed to facilitate your purchase of Italian real estate from beginning to end. Our real estate experts are knowledgeable of the local real estate markets and keep our clients up-to-date on current market trends and assist them in contacting an experienced and honest real estate agency in their desired region.

To facilitate our clients, our legal team will draft and negotiate the preliminary contract and all conditions related to it, help negotiate a price, and draft a first offer. Our team duly inspects all preliminary documents such as land register plans, energy rating certificates, and habitability certificates, provides translations, and advises our clients on the content. A summary of our findings is provided in a technical and due diligence report. Finally, we will represent our client in front of a notary public to ensure their best interest is satisfied, and/or act on their behalf signing the final deed.

We can also provide an Italian power of attorney in order for you to avoid travelling back and forth to sign documents, if you prefer.

In addition to our real estate services, we also offer renovation and property management services. Our team of experienced architects and contractors can help you transform your newly purchased property into your dream home. Our property management services include regular maintenance and repairs, as well as rental management for those interested in renting out their property. We can handle everything from finding tenants to collecting rent and handling any issues that may arise. Our goal is to make owning a property in Italy as stress-free as possible for our clients.

The purchase process in Italy in short

The process of purchasing a house in Italy typically starts with a real estate agent or a search online for properties that are for sale.

  • Step 1: The client or ILF on the client’s behalf, find a property that meets your needs and budget
  • Step 2: ILF negotiate purchase price on your behalf to make an offer
  • Step 3: ILF does all technical and legal checks of the property. A summary of our findings is provided in a technical and due diligence report.
  • Step 4: ILF will draft the preliminary contract and all conditions related to it, that you will sign (compromesso) and pay a deposit, typically 10% of the purchase price
  • Step 5: ILF attorney conducts a title search to verify that the property is free of any liens or encumbrances
  • Step 6: ILF attorney prepares the final sales contract for completion (in Italian called the rogito)
  • Step 7: Pay the remaining balance of the purchase price, as well as any additional fees and taxes
  • Step 8: Sign the final sales contract (or signed by your attorney with a POA) and transfer the property to your name in front of the Notary

Having a dedicated attorney that can help you in every one of these steps can be crucial. Here at ILF we can provide you with the best attorneys in town.

The compromesso, when properly issued, is a legally binding agreement that outlines the terms of the sale, including the purchase price, payment terms, and any conditions that must be met before the sale can be completed.

At the final closing, you’ll need to pay the remaining balance of the purchase price, as well as any additional fees and taxes, such as the registration tax (imposta di registro) and the notary’s fees. Once all payments are made and the contract is signed, the property is officially transferred to your name and you can take possession of the property.

compromessoThe purchase proposal template in Italy

Once the potential buyer has selected the property he desires to purchase, the next step is to contact the seller to start negotiations or to formally draft what is known as the purchase proposal. The proposal is not legally binding, but instead is used to inform the seller of an interest in the purchase of the property and a willingness to sign a contract. It is common practice for the potential buyer to include a deposit between 5% – 10% of the asking price in a show of good faith. The seller has a precise time limit to accept the offer. If the offer is accepted, the seller is entitled to retain the deposit and subsequently signs the proposal. Once the proposal is signed it becomes legally binding. If the seller declines the offer, the deposit shall be returned.

Real Estate Purchase Deed

Download a free template of an Italian Real Estate Purchase Deed drafter by our attorneys

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Legal advice on the purchase of the property

We suggest that purchase proposals are seldomly used due to the fact that, at this stage, the potential buyer does not have sufficient information or legal documentation concerning the property or its ownership. The buyer should instead consult a lawyer to obtain legal advice on the purchase of the property.

Compromesso: the preliminary agreement for sale and purchase

A very important key step in the process of purchasing a property in Italy is the preliminary contract (Compromesso). It is a private agreement stating:

  • the agreed sale price
  • the closing date
  • the details of the property as specified in the land registry
  • the amount of the deposit given.
  • anyspecific conditions

It must always be signed prior to the completion of the house deed, and per Italian legislation, must be registered with the tax authorities. Registration fees are typically paid for by the buyer and the contract is registered by the real estate agent. The preliminary agreement for sale and purchase obliges both parties to sign the house deed before a notary, at which time the transfer of property ownership occurs.

The Purchase Preliminary Agreement is a contract with mandatory effect for the parties, who assume the obligation to give future consent. As a perfectly valid and binding contract, the parties to the preliminary contract, which has as its object a performance of doing, can seek its enforcement in specific form, through the specific application indicated in Article 2932 of the Italian Civil Code.

Preliminary agreement Italian legal provisions

The Civil Code does not give a single definition of “preliminary contract,” but mentions it in various areas, mainly on the subject of form (see for example the Article 1351 of the Civil Code, which states that the preliminary is void if not made in the same legal form as the final deed).

A) Art. 2645 bis Civil Code – Transcription of preliminary contracts

Ph. 1 Preliminary contracts having as their object the conclusion of any of the contracts even if subject to conditions or relating to buildings to be constructed or in the course of construction, must be transcribed if they result from a public deed or private writing with a notarized or judicially ascertained signature.

Ph. 2 The transcription of the final contract or other act otherwise constituting execution of the preliminary contracts referred to in paragraph 1, or of the judgment granting the application for specific performance of the aforementioned preliminary contracts, prevails over the transcriptions and registrations executed against the promisor alien after the transcription of the preliminary contract.

Ph.3 The effects of the transcription of the preliminary contract shall cease and shall be deemed never to have been produced if within one year from the date agreed upon by the parties for the conclusion of the final contract, and in any event within three years from the aforesaid transcription, the transcription of the final contract or other act otherwise constituting execution of the preliminary contract or of the court application referred to in Article 2652, first paragraph, number 2)(3) is not executed.

Ph. 4 Preliminary contracts concerning portions of buildings to be constructed or in the course of construction must indicate, in order to be transcribed, the usable area of the portion of the building and the share of the right due to the promissory purchaser relating to the entire building being constructed expressed in thousandths.

Ph. 5 In the case provided for in Subsection 4, the transcription shall be made with reference to the building property for the share determined in the manner provided for in that subsection. As soon as the building comes into existence, the effects of transcription shall be produced with respect to the tangible portions corresponding to the predetermined ownership shares as well as to the relevant common parts. Any difference in area or share contained within the limits of one-twentieth from those specified in the preliminary contract shall have no effect.

For the purposes of the provisions of paragraph 5, the building in which the rustication, including the perimeter walls of the individual units, has been carried out and the roofing has been completed is deemed to be existing.

B) Art. 2668 Civil Code – Cancellation of transcription

The cancellation of the transcription(1) of the applications set forth in Articles 2652 and 2653 and the annotations thereon shall be carried out when it is duly consented to by the parties concerned or is judicially ordered by a final judgment.

It must be ordered by the competent Court when the application is rejected or the trial is terminated by waiver or inactivity of the parties.

One must cancel the indication of the condition or term [1184] in transcribed deeds, when the fulfillment or absence of the condition or the expiration of the term results from a judgment or declaration, even unilateral, of the party, to whose detriment the suspensive condition has occurred or the resolutive condition has failed or the initial term has expired.

The transcription of preliminary contracts shall be cancelled when the cancellation is duly permitted by the parties concerned or is judicially ordered by a final judgment.

C) Art. 2780 Civil Code – Order of liens on real estate

When more than one preferential claim concurs on the price of the same property, preemption shall take place in the following order:

  • claims for real estate income taxes, indicated by Article 2771;
  • claims for contributions, indicated by Article 2775;
  • state claims for water concessions, indicated by Article 2774;
  • credits for indirect taxes, indicated by Article 2772(2);
  • credits for municipal tax on the increase in value of real estate;
  • the claims of the promissory purchaser for non-performance of preliminary contracts, indicated in Article 2775a.

D) Art. 2825 bis Civil Code – Mortgage on property subject to preliminary contract

A mortgage registered on a building or condominium complex, including those to be built or in the process of being built, as a guarantee of financing for the construction work pursuant to Article 38 et seq. of Legislative Decree No. 385 of September 1, 1993, prevails over the earlier transcription of the preliminary contracts referred to in Article 2645 bis, limited to the portion of the debt arising from the said financing that the promissory purchaser has taken over by the preliminary contract or other subsequent deed that may be adjusted pursuant to Article 39, paragraph 3, of the said Legislative Decree No. 385 of 1993. If the assumption results from a subsequent deed, it shall be noted in the margin of the transcription of the preliminary contract.

E) Art. 2932 Civil Code – Specific execution of the obligation to conclude a contract

If the one who is obligated to conclude a contract fails to perform the obligation, the other party, if it is possible and not excluded by the title, may obtain a judgment producing the effects of the unfinished contract.
In the case of contracts having as their object the transfer of ownership of a certain thing or the establishment or transfer of another right, the application cannot be granted, if the party who proposed it does not perform its performance or does not make an offer of it in the manner prescribed by law, unless the performance is still due.

F) Art. 67 Bankruptcy Law – Deeds for consideration, payments, guarantees

Shall be revoked, unless the other party proves that he did not know of the debtor’s insolvency:

  • acts for consideration performed in the year prior to the declaration of bankruptcy in which the services performed or
  • obligations assumed by the bankrupt exceed by more than one-fourth what was given or promised to him;
  • acts extinguishing pecuniary debts due and payable not made with money or other normal means of payment, if performed in the year prior to the declaration of bankruptcy;
  • pledges, antitrusts and voluntary mortgages established in the year prior to the declaration of bankruptcy for pre-existing debts that have not expired;
  • judicial or voluntary pledges, antitrusts, and mortgages established within six months prior to the declaration of bankruptcy for overdue debts.

Also revoked, if the trustee proves that the other party knew of the debtor’s state of insolvency, are payments of liquid and collectible debts, deeds for consideration, and deeds constituting a right of first refusal for debts, including those of third parties, contextually created, if made within six months prior to the declaration of bankruptcy.

The following are not subject to the revocatory action:

  • payments for goods and services made in the course of business within the usual terms;
  • remittances made to a bank account, provided that they have not substantially and permanently reduced the bankrupt’s indebtedness to the bank;
  • sales and sales preliminaries transcribed pursuant to Article 2645 bis of the Civil Code, the effects of which have not ceased pursuant to the third paragraph of the aforementioned provision, concluded at a fair price and concerning real estate for residential use, intended to constitute the principal residence of the purchaser or his relatives and relatives-in-law within the third degree or real estate for non-housing use intended to constitute the principal place of business of the purchaser, provided that on the date of declaration of bankruptcy such business is actually carried on or investments have been made to start it.
  • the acts, payments and guarantees granted on the debtor’s assets provided that they are made in execution of a plan that appears suitable to allow the reorganization of the enterprise’s debt exposure and to ensure the rebalancing of its financial situation; an independent professional appointed by the debtor, registered in the register of statutory auditors and in possession of the requirements provided for in Article 28, letters a) and b) must certify the truthfulness of the enterprise’s data and the feasibility of the plan; the professional is independent when he/she is not linked to the company and to those who have an interest in the reorganization operation by relationships of a personal or professional nature such as to compromise his/her independence of judgment; in any case, the professional must meet the requirements provided for in Article 2399 of the Civil Code and must not, not even through persons with whom he/she is united in a professional association, have provided in the last five years subordinate or self-employed work in favor of the debtor or participated in the administration or control bodies; the plan may be published in the commercial register at the request of the debtor;
  • the acts, payments and guarantees put in place in the execution of the arrangement with creditors, receivership, as well as the agreement approved under Article 182 bis, as well as the acts, payments and guarantees legally put in place after the filing of the appeal referred to in Article 161.
  • payments of consideration for services rendered by employees and other collaborators, including non-subordinate collaborators, of the bankrupt;

(vii) payments of liquid and collectible debts made when due in order to obtain the provision of services instrumental to accessing the bankruptcy proceedings of receivership and (12) composition with creditors.
The provisions of this article shall not apply to the issuing institution, pledge and land credit transactions; the provisions of special laws shall not be affected.

property purchase proposal in Italy

G) Art. 72 Bankruptcy Law – Preliminary agreement parties pending relations

If a contract is still unexecuted or not fully executed by both parties when, in respect of one of them, bankruptcy is declared, the execution of the contract, subject to the different provisions of this Section, shall remain suspended until the liquidator, with the authorization of the creditors’ committee, declares to take over the contract in place of the bankrupt, assuming all the obligations thereof, or to dissolve the same, unless, in contracts with real effects, the transfer of the right has already taken place.

The contractor may put the liquidator in default by having the delegated judge assign him a term not exceeding sixty days, after which the contract shall be deemed dissolved.

The provision in the first paragraph shall also apply to the preliminary contract except as provided in Article 72 bis.

In the event of dissolution, the contractor shall have the right to assert in the liabilities the claim resulting from non-performance, without being due compensation for damages.

An action for termination of the contract brought before the bankruptcy against the defaulting party shall be effective against the liquidator, subject, in the cases provided for, to the effectiveness of the transcription of the application; if the contractor intends to obtain by the ruling of termination the restitution of a sum or property, or compensation for damages, he shall bring the application in accordance with the provisions of Chapter V].

Negotiating clauses that make the termination of the contract dependent on bankruptcy are ineffective.

In the event of the dissolution of the preliminary contract of real estate sale transcribed pursuant to Article 2645 bis of the Civil Code, the purchaser shall be entitled to enforce his claim in the bankruptcy estate, without being owed damages, and shall enjoy the privilege referred to in Article 2775 bis of the Civil Code provided that the effects of the transcription of the preliminary contract have not ceased prior to the date of the declaration of bankruptcy.

The provisions of the first paragraph shall not apply to the preliminary contract of sale transcribed pursuant to Article 2645 bis of the Civil Code concerning a property for residential use intended to constitute the principal residence of the purchaser or his relatives and relatives-in-law within the third degree or a property for nonresidential use intended to constitute the principal place of business of the purchaser

H) Art. 173 Companies Crisis Code – Preliminary contracts in bankruptcy procedure in Italy

STEP 1
The liquidator may dissolve the preliminary contract of real estate sale even when the promissory purchaser has filed and transcribed before the opening of the judicial liquidation an application for specific performance pursuant to Article 2932 of the Civil Code, but the dissolution is not enforceable against the promissory purchaser if the application is subsequently granted.

STEP 2
In the event of dissolution of the preliminary contract of real estate sale transcribed pursuant to Article 2645 bis of the Civil Code, the promissory purchaser shall be entitled to enforce his claim in the liabilities, without being owed damages, and shall enjoy the privilege referred to in Article 2775 bis of the Civil Code, provided that the effects of the transcription of the preliminary contract have not ceased prior to the date of the opening of the judicial liquidation.

STEP 3
Without prejudice to the provisions of Article 174, the preliminary contract of sale transcribed pursuant to Article 2645 bis of the Civil Code shall not be dissolved if it relates to a property for residential use intended to constitute the principal residence of the promissory purchaser or his relatives and relatives-in-law within the third degree or to a property for nonresidential use intended to constitute the principal place of business of the promissory purchaser, provided that the effects of the transcription have not ceased prior to the date of the opening of the judicial liquidation and the promissory purchaser applies for its enforcement within the time limit and in the manner established for the submission of applications to establish the rights of third parties to the property included in the proceedings.

STEP 4
In cases where the receiver takes over the preliminary contract of sale, the property shall be transferred and delivered to the promissory purchaser in the state in which it is located. Down payments made prior to the opening of the judicial liquidation shall be enforceable against the estate in an amount equal to half of the amount that the promissory purchaser proves to have paid. The delegated judge, once the sale has been executed and the price has been collected in full, shall order by decree the cancellation of the registrations relating to rights of first refusal, as well as the transcripts of foreclosures and attachment and any other encumbrances.

I) Art. 385 Companies Crisis Code – Amendments to Article 3 of Legislative Decree No. 122 of 2005

Article 3 of Legislative Decree No. 122 of June 20, 2005 shall be amended as follows:

  1. Paragraph 1 shall be replaced by the following:
    “1. The surety bond shall be issued by a bank or an insurance company; it shall guarantee, in the event that the builder incurs a crisis situation referred to in Paragraph 2 or, in the event of default on the insurance obligation referred to in Article 4, the repayment of the sums and value of any other consideration actually collected and the related legal interest accrued up to the time when the said situation occurred.”
  2. Paragraph 3 shall be replaced by the following:
    3. The surety bond may be enforced:
    1. as from the date on which the crisis situation referred to in subsection 2 occurred provided that, for the hypothesis referred to in subparagraph (a) of the same subsection, the purchaser has notified the builder of his willingness to withdraw from the contract and, for the hypotheses referred to in subparagraphs (b), (c) and (d) of subsection 2, the competent body of the bankruptcy proceedings has not notified the competent body of the bankruptcy proceedings of his willingness to take over the preliminary contract;
    2. as of the date of the notary’s attestation that he has not received for the date of the deed of transfer of ownership the insurance policy in accordance with the ministerial decree referred to in Article 4, when the purchaser has notified the builder of his intention to withdraw from the contract referred to in Article 6.
  3. Paragraph 7 shall be replaced by the following:
    “7. The effectiveness of the surety bond shall cease when the surety bondholder receives from the builder or another of the contractors a copy of the deed of transfer of ownership or other real right of enjoyment over the property or the final deed of assignment which contains the mention referred to in Article 4, paragraph.

The Caparra: Compromesso’s deposit

A deposit between 10% – 30% of the purchase price normally accompanies the preliminary agreement. This down payment is in 2 forms:

  • Caparra Penitenziale (penitential deposit)
  • Caparra Confirmatoria (confirmation deposit)

Caparra is used to safeguard both parties in case a default occurs prior to the completion of the sale. If the buyer is held in default, he will automatically lose the entirety of the deposit. If the seller defaults, he shall pay the buyer twice the amount of the received deposit. This amount may be higher if the buyer can show damages in excess of the deposit. However, in the case of a Caparra Penitenziale, the party that decides to withdraw from the agreement must only pay the amount agreed upon as a penitential deposit and cannot claim further damages.

Notary’s expenses for Compromesso e Rogito

Sometimes the compromesso is skipped and the Rogito takes place without this step. This last and mandatory step must take place before a notary. The notary is typically a professional chosen and paid for by the buyer. Notary fees are generally 1% of the purchase price; however, this may be higher for low-cost properties. Both parties, or a Special Power of Attorney representing the party, must be present in front of the notary at the signing of the notary deed. Italian law states that deeds must be drawn up in the Italian language. In the case that one of the parties does not speak Italian, a second notary deed may be drafted in the party’s native language. In this case, an interpreter is hired to assist in communication with the notary. The buyer may choose to also be represented by a bilingual attorney. According to Italian law, the notary must read the deed aloud in order to ascertain there are no misunderstandings and that all statements are valid and true. Once the deed is read and confirmed by both parties, the final deed is issued in three copies and signed by the two parties and the notary.

The final step is the transfer of the balance due to the seller. It is advisable that the balance is held in an escrow account by the Notary and all transfers are made from this account. This is a bonded client account allowing the notary to receive funds from the buyer for the payment of the property. Once all criteria set forth by the agreement are met, the seller receives the payment and the property is transferred to the purchaser.

OUR SERVICES

Our team is composed of the multifaceted professionals needed to facilitate your purchase of Italian real estate from beginning to end. Our real estate experts are knowledgeable of the local real estate markets and keep our clients up-to-date on current market trends and assist them in contacting an experienced and honest real estate agency in their desired region. Our team duly inspects all preliminary documents such as land register plans, energy rating certificates, and habitability certificates, provides translations, and advises our clients on the content. A summary of our findings is provided in a technical and due diligence report.  To further facilitate our clients, our legal team will draft and negotiate the preliminary contract and all conditions related to it, help negotiate a price, and draft a first offer. Finally, we will represent our client in front of a notary public to ensure their best interest is satisfied, and/or act on their behalf signing the final deed.

The contents of this page should not be taken as an authoritative statement of Italian law and practice. Neither the author nor the publisher are responsible for the results of actions taken on the basis of information contained in this summary, nor for any errors or omissions. This text is not intended to render legal, accounting or tax advice. Readers are encouraged to seek professional advice concerning specific matters before making any decision.

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