Italian preliminary contract for the purchase and sale of real estate

Italian preliminary contract for the purchase and sale of real estate, what you need to know When you buy a house, you start a multi-step process. It is important to know each phase to complete the operation in the best possible way. Let’s see in particular what the purchase proposal and the preliminary contract are. The purchase proposal The purchase proposal is the declaration of the buyer that he wants to buy a certain property at a certain price. Normally, this is a pre-printed form provided by the real estate agency and accompanied by the payment of a sum of money as a deposit. We can also make a purchase proposal a bit special, without a real estate agency. Signed, the purchase proposal contains commitments that already engage the buyer, while the seller remains free to evaluate other offers. The purchase proposal is binding only on the party who signed it. Once accepted by the seller, the purchase proposal is automatically converted into a preliminary contract. The preliminary contract The Italian preliminary contract (or compromise) is a real contract that obliges both parties to sign the final contract. The preliminary must indicate the main elements of the sale price, the house to buy, the address and a precise description with the land register data and the date of the final contract. In the case of the sale of goods under construction, special rules are required by law for the preparation of the preliminary contract. It is not mandatory that the preliminary contract be signed by a notary, but it is good to specify with the notary or with a real estate lawyer what the obligations that result are. Preliminary contract for real estate purchase, transcription in real estate registers The transcription figures as a real purchase reservation of the property, it means that the seller can not sell the property to anyone else, or grant a mortgage on the property, or constitute a passive servitude or any other prejudicial right. The creditors of any seller will not be able to register a mortgage on the goods promised for sale, nor seize them. Since the registration of the preliminary contract, the property is “reserved” to the future buyer, and any transcript or registration would not be applicable. When registering the preliminary contract, the following fees must be paid, which will then be recovered upon signature of the definitive contract: 0.50% on the deposit 3% of the amounts paid as down payment.  

Buying a home that has been given, risks and remedies

Buying a donation house in Italy, what are the risks and how to avoid them Buying a home from a vendor who has received a donation may be risky and the bank may not grant the loan. Let’s see why and how, thanks to a recent decision, it is possible to avoid problems. Donation may be contested within 20 years of being transcribed or within 10 years of the donor’s death. A long time. And with the protest the heir can recover the given property, even if his property has already been transferred. In order to protect the gift, the heir may waive the action by signing an official document when the donor is still alive. To clarify it there is the judgment of the Court of Pescara n. 250/2017. This decision is based on what has already been expressed by the Court of Turin (Judgment No. 2298/2014). In the case of a donation, it is therefore good to defend oneself against the heirs and their actions. First of all, it should be remembered that the person who gives a home to a parent or a third party performs an act that could harm the so-called legitimate heirs, to whom Italian law always grants a minimal share of the estate of the deceased, even in spite of his will. They are the spouses, their children, the parents and the brothers and sisters of the deceased. This means that if a person, while still alive, make donations depleting his assets, or with his will, leaves most of his property to persons other than the legitimate heirs, they may experience the so-called “action of reduction of the legitimate part “. The action aims to recover the part of the inheritance that is due to them by law. In this way, those who benefit from a donation of the deceased are obliged to return the property to the heirs even after the transfer of ownership in their favor. Not only that. If the donor sells the property to another person, the lattermay also be the subject of the heirs reduction action and, therefore, be obliged to return the property to the legitimate ones. The reduction action can no longer be experienced beyond a certain term. The right of the heirs to recover the property dumped from the estate of the deceased, who damaged their rights,  prescribes alternatively under: 20 years from the transcription of the donation in the public register; 10 years from the opening of the succession, that is to say the death of the donor. After this period, if no action is taken, the gift becomes unassailable. But the practice of the notary has developed a faster solution, validated now by the judges. It is a question of having the legitimate heir sign a waiver to contest the donation: he thus undertakes not to proceed with the restitution of the property. If the legitimate heirs are more than one, the signature must be collected by everyone. The waiver can be signed when the donor is still alive, that is, shortly after the donation itself. The judgment states that the renunciation of the legitimate heir to the action of restitution of the given property is valid even if it is completed before the death of the donor and before 20 years from the transcription of the donation. If made with a notary act, it can be noted in the real estate registers on the sidelines of the donation in order to be public and knowable by anyone. It is necessary to emphasize however that with this agreement the legitimate heir does not lose its legitimate part, that he can always claim also against the donor; he undertakes not to claim the object of the agreement, without prejudice to the possibility of defending his rights in a different way. Therefore, the situations that may arise are as follows: if the donor is still alive, the legitimate heir can only give up the action to recover the property, it means that he will no longer be able to claim the property object of worship, but can still act against the donor to obtain (in a different way) his legitimate share. If the donor is dead, the legitimate heir may renounce both the action to obtain restitution of the property, and the action of reduction of the legitimate share.  

Buy an auction house in Italy and save 20%

Buy an auction house in Italy with or without bank loan Real estate auctions are a good opportunity to buy quality property at affordable prices, stipulating, if necessary, even a special mortgage. Real estate auction: how does it work In any case, it is always possible for those who know how to choose, to find good buying opportunities in real estate auctions, even if the available liquidity does not always make it possible to realize the real estate dream. In this case, it is possible a mortgage loan by auction. When a property is auctioned as part of a legal proceeding, its selling value may fall by 20% of the market value, which is a benefit from the point of view of the accessibility of the purchase. The amount financed by the mortgage can instead reach 100% of the value of the sales and 80% of the value of expertise, thanks to an agreement between Abi (Italian Banking Association) and the courts (the list of participating banks is available on the Abi site). Before establishing the amount of a mortgage by auction, it will then be up to the forensic expert to set the value of the property, once established its cadastral parameters and general conditions. These characteristics will be recorded in a document that each participant in the auction will be able to consult. The court then sets the base price, the filing date and the duration of submission of tenders, as well as the date of payment of the balance. Information, these, which are made public in the court register and with advertisements in the sections devoted to auctions in newspapers and other media. Loan auction: no notary fees Once the property is granted, the winner pays the balance: if he wants to buy by loan, the signature of the latter is done at the same time as the transfer of ownership decreed by the judge (which does not involve notary fees, which constitutes an additional advantage). The loan is then granted only on the condition that the participant in the auction, who must have signed and presented at the auction stage a preliminary document to this effect, actually gains ownership. If the award does not take place, the preliminary document does not imply any obligation. If the loan is not sufficient to cover the total cost of the purchase, the borrower will have to cover the remaining part (with its own cash or with a loan or mutual liquidity). Mortgage bids, like all other mortgages, will have an amortization period and procedures similar to “traditional” loans. In addition, if the property purchased will be a first home, it will receive the associated tax benefits.

Increase the value of your home in Italy and elsewhere

What increases the value of a property: Here are some of the most useful interventions. From the renovation of rooms to energy certification, here are the most useful interventions to increase the value of your house or apartment and make it more attractive to potential buyers. Space is never enough. When the surface of a house can not be changed, how can this limit be solved? One of the added values ​​of a home is certainly the ability to be ready for any need or unforeseen: from the arrival of an extra person (be it a baby or an elderly parent) to the sudden need to work at home. the House. With the help of an expert, it will be much easier to rethink the premises and optimize the spaces to get an extra room. Simply divide a very spacious room, or badly cut, into two different rooms and you will get a second bathroom, a room for guests, or a small studio to devote to work from home! If the house is not big enough for this type of intervention, something can be the use of a sliding door that can still guarantee privacy. Restructure the most used parts Renewing the most used spaces of the house, such as the living room, kitchen and bathroom will give the impression of a well maintained home. Operations that can give the rooms a whole new atmosphere: for example, the coating of walls with soft colors illuminates the rooms and gives them a much larger and more spacious appearance. Outdoor spaces Outdoor spaces are an excellent business card! Fortunately, this is the right time for interventions concerning the layout of green spaces. From the renovation of the terrace to the garden design: the green bonus, launched in the budget law of 2018, is a tax benefit that allows Irpef (income tax) to deduct an amount equal to 36% of their expenses related to the maintenance of green spaces. Thermal insulation Carpentry maintenance has an influence on the cost savings of heating and cooling the house, as well as the insulation of the walls with the thermal layer or the installation of solar panels allow a considerable saving in the energy bill. Energy efficiency measures have benefits not only in terms of well-being, but also in terms of savings: a cost-effective and sustainable solution that will appeal to potential buyers.

Buying a house for 1 Euro in Italy, instructions for use

Update of Jan. 17th, 2019: There are still some 18 houses at 1 € in Italy, Sicily,  click here for further information. How does the project house for 1 € work? These houses are owned by individuals who want to get rid of them often so as not to pay taxes. We are talking about dilapidated or dangerous buildings that require major renovations. The buildings are sold as donations to the municipalities which, by public procedure, sell for the symbolic amount of 1 euro. In other cases, it is the municipal governments that vouch for the owners of these properties. Naturally, there are commitments for those who buy with a project of houses for 1 €, which must guarantee: To plan a restructuring and reevaluation project within 365 days of purchase (approximately 20-25 thousand euros). To support notary fees for registration, transfer and registration. Two months to start working when all permits are obtained. To ensure the security of the purchase by the buyer, the municipality asks to stipulate a deposit of 5 thousand euros for a period of three years, which is then refunded at maturity. For more details, contact directly the construction offices of the concerned municipalities and consult attentively the corresponding opinions. The advantages of buying a house for one euro This long-term strategy is attractive for those looking for a home cheap and simple to restore the brilliance of the Italian villages that the whole world envy us for their extraordinary beauty, and for that spirit of the past that is so sought after today. In addition, the Case 1 Euro (houses for 1 €) project could shake up the real estate market by facilitating access to youth-owned homes, for which the possibility of accessing a mortgage is often an insurmountable obstacle today. The repopulation of these small towns will promote the birth of tourist activities, activating the economy of the whole area concerned. Always with a view to welcoming tourism, you can explore the possibility of redeveloping the property with a small hotel, a B & B, or think of a larger project that also involves more properties in the same village with the possibility of creating an extended hotel. In short, the possibilities and implications are numerous and very interesting.

Naked ownership and usufruct: advantages and disadvantages

Naked ownership and usufruct: implications for the seller and the buyer “Genoa: liferenter (usufructuary) aged 95 sells naked ownership of apartment of 6 large rooms with two balconies. The apartment is divided into an entrance hall, a large hall, kitchen, two bedrooms, bathroom and pantry. High floor with elevator, sunny panoramic exposure. Only 85,000 €. You can fins good bargains like this on italian real-estate ads, but what is naked ownership in Italy? The bare ownership is generally an investment option for those who aim at the revaluation of the brick in the long term, without immediate needs or housing (obviously the house remains at the disposal of the usufructuary as long as he is alive), or profitability (purchase to rent). The years of crisis have pushed the offer of this type of solutions: the 2016 data recorded an increase in the bare-property trade of + 11.7% (24,107 transactions). What does it mean to buy a property in this mode? There is no doubt that for those who sell the formula to satisfy the interest of obtaining liquidity, to divest, but without leaving the house and without (as in the case of a regular loan) having to start every month to return the money. If, however, I also have another house in which I live, I can, as an usufructuary or liferenter, make income and also round off my pension. For those who buy, it definitely involves buying at a reduced price (the younger person the longer the life expectancy), waiting for the moment of death to become a homeowner, then go live or rent it. In the case where the bare property has been sold by owners in communion of property, it is necessary to wait for the death of both to come into possession. This is done as an investment, for example, to give the house to a child who is still small at this time. What are the tax burdens for naked ownership? Who buys a bare property pays indirect taxes at ordinary rates: so if it is a principal residence it pays 2% on the price or the cadastral value (if you invoke the value-price). If second home, you pay 9%. Naturally, the tax base is reduced because the value of the usufruct is calculated on the basis of the tables attached to the TU (Single Text Law) and is deducted in terms of registration tax. As for the subsequent expenses: the direct tax costs (IMU, = property tax etc.) and the expenses of co-ownership, in addition to the expenses of ordinary maintenance, are chargeable to the usufructuary. Extraordinary maintenance (e.g. roof repairs) remains the responsibility of the bare owner. Who should enjoy this option? Buyer side: I buy at a much lower price and I bet on the survival more or less long of the usufructuary to calibrate the times when I can enter the house or rent to earn money. Vendor side: I immediately receive a small amount of money and do not leave the house. I do not have to (as in the mortgage) return anything. Alternatively I can ask, as payment, a monthly rent or a moral and material help according to the needs. But in the latter two cases the risk of default of the buyer are higher and it will be up to the notary to provide the safeguard clauses of the position of the seller. What are the other aspects to consider? From the seller’s side: You can continue living at home without risk Will have to bear the tax burden You will have to arrange regular maintenance at your expense On the buyer’s side You will not be able to enjoy the house before the expulsion of usufruct However, it will not be necessary to bear the tax burden You will have to pay for extraordinary maintenance Can we sell the bare property of the house before the death of the usufructuary? Yes. What is the position of the heirs of those who sell a bare property? The heirs of the seller will find nothing to inherit because the usufruct is extinguished on the death of its owner. The instrument is an indirect way of disinheriting, but it is necessary that the sale be made at a reasonable price otherwise the heirs could challenge it in court. Can you buy with a mortgage? Yes of course. Given the reduced value of bare ownership, even the amount I can claim will be proportional to it. If then I get the consent of the usufructuary to register a mortgage on his usufruct, then the bank will have the guarantee on full ownership and not on the bare property alone, so it could give me a bigger mortgage.

Residential real estate in Italy – the market grows; prices decrease

Prices stabilized in Q4 2017 In the fourth quarter of 2017, the residential real estate market grew by 6.3%. Prices have decreased by 4% in 2017, albeit the Q4 saw a stabilisation. The residential real estate types most sought by Italians The demographic changes that have gone through the company in recent years and the decline in property prices has led to a change in the type of properties required by buyers. Now the most requested are the three-room apartments, followed by the four-room apartments. But let’s see what is the situation in the main Italian cities according to the analysis of Tecnocasa. According to the Tecnocasa study office, in January 2018 there was a prevalence of three-room apartments (40.5% of the preferences) followed by four rooms (24.1%) and two-room apartments (23.4%). The percentage of the latter type is also increasing due to a return of investors. Sales times are slightly down. The analysis of the offer shows that in the major Italian cities the most common type is the three-room apartment, with a percentage of 32.7%, to follow the four rooms with 23.9% and finally the two-room apartment with 22.6% . Rental prices up 1.9% in 2017 According to the rental report of the real estate marketplace, the rental price has returned to the rate of 1.9% in 2017, at an average of 8.6 euros per square meter per month, after the surge in the last quarter (0.8%). This is an increase above the rate of inflation of 1.2% in Italy in the past year, which shows strong growth in demand driven by the centers of greatest attraction from the employment point of view. Rental prices by region 16 out of 20 regions recorded positive changes over the last twelve months. The biggest increase is in Trentino Alto Adige (9.7%), followed by Valle d’Aosta (8.0%) and Veneto (7.0%). Among the macro-areas with variations above the average for the period, the performance of Sardinia (6.1%), Piedmont (4.4%) and Puglia (4.1%) was highlighted. On the other hand, Basilicata (-7.3%) is the region that suffers the most, with a real drop in yields. Calabria (-4.5%), Campania (-2.7%) and Lazio (-1.1%) lay behind it. On the price front, Lazio brings the rents to 11.4 euros / m², followed by Lombardy (10.9 euros / m²) and Tuscany (9.5 euros / m²). The lowest values ​​of the peninsula are in Basilicata (5.3 euros / m²), Molise (4.8 euros / m²) and Calabria (4.6 euros / m²).

How to estimate the market value of a property

How to calculate the market value of real estate The construction costs, the neighborhood, the state of maintenance, the size, the finishes, the presence of the elevator rather than a terrace or a large garden and the energy class: these are the factors usually considered more important and therefore valued to define the price of a house, in Italy and also in France; but are they sufficient? And how much do they really affect the cost? It is not easy to establish the market value of a property. You must first consider the location and the context, then the condition of the apartment, but there are many factors and even more variables that can affect the final price: there is no specific list indicating the values ​​to take into account. The variables are different and the factors also change depending on the type of property. On equal terms, therefore, an apartment in a condominium, a detached or independent house will have a different value. First, come the construction costs, especially on new or recent real estate The price of a house or apartment is a complicated intertwining of the market and the costs incurred by the manufacturer. For example on the new will have a major impact the cost of construction, municipal costs and technical costs, the cost of the construction area or demolition. Second, the position Once defined the construction costs defined, the following factors to consider are definitely the position and the area. If the demand is higher in a particular neighborhood or position, the cost will also be higher. This factor can affect the price of a variable percentage between 40 and 80% for example. Two apartments of 150 square meters with the same characteristics, the first at the gates of Milan and the second in one of the most luxurious streets of the city, can cost 300 thousand euros one and 2 million the other. Third, the condition of the building Then we find the state of the property: It can affect between 20 and 50% of the value: this gap depends on the condition, because if you do not need extra work, you will be ready to spend more than for a house where you incur other expenses to make it habitable. Old and new construction, what is different? If the apartment is old, the seismic parameters, the thermal and acoustic insulation and the exterior of the building will be evaluated. When we talk about restructuring, we can find ourselves in front of a house that is comparable internally. construction, but outside, it is still part of a building built in more or less remote times, with technologies often obsolete. In fourth place, the surface of the building The size of the house is in fourth place. In fifth place, several factors For example, the elevator: It is important, however, to specify that the elevator affects only slightly, about 15% of the value, if we consider an apartment on the first floor or on the ground floor; if we are talking about a house in a building of more than three floors, it will have a greater impact. The heating system can affect a good 10%, depending on whether it is efficient and economical, or old and consumes a lot of energy. Other factors include the assessment of the year of construction, including anti-seismicity, energy class and condominium work to be done. These can weigh from 10 to 30%.  

Hundreds of houses for sale at 1 euro in Italy

“1 Euro” properties: update on past and upcoming initiatives Given the high interest that “1 euro” properties have been recently attracted, we have prepared this short draft to update our readers about the past and current “1 Euro” properties’ initiatives across the entire Italian territory. These initiatives started few years ago already, with Ollolai being one of the first municipalities offering these investment opportunities.  As of June 2018, the list of Italian municipalities offering “1 euro” properties included the following municipalities, here listed by region: TUSCANY (Toscana): Fabbriche di Vergemoli (Province of Lucca); Montieri, (Province of Grosseto). SICILY (Sicilia): Salemi (Province of Trapani); Sambuca (Province of Agrigento); Gangi (Province of Palermo); Regalbuto (Province of Enna); SARDINIA (Sardegna): Nulvi (Province of Sassari); Ollolai (Province of Nuoro). PIEDMONT (Piemonte): Carrega Ligure (Province of Alessandria). ABRUZZO (Abruzzo): Lecce nei Marsi (Province of Aquila). LAZIO (Lazio): Patrica (Province of Frosinone). In September 2018 we have contacted most of the municipalities listed above, to create a complete database that listed the number of properties available in each site, their structural conditions, estimated refurbishment costs, and legal requirements to get full ownership of these properties. Most municipalities we contacted told us that the first batch of properties were already gone, with Ollolai in particular having received 5,000 requests for the first 100 properties, being currently “overbooked”. Overall, it looks like that these initiatives are currently on hold, with the municipalities trying to identify a new batch of properties to offer. The case of Sambuca (Sicily) In 2018 the Municipality of Sambuca (Sicily) did publish a call for tender to sell various properties in its historical district. The deadline to submit requests to participate to the call expired in May 2018. However, since most of the properties remained unsold, the Municipality recently decided to extend the deadline for submissions, read here. However, in order to submit new requests, it is necessary to wait for the Municipality to publish a new call for submissions (i.e., “Bando di Gara”, in italian). We recently contacted the office in charge of issuing the new call and they told us they expect to do so in 30/40 days, the latest. At that point, we would be able to know the rules governing the call in more detail. According to the one expired in May, properties were assigned based on an auction with a starting price of €1, with participating bidders submitting their offers and the highest bidder winning the property. At the moment, there is uncertainty on whether the new call will be regulated based on the same rules, this is why we have to wait for it to be issued. Here the link to the properties that are still available for bids. Our law firm will update this page as soon as we receive any new info. Feel free to contact us by email at info@studiolegalemagaraggia.it if you have any further question or you would like to receive a quotation of costs and fees for our advice and assistance in the bidding process. Further information, see article by CNN. Kind regards, Marco Magaraggia Senior Partner

20 mistakes to avoid when buying a home in Italy

The purchase of a house is one of the most important decisions and probably the main investment in the lives of most Italians and, nevertheless, the same mistakes are frequently made. Buying a home is a big economic effort and sometimes we are engaged in a good part of life. After years of crisis, the real estate market is catching up in Italy. 1. Generally, the accounts are not good. In Italy, according to various international studies, we do not have a financial culture. Buying a house is the biggest investment for many Italians, but we do not have enough financial preparation to deal with it. 2. Many people forget that at the price of the property you have to add about 10% for the expenses. In addition to the VAT (if the house is new) or the registration tax (if the house is second-hand), there are cadastral taxes. 3. There is no account on the loan, which also involves expenses and taxes. The mortgage tax usually applies 2% of the amount borrowed, not to mention that many banks want mortgage insurance, which serves to protect against risks such as the loss of employment or death of the policyholder. It’s useful, but it costs, and much. 4. Taxes and additional expenses. The buyer forgets that being a homeowner means paying condo fees each month and other extras that can dramatically increase the price. Houses need maintenance, not to mention common expenses (facade, antenna, elevator, etc.). In the case of an independent house, the costs are even higher. 5. Money for furniture and contingencies. When you make a budget, you add the expenses for furniture and additional funds for contingencies that do not have to do directly with the house, like breaking the car two months after buying a house. 6. Do not ask for a report on the taxation of the property. 99% of people who buy a house do not inform themselves in advance of the fees to be paid. 7. Do not rely on Euribor in the case of a variable rate mortgage. If Euribor is at its lowest, we must also consider when it will be the highest. 8. Apply for a mortgage with long maturities. More than 25 years, it is not practical to buy: by calculating all interests, the house becomes too expensive. 9. Make debts greater than 30% of your income. The Bank of Italy suggests that the share of the loan, added to the rest of the debts (the payment of the car, credit card, personal loans) should not exceed 35-40% of the income of the mortgage borrower. 10. Ask for guarantees from parents, friends or relatives. Those who decide to buy a house should take their responsibilities. 11. Often those who buy lose the meaning of what it means expensive or cheap. You need to research statistical information and compare market prices. You can find information in many ways, from the local branch to the Bank of Italy, but also through real estate portals. 12. Many buy a home thinking that prices are still rising. The latest experiences have taught us that the value of homes does not always improve, but it seems that not everyone wants to understand it. 13. Do not listen to the agencies. At the moment, you can save money through an agency. Negotiate, and the agents know it well. For this reason, they may have more room to lower the price and convince the seller to substantial discounts. 14. Do not negotiate the price until the end. Many potential buyers give up some properties because they think they can not cope with the price. Prepare to negotiate and always have a counter-offer available, but always after counting. Another mistake is to accept a contract for fear of losing the house. If your budget is 180,000 euros, for example, do not move from there. If that’s not enough, it’s not the house for you. 15. Let yourself be emotionally transported. Sometimes buying a house is a more emotional than rational decision and the purchase is then wrong. If you feel tired or unmotivated after months of searching, it will be easier to decide badly. Take the time to think. 16. Thinking that prices will not go down and so rush. There is still no clear data to speak of a widespread price recovery, but only a few partial data confirming that certain areas have held. If the center of Milan or Rome has increased, it is not granted that the same thing happens in the suburbs. 17. Speculate on the house. The house must be a good use. If we buy it to live, there is a relative problem, since, at least, it solves the housing problem. But if we buy it to speculate and things go wrong, we will have destroyed our finances for many years. 18. Do not consider whether it is worth living on rent. 19. Buying a home is not like buying a car. It is a decision that can have repercussions over the next thirty years, a period when anything can happen: births, deaths, divorces, job opportunities in other states or in other cities. 20. Not consult the notary before signing important documents such as purchase proposals and a preliminary contract. For example, not everyone knows that donated goods are liable to an action for revocation by the heirs who have been wronged in their rights. For this reason, many banks do not lend for the purchase of property from a donation. In this case as in other cases, the opinion of an expert can prevent any bad surprise.