ARCITALIA  INFORMATION TWO: THE BUYING PROCESS          home      property     what we do      contact

The buying process begins with the contratto preliminare or compromesso and ends with the rogito notarile or atto: that is, it begins with the initial agreement to buy and ends with the procedure that transfers a property into your ownership.

Given the nature of the Italian property system, the buying process should be handled by registered agency.  The agent has a number of functions in the acquisition process, and registered agents must conform to specific codes of conduct in handling an acquisition.  It also helps to understand the buying process, and to realise that it may not be akin to that of your country.  Arguably, the Italian system is relatively ‘transparent’ in the sense that it is well understood by Italians.  It might also be argued that it is secure in that, once the buying process is enacted, it may be relatively less unlikely to be derailed. 

It also helps to understand the roles of the notaio and the agent.  While legal fees may be lower than you expect, agency fees may be relatively higher.  However, this reflects the role of the agency in the buying process.  The agent or the noatio serve both the buyer and the seller, and both are subject to regulation by the State. The notaio functions as a ‘witness’ appointed by the State to ensure that a transaction is conducted according to law.  Unlike, for example, an English solicitor who acts for a buyer, the notaio performs a different role in a different legal system.

Elements of the foreign property press may like to present a view of the Italian property system as labyrinthine and fraught with pitfalls.  However, it is important to consider the motives of those who present this view.  For example, British newspapers and magazines commonly carry copy that is provided by estate agencies, or firms that offer legal services.  Hence, the tendency to stress the dangers of venturing abroad without the support of local legal advice and support.  In that respect, it pays to be wary of advertising dressed up as journalism.  Articles that offer contract addresses or mention specific interests are generally promotional.  While, the overtly romantic view of foreign home-ownership is also promotional, so too is scare mongering intended to drive buyers into the ‘protective’ arms of legal advisors or local agencies.  In short, it pays to realise that secondary agencies and local legal advice are lucrative markets.  The value of advisors based outside Italy depends entirely on whether they can add to the protection that is afforded by local Italian-based agencies and the Italian legal system.  There is also the question of additional costs; particularly where foreign legal advisers appoint secondary local Italian interests to monitor a purchase.  In that situation, the clients pays (a) for the Italian notaio and the agency that are a necessary part of the buying process, (b) for foreign-based advisors, and (c) for the secondary, and possibly hidden, Italian interests to which those foreign advisors pass on their work and part of their responsibilities.

Foreign-based advisors are rarely used in our area.  If you feel you should be cautious, first you should satisfy yourself as to the registration, status and track record of the agency and the notaio that are the primary interests in your buying process.  Do not deal with unregistered ‘agents’, private individuals, or directly with sellers. If you want further reassurance, you might consider hiring a local geometra (surveyor) to work alongside with the agency and notaio.  It is worth noting that, unlike foreign-based interests the agency and notaio are at the ‘coal face’ of the purchasing process, and may be best placed to interpret or monitor the details of your particular property.  Foreign-based advisors are somewhat akin to ‘miners’ that remain above ground while communication with the real miners below.

The same may be said of foreign (or for you home- based) agencies dealing in Italian property which they are unlikely to have seen first-hand. In addition, it is worth noting that the price at which a foreign agent may sell an Italian property may be higher than the price for the same property in the local Italian market, as prices may be marked up simply to cover the foreign agent. It is also worth noting that foreign agent are unlikely to have exclusive right to sell a property.

Getting to know your property

Property is a physical and a legal entity.  As a physical entity, Italian property is primarily identified on the basis of map numbers (mappali).  A map reference has two components, the number for a sheet or folio that covers an area within a specified comune or local authority, and a reference number for a specific plot on that sheet.  Each plot of land has a unique reference number; for example, Dolcedo, folio 10, mappale123.

The catasto (deeds office) houses the records of every parcel of land within its area, including details regarding use, registered owners, the nature and portion of their ownership, and any ‘external rights’ pertaining to that plot.  Every mappale can also be seen as a reference to a bundle of legal rights relating to a plot of land and/or buildings.  Ownership of those rights can be divided between one or more parties.  The property you buy may be in the hands of numerous owners.  It is also common for a property to consist of a number of mappali. Those mappali may be held by one owner.  Theoretically, however, each mappale can be held by an individual or a group of owners.

Given a system of inheritance through which property is passed down within families, tracing the ownership of a mappale is akin to tracing downwards from the trunk to the roots of a tree. Moreover, any individual mappale can also be split or subdivided to create a new property or legal ‘cells’.  This can arise, for example, where a part of a plot of land is sold off - effectively creating two or more subdivisions of one ‘mappale’ – known as subalterni.  The owners of the different subalterni hold separate bundles of property rights relating to different ‘physical’ parts of a mappale.  With the exception of a group purchase, the buying process generally means that all mappali and any subalterni are placed under ‘single’ ownership.  Thus, property transactions tend to clean up untidy bundles of property rights that have resulted from subdivision and the inheritance system.  

In addition to owners, other interests may have rights in a plot of land.  Such rights can be incoming or outgoing. They are possibly advantageous when they are ‘outgoing’, and possibly disadvantageous when they are ‘incoming’. From the buyer’s point of view the question is whether you will hold rights in property owned by other people, or whether other people will hold rights relating to your property.  Such rights may pertain to use - creating something akin to common land.  However, they generally relate to the right to pass across land. For example, you may need to pass across someone’s land to access your land.  Similarly, small streets that afford access to a few houses may be communal rather than public.  Given the historical nature of an agricultural system based on small plots of land, the structure of hill towns, and the historical need for common areas used to in association with grain or milling, it is not unusual to find mappali with secondary inbound or outbound rights, or land with which is effectively communal.  As a traditional part of agricultural and urban life, such rights are well understood and respected, even where they are no longer in serious use.          

In agricultural areas, farmers have the right to buy adjoining land that has been offered for sale. However, this right is only available to neighbours that are ‘professional farmers’, and the option is subject to a time limit.  To obviate any risk, the agency can formally ascertain that neighbouring farmers have no wish to acquire land in which you are interested.      

While the Italian property system may sound complicated, Italians find it relatively ‘concrete’ and transparent.  Italians know about the law and grammar than their foreign counterparts.  And, like grammar, the property system is negotiable once you have learnt the rules.  Some properties are extremely simple.  However, the acquisition system is set up to process all property with regard to ownership, rights, registration, planning legislation, and any other issues.  It is very rare to encounter an irreducible problem.  Moreover, the buying process clears away a lot of legal ‘detritus’ that may have built up over the years.  In short, as property is transferred into single ownership, it passes through a series of checks and ‘cleansing’ processes.

The compromesso

The compresso is a written agreement in which buyers promise to buy and sellers promise to sell.  It formally identifies buyers and sellers, the property, the price, and the period for which the compromesso is valid.  A separate compromesso is required for each seller or configuration of sellers.  If you buy a property from one seller, or legally unified group of sellers, there is only one compromesso.  If your property has two separate sellers, or groups of sellers, there are two compromessi – and so on.  The number of mappali involved bears no relation to the number of compromessi that must be made.  While one seller may own one or more mappali, in theory any number of mappali can be held by any number of owners.

The compromesso is normally drawn up by an agency, and is registered with the local tax office.  The amount paid as a deposit is commonly ten per cent of the price of the property, but might be higher for compromessi that are valid for more than ninety days.  If the buyer fails to buy a property within the period set by the compromesso, the deposit may be forfeit.  Generally, if the seller fails to sell the buyer may retrieve twice the amount of deposit.  However, if something simply forces a delay in the acquisition process, the parties generally agree to prolong the period within which the compromesso is valid. 

Agency fees can be charged at the point at which the compromesso is made.  Belpalazzo generally charges a fixed minimum fee of 1.500 euro plus VAT for property priced below 50.000 euro. If the price of the property is more than 50.000 euro, the agency fee is three percent plus VAT.       

Note that not all of the buyers must be covered by the compromesso - although the agent and the notaio must be made aware of all buyers involved in the ultimate transaction.  In contrast, all sellers must be named in the compromesso.  Moreover, a compromesso can also be drafted to allow the right to buy to be passed to someone else prior to the atto, although it must be written in a way that covers this possibility.

Procura

Buyer or sellers may appoint someone to represent them in the atto, and to sign on their behalf.  It is not uncommon for the agent to sign on behalf of a client, if for any reason the client cannot be present at the atto.  However, a ‘power of attorney’ (procura) must be drawn up before a notaio in a separate, and relatively inexpensive, legal process.  A procura carries details of (a) the property, (b) the buyer(s), and (c) the person to whom you grant the right to act on your behalf.  It is advisable to generate the procura in Italy.  Outside Italy, a procura may require the involvement of a notary, an Italian embassy or consulate, and possibly an official translator. Moreover, the system for generating a procura abroad varies between countries.

 Documents and accounts

Belpalazzo will help you prepare for the atto in terms of the necessary documents and financial arrangements.  You will a codice fiscale, or fiscal ‘identity card’. You are also likely to need an account in a local Italian bank.  This might be used to transfer the deposit paid when you sign the compromesso.  However, you are more likely to need an account to pay the balance of the price of your property and the legal costs and fees paid at the atto.  Money can be transferred ‘electronically’ between your home bank and your Italian bank using the ‘swift’ and IBAN codes, allowing you to draw cash from your Italian bank immediately before the atto.  Later, your account may serve to finance building operations or pay your household accounts.

the atto or rogito notarile

The transfer of property takes place at the atto when buyers and sellers meet before a notaio.  Belpalazzo guides the buyer through the procedure.  If you have made more than one compromesso, theoretically there will be more than one atto.  However, the individual transfers of property between the buyer and different sellers are woven into one document.  You must pay legal cost on the basis of the number of atti involved, although costs are lower where numerous atti are woven into one ‘transaction’. During the atto, the notaio must be satisfied that you have an adequate understanding of both the buying process and the property you are buying. While the atto is read in Italian, relevant details are discussed in the buyer’s language. The first part of the atto covers the identities of both buyers and sellers.  It records the legal arrangements between married couples with respect to property – something the agent will be ready to handle on your behalf.  It also defines the property as a physical and legal entity; that is in terms of map numbers, boundaries, number of rooms, and so on.  It is also covers any additional rights associated with the property.  The notaio also establishes that the sellers have the right to sell, and that property is free of loans and mortgages, and infringements with regard to planning law.  

It is not unusual for minor alterations or clarifications to be made during an atto. Then, once the buyers have been paid the balance of the property price, the atto is signed.  At that moment the property is legally transferred to you, and the notaio prepares a statement of your legal costs.  These are made up of a number of elements, including the tax payable on the price of the property, and the notaio’s fee.  Any additional costs, for example, costs incurred on the part of a surveyor, are also paid at this point so that you leave the atto in possession of the property and having paid all costs to all parties involved. 

Note that the registration of property as ‘urbano’ creates the basis for the tax or ‘stamp duty’ paid at the atto.  For example, the value of the property in terms of stamp duty might be 125 times the rateable value (rendita) – although that figure may bear no resemblance to the actual price.  Italian property taxes and rateable values are relative low; so do not be alarmed by a high ‘multiplier’.

While foreign buyers might normally pay ten per cent of the declared property price in the form of tax or ‘stamp duty’, this is reduced in the case of foreigners who, as residents, are buying their first home in Italy.  However, that situation is more likely to apply to foreigners who retire or take up permanent residence in Italy. It is also worth nothing that residents pay slightly less for electricity and other services. Residency also carries other benefits and implications in terms, for example, of health care, taxation, or the ability to buy and register cars in Italy.  In the case of a couple, one partner might choose to be resident in order to take advantages of tax and other concessions, particularly where any property is in the name of the resident partner.    

The Complex Atto

Only those who are intensely curious, or have a taste for legal theory, need to read this section. It covers common complications in the transfer of property.

An atto involving property that is on the urban register may have fewer complications than one involving property on the rural register. The transfer of property from the rural to the urban register generally results in that property being ‘tidied up’ in terms of the registration of owners and problems presented by unregistered or untraceable owners. However, in most cases solutions to such problems are woven into an atto.  Where heirs have not registered their ownership with the deed office (successione) then either they must do so, or a ‘co-owner’ must usurp their ownership on the basis that the registered owner has held an interest in the property for a minimum period of years (usucapione).  Effectively, the two processes of usucapione and atto are integrated in one procedure. The acquisition of the rights of unregistered, missing or untraceable owners are taken over by one or more of the extant registered owners and all rights in the property are transferred to the buyer.  Generally, traceable but unregistered owners generally attend the atto, sign the documentation, and are paid for their share of the property. Thus, the process of usucapione is simply a way to overcome the fact that those owners never registered their ownership with the deeds office. Untraceable ‘owners’ on the other hand frequently result for migration from rural areas.  Should they exist, they may have little or no knowledge of the property in question. They may even be dead, but as they are untraceable no death certificate can be produced at the atto.  In fact, there may be some uncertainty as to whether there are untraceable unregistered ‘owners’, or that bygone relatives who are likely to have emigrated ever had offspring.  However, the ‘usucapione in atto’ means that registered owners guarantee that the buyer will not be disadvantaged.  The fact that unregistered owners sign the atto means that those owners were party to the usucapione and the sale of the property.     

Unless the property purchased is remarkably expensive, or is subject to an astronomical increase in value, the risks posed by untraceable or unregistered owners are at best theoretically. Before a ‘lost’ interest might make a claim on a property, that interest would have to prove partial ownership and pay for a successione.  That interest is then entitled to no more than the proportionate increase in the capital value of the property, and only then after they have paid for a proportionate share of the building and other costs employed in the creation of that added value. The settlement of any claim lies with the sellers and not with the new owners.  Moreover, any claim must be made within ten years of the date of atto.  Thus, given the costs of any action, the relative value of property, the time limits, and the potential rewards to the claimant, it is difficult to imagine how problems might arise from the wise use of an ‘usucapione in atto’.                        

Where known registered owners cannot attend an atto, for example, because they area ill, aged, or live abroad, they must be represented by someone who can sign in their place. A procura (power of attorney) is used to overcome this problem.  Note however that a senile owner may be deemed incapable of signing either an atto or a procura.

Registered owner that cannot be traced are very rare. However, as untraceable registered owners cannot be usurped any usucapione is a matter for the court.  Similarly, problems presented by senile registered owners that the noatio may deem unfit to sign an atto will be processed through the courts.  Such properties are generally withheld from the market until all issues are resolved.

Postscript:

In this litigious age, this document comes with all the usual disclaimers.  The information and opinions contained therein are those of the author and not of any other individual of agency.   However, this document is not offered for sale and the author bears no legal responsibility for the contents or any consequences arising thereof.

The purpose of this booklet is to offer some understanding of the issues that commonly arise in buying and developing property in our area.  It will be revised as new or neglected issues come to light.  The author welcomes all suggestions as to how the document might be expanded or improved.