Preliminay agreement for purchase of real estate property in Italy
The first agreement so called Compromesso to be signed before the final one called Rogito
The signature of a preliminary agreement in Italy produces mandatory effects
The preliminary agreement to buy property in Italy (also known as: compromesso) does not determine yet the transfer of ownership of the property (eg.: house) from the seller to the buyer, but it obliges both parties to sign the final contract in front of the notary.
The preliminary can be stipulated, for example, when immediate sale is not possible, because the buyer is looking for a mortgage or the seller is waiting for a new home to be delivered.
The preliminary agreement must be drawn up in writing (private writing, certified private writing or public deed).
The preliminary contract must be registered to the Revenue Authority (Agenzia delle Entrate) within 20 days of signing, paying the registration tax and attaching the stamps; taxes are paid by the buyer; also the purchase proposal of immovable property when accepted must be registered to the Revenue Authority.
If one of the parties, after having signed the preliminary agreement, does not fulfill it, the consequences are:
• the buyer loses the deposit or
• the seller is forced to return the double amount of the deposit he previously received.
The preliminary agreement is not mandatory, it offers many benefits to both parties:
• allows the buyer to block the sale of the property to a third party
• the seller receives, on the other hand, on the occasion of the signing of the preliminary agreement, a substantial deposit (caparra confirmatoria) that could hold in the event that the buyer gave up the purchase.
The preliminary agreement must contain a number of important features:
• characteristics of the property
• the price
• the payment schedule with deadlines
• the date of delivery of the property.
In any case, in the preliminary agreement must be clear the will of the parties to close the deal.
The drafting of the preliminary agreement may be entrusted to the same notary who will take care of the deed of sale (rogito); if, however, a realtor has been involved in the sale, in most cases he will arrange the drafting of the agreement.
When the sale concerns a building under construction, the preliminary agreement is always required and will be the same manufacturer to draft it, it will possible to avoid to involve any third parties for the preliminary agreement and draft a private act (scrittura privata).
The elements contained within the preliminary agreement are:
• name, surname, date and place of birth, tax code of buyer and seller (in case of a company: company name, job title and powers of the person who signs the agreement)
• description of the property with the data resulting in the cadastral documents, boundaries, house number and, in the cadastral plan (scale 1: 200)
• description of all the rooms, including attics, basements, garage (if the property is under construction or to be constructed, it will be necessary attach the description of the works and the reference to the specification)
• the price and the payment plan
• the date of delivery of the property and of signing of the deed and indication of any penalties for delay
• a statement of the seller:
- that the property complies with the laws and regulations of the existing master plan
- that the property is not encumbered by easements, rights of third parties or privilege tax
- that all service charges have been paid.
Usually the preliminary agreement is not a public document but a private agreement (scrittura privata) which is binding only between the parties and not against third parties, unless the preliminary agreement is transcribed in the Real Estate Registry.
About payment plan, usually at the time of preparation of the preliminary agreement the buyer pays as a deposit an amount equal to 10% of the total price of the property; however, the parties may agree, according to their needs, to request or offer lower or higher amounts.
If for the purchase of the property will be necessary to ask for the release of a mortgage loan to the bank, it is advisable to insert a clause in the agreement that allows the buyer to withdraw from the purchase, without charge, in case the bank does not grant the loan.
Real estate agency mandatory registraton
Real estate brokers are obliged to register preliminary sales contracts entered into as a result of their business.
In general, for business concluded with the intervention of real estate agents, it is mandatory to request registration for:
• preliminary contracts
• acceptance of the proposal, when the clauses inserted in the proposal outline are sufficient in themselves and necessary to determine the conclusion of a preliminary purchase contract.
However, the following are not subject to registration:
• the sales assignments given to the mediator
• the purchase proposal
• acceptance of the proposal that is not in itself sufficient to determine the conclusion of a preliminary purchase contract.