Italy remains one of the world’s most desirable relocation hotspots, thanks in no small part to its centuries of unparalleled history, architectural gems such as Florence and Rome and the natural beauty of areas such as its Tuscan and Umbrian countrysides.
Little wonder that an estimated 45 million people visit each year and that Live and Invest Overseas named Abruzzo in Italy among its top retirement havens for 2016.
If you’re considering buying a home in Italy, bear in mind that the process is vastly different from what you might be used to the in the US or Great Britain.
For instance, many unwary investors have been caught out by not realising that there is a point-of-no-return in the transaction, beyond which it is impossible to change your mind and pull out without incurring a financial penalty.
The advice for buying in Italy — as with most overseas property transactions — is to engage a property lawyer to guide you through the process. Alternatively, there are Italian specialist property finding companies that offer to handle everything for you (a few examples: Homes and Villas Abroad, Antonini Realty and The Property Organiser).
Nonetheless, it is handy to have a good idea of the process. Here are the basics of what you need to know.
Assuming you have decided on the property you wish to buy, you first need to make a formal offer.
You can probably negotiate 10-15% off advertised prices — perhaps significantly more if the property has been on the market for a year or longer. Your realtor should be able to give you a heads-up on how motivated the seller is.
The formal offer is called the proposta irrevocabile di acquisto (irrevocable proposal to buy). Should the buyer accept your offer, a small deposit is payable. This is decided between the parties but is usually around 5%. As the name suggests, once signed and countersigned, this document becomes legally binding and locks both parties into the process.
Ensure you ask your realtor or lawyer to insert a clause making the proposta irrevocabile conditional to the results of a survey — or, if you are buying via a mortgage, conditional to mortgage acceptance. That way, should the survey reveal any unpleasant surprises, or if your mortgage application is turned down, you can get your deposit refunded in full.
A quick word on financing: Owner-financing is virtually unheard of in Italy, so unless you are a cash buyer you will need a mortgage from an Italian bank. These are available to Americans and other foreigners. Current maximum Loan-To-Value ratio is around 70%. The bank will perform its own valuation on the property.
Once your offer is accepted by the buyer, you will need to engage a geometra (surveyor). They will provide a report on the property’s physical state — and can also provide you with a valuation, should you wish.
A good surveyor will also carry out other important checks, including but not limited to:
· Ensuring there are no outstanding debts on the property;
· Ensuring the property belongs solely to the vendor (ie, making sure various relatives do not also have a claim on it);
· Establishing the precise boundaries and dimensions of the property;
· Ensuring there are no hidden rights-of-access to the property’s land;
· Ensuring the construction and any modifications comply with building and health-and-safety regulations;
When you are happy that all is in order, the next step is a second contract — the contratto preliminare di compravendita (preliminary sales contract), also known as the compromesso, which sees the buyer pay a further deposit — taking the amount paid to up to 30% of the total price. The compromesso also spells out the deadline for completion of the sale.
Unlike the first contract, there is no going back at this stage. Should you as the buyer change your mind and pull out for whatever reason, you forfeit whatever deposits you have so far paid.
Should the seller change his mind, he must hand back your entire deposit — and will often have to pay you double the size of your deposit as a penalty, depending on the terms of the compromesso.
Before deeds are signed to complete the transaction, you will need to have a codice fiscale (fiscal code) from the Italian tax authorities, allowing you to register for property taxes. You will also need to have opened an Italian bank account to complete any outstanding payment on the property.
The final stage sees the signing of the rogito (final deeds) in the office of a notaio (notary) — where all outstanding payments must be settled. It typically takes up to two months from signing the first contract to get to this stage.
Unless you are fluent in Italian, the notary will insist that you appoint a power-of-attorney to represent you. You may accompany your power-of-attorney should you wish, but it is not obligatory.
The notary’s role is to ensure all documentation is correct, send it to the Land Registry Office and forward all taxes to the local tax authorities.
Once the meeting in the notary’s office is over, you are now the proud owner of your dream property in Italy. Enjoy!
