Property rights under Italian law include the following:
Property rights, including the right of full ownership of real estate, may be co-owned by two or more persons, companies and/or other legal entities. The co-ownership can be established on a “voluntary” basis (where agreed by the parties involved) and/or on a “legal” basis (where set forth by applicable laws, as in the case of hereditary co-ownership). Each co-owner has the right to divest its quotas on the co-ownership but cannot dispose of the entire co-owned real estate.
Co-ownership can also take the form of condominium: usually in relation to housing but also, in certain cases, to shopping malls where different units in the same building and/or different buildings in the same real estate complex are owned by different owners but some of the areas and services are used by the owners collectively. The members of the condominium have a right of co-ownership over the common assets which are proportionate to the value of their respective interests in relation to the value of the entire building/real estate complex. The rights of co-ownership in a condominium are expressed in millesimi (ie participation interests calculated on the basis of 1/1,000 ratio) and listed in a millesimal chart; the millesimal quota represents the value of the voting rights of each member of the condominium and, normally, also the parameter on the basis of which the condominium charges are allocated.
Last modified 2 Aug 2023
There are no restrictions on the purchase of real estate assets by foreign investors, provided that the principle of reciprocity is met. There is no reciprocity when a foreign country places restrictions on an Italian investor who wants to establish a company in that country, since in such cases Italy applies the same limitations to the foreign citizen of that country, or to the foreign company of that country that wishes to invest in Italy. The check about the existence of treatment reciprocity shall not be carried out towards citizens of those countries with which Italy has concluded Bilateral Investment Treaties (BITs), for the matters covered by such treaties.
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In rare cases mandatory pre-emption rights apply to the sale of real estate assets. Public authorities have pre-emption rights over properties of historical or architectural significance. In addition, agricultural tenants or neighbouring farmers have pre-emption rights over farmlands, provided those certain requirements set forth by the laws are met.
In the case of commercial lease agreements (ie lease agreements for non-residential use) tenants carrying out activities involving direct contact with the public (as users and consumers) have – inter alia – a pre-emption right if the landlord intends to sell the property they are leasing during the term of the lease; in particular, tenants are entitled to purchase the leased premises on the same terms and conditions agreed for the sale to third parties. According to the prevailing case law tenants shall not be granted with such pre-emption right in the case of bulk sale of the leased properties (vendita in blocco). For the sake of completeness, please consider that – according to Law Decree no. 164/2014 (the ‘Decreto Sblocca Italia’) – it is possible to expressly derogate – inter alia – the application of the tenant’s pre-emption right in case the yearly rent agreed between the parties in the lease agreement is higher than € 250,000.
Last modified 2 Aug 2023
The transfer of title to real estate is generally governed by the Italian Civil Code, with supplementary provisions relating to town planning, building and taxation.
Last modified 2 Aug 2023
The regime for the transfer of title is the same, irrespective of the property’s use. Shorelines, beaches and waterways (such as harbours, waterfalls, lakes, rivers and other stretches of water defined as ‘public’ by the applicable law) are part of the Natural Domain (Demanio Naturale). Title to these assets is owned by the State of Italy and cannot be sold.
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The deed of transfer must be made in writing and authenticated by a public notary in order to be recorded in the Real Estate Register (Conservatoria dei Registri Immobiliari). Preliminary contracts must take the same form as the final deed of transfer and therefore must also be in writing.
The transfer of title is effective immediately on the signing of the sale agreement.
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Real estate is registered in the Cadastre Register, which is held by the municipality in which the property is located, and consists of the Land Cadastre, in which undeveloped land is recorded, and the Building Cadastre in which buildings are recorded. Both land and buildings must be registered and after registration are attributed a 'cadastral income'.
The Building Cadastre distinguishes between buildings according to their planning designation and use (such as office space, residential property, warehouses, parking lots, shops, etc) and attributes a value to them known as the cadastral income. This forms the basis for calculating the municipal property tax (IMU). Cadastral income can be subject to review by the relevant authority.
Although it is not a requirement for the validity of the transfer, deeds are usually filed with the Real Estate Register (Conservatoria dei Registri Immobiliari) held by each municipality, in order to prevent possible conflicts with future buyers and third parties. The register records information relating to the property, including sales and purchases, mortgages, easements and rights of use, as well as any pending disputes. Any right in rem, including the right of full ownership, is not effective against the person who effected a filing (trascrizione) on the property if it is registered after the filing of that person's right, even if the relevant right was acquired earlier A filing can benefit from these rules only if the previous acquisition deed has also been properly filed (the rule of continuity of filings, ie an uninterrupted chain of ownership).
The Real Estate Register is accessible to the general public.
Preliminary agreements relating to an existing property or to a property under construction can also be registered in order to protect the buyer against any subsequent filing of third parties’ rights (such as mortgages or lawsuits against the property). or a second sale of the same asset. This protection stops one year after the completion date specified in the preliminary agreement and, in any event, three years after the registration of the preliminary agreement. The filing of a preliminary agreement does not have the same effect as for the final sale agreement, but it gives retrospective effect to the final agreement as from the date of filing of the preliminary agreement (the booking effect – effetto prenotativo).
The execution of collateral insurances (like as W&I and/or Title insurance), aimed to mitigate the risks related to real estate transactions is becoming an increasingly common practice also in Italy.
In any case, please note that it is customary in Italy that public notaries carry out a search on title in the Real Estate Register. The notary’s report is usually part of the legal due diligence and includes an investigation into the existence of any third-party rights as well as the seller’s title to the property. An investor will usually appoint a notary public to provide an updated 20-year notarial report (relazione notarile ventennale), which is the only document giving legally conclusive evidence of legal title to the property and the relevant encumbrances, as well as of the compliance with the principle of continuity of the filing with Real Estate Register of the title deeds over the real estate.
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Usually, the parties to the transaction enter into an agreement such as a letter of intent or a head of terms, providing the potential buyer with an exclusivity period in which to carry out the due diligence.
Due diligence is undertaken in relation to technical and legal issues by the purchaser’s professional advisors (usually, this takes about two or three weeks).
Upon completion of due diligence, assuming the results are satisfactory, the parties negotiate the terms and conditions of the transaction. Often, the parties agree to enter into a preliminary agreement specifying certain conditions which must be fulfilled prior to the completion of the transaction and the signing of the final deed.
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Investors usually carry out technical and legal due diligence on title, building permits, leases, tax aspects and contracts relating to the property. With reference to greenfield/brownfield and/or industrial complex it is customary also to carry out an environmental due diligence.
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In specific circumstances certain consents may be required. If the seller is a minor the approval of the court may be necessary. If the sale concerns a property which belongs to a married couple, the consent of both spouses is required.
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The deed of transfer for a real estate asset must be made in writing and authenticated by a public notary.
The content of the contract is negotiable but essential elements must be included:
Certain formal requirements must be met when the contract is signed in front of a public notary. The means of payment must also be indicated in the notarial deed, as well as details of the real estate agent involved in the transaction and the agency fee.
The urban designation certificate (CDU) issued by the municipality in which the property is located must also be attached to the transfer deeds of lands/greenfield and/or when the lands constitute an appurtenance to buildings to be sold, provided that, in such a case, that the total area of the land is higher than 5,000 square meters, otherwise the deed is void.
Finally, the relevant energy performance certificate (APE) must be attached to the transfer deed.
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According to statutory law, the seller guarantees that it has title to the property, and that the property is free from any third parties' rights and from any defects that might prevent the agreed use of the property or have a negative impact on its value.
The seller must issue a declaration that the equipment installed in the property complies with the relevant legal provisions.
If these warranties are breached, the buyer is entitled to request the termination of the sale and purchase agreement with a full refund of the purchase price, as well as payment of any additional damages. Alternatively the buyer may ask for a reduction in the purchase price.
The buyer must notify the seller of any breach of the warranties within eight days of discovering it.
A one-year statute of limitation applies from the date the buyer takes possession of the property.
The statutory warranties can be negotiated by the parties, apart from those relating to certain limited issues. Current practice in the Italian real estate market is to limit the extent of the warranties and to place more importance on the role of due diligence by excluding any issues disclosed through due diligence from the warranties.
If the property is newly built, the buyer also benefits from a ten-year warranty provided under statutory law. This makes the developer liable if the structure collapses or suffers from serious defects.
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The buyer’s remedies against misrepresentation by the seller include the termination of the sale and purchase agreement, the payment of damages, a reduction in the purchase price or, where appropriate, the right to require the seller to rectify any specific defects.
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The following matters should be verified by the buyer:
Tthe general master plan (Piano Regolatore Generale) and the related implementation rules (Norme Tecniche di Attuazione, NTA) show the permitted use of the area in which the property is located.
The buyer should ensure that the structure of the property complies with the original building permits (in particular the designs and plans attached to the permits) and that any building work has been carried out with the necessary prior authorisations (building permits and declarations of commencement of works). The seller shall declare the compliance of the de facto state of the property with the cadastral data and maps filed with the Cadastral Register.
Certain properties require a fit for use certificate (certificato di agibilità) confirming that specific health, safety, and hygiene requirements have been met. In this respect, within 15 days from the notice of completion of construction/renovation works, the certified declaration of fit-for use (segnalazione certificata di agibilità) attesting the existence of such health, safety and hygiene requirements shall be summitted to the competent Municipality along with by all designs and structural and cadastral documentation pertaining to the property. The Municipality has 30 days to check the documentation and request any clarification/supplement of documentation.
Certain structures (for example offices with more than a specified number of employees, parking spaces covering more than a specified area, storage and archive buildings, heating plants and buildings in which particular activities are carried out) are subject to fire prevention regulations.
Any project plan regarding works to be carried out on the structures mentioned above must be approved by the Fire Service.
Before the site inspection takes place, a declaration can be completed by the owner of the building, attesting that all work has been carried out according to the project plan. Once this declaration is submitted, the structure can be used legally, even if the fire prevention certificate has not yet been issued.
A developer must request a site inspection by the Fire Service, after which a certificate is issued.
A potential buyer should therefore ascertain whether a property is subject to fire prevention rules and whether a declaration has been submitted.
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Under Italian law, the buyer is responsible for the necessary remediation and safety work, even if the person who originally caused the contamination and soil pollution is liable to pay damages. The authorities may, at their discretion, require either party to carry out remedial measures.
However, if the owner/occupier is required to do this then they can make a claim against the party that actually caused the contamination, unless this is otherwise agreed in the sale and purchase agreement.
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The General Master Plan and Town Planning rules, as well as local laws, provide a description of the permitted uses in different areas of a city. In order to determine the permitted use of a property, a town planning designation certificate (certificato di destinazione urbanistica) can be requested from the municipality.
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Developers normally enter into development agreements with the relevant public authorities. Under a development agreement, the private developer will usually undertake to carry out certain public works, such as, for example, providing roads, parking spaces, green areas etc.
Last modified 2 Aug 2023
Expropriation is possible but only where specific permission is granted in accordance with the law. Moreover, expropriation is only allowed if this is in the public interest and in such cases the state must pay compensation to the parties involved.
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The sale of commercial property performed by VAT liable entity (eg companies) is generally exempt from VAT, except in the following cases:
For all sales subject to VAT, VAT is applied at the rate of 22% (or 10% in case the property has been refurbished by the seller) under two different and alternative mechanisms:
If the sale and purchase are subject to VAT (under the taxable or the exempt VAT regimes), cadastral tax at the rate of 1%, mortgage tax at the rate of 3% (mortgage and cadastral rates are reduced to 50% in case one of the party is an Italian real estate fund), and registration tax of €200 are payable. VAT can often be recovered, although this can take up to two years.
If the sale is out of the scope of VAT (the seller is not a VAT liable entity – eg individuals not carrying on business), registration tax is payable at a rate of 9%, while cadastral and mortgage tax are payable at fixed rates of €50 each.
Each side will normally pay its own legal costs. Property transfer tax, notaries’ fees and the legal costs for the implementation of the sale and purchase agreement are usually paid by the buyer, with the exception of any legal costs incurred in connection with the cancellation of existing encumbrances on the property, which are paid by the seller.
Agency fees are usually between 1% and 3% of the property value. Unless otherwise agreed between the parties, the estate agent can claim its total fee from both parties (except where the payment has been already declared in the transfer deed).
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Registration tax of €200 applies. Financial transaction tax (Tobin Tax) applies in the case of a purchase of shares in an Italian resident joint stock company, even if the purchaser and the seller are not Italian resident. The tax is levied at a rate of 0.2% on the agreed price (no Tobin Tax applies in case of transfer of quotas of an SRL, therefore a limited liability company).
These costs are usually paid by the buyer.
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How is a lawful and proper transfer of title to real estate to a purchaser effected?
The deed of transfer must be made in writing and authenticated by a public notary in order to be recorded in the Real Estate Register (Conservatoria dei Registri Immobiliari). Preliminary contracts must take the same form as the final deed of transfer and therefore must also be in writing.
The transfer of title is effective immediately on the signing of the sale agreement.
Last modified 2 Aug 2023