How to sell a property in Italy

Selling a property in Italy can be quite a complex process and, although it is not as complicated as buying a property, it is very important to pay attention to some specific legal aspects.

For this reason, it is better to have on your side a bilingual expert in the Italian property market, as well as in both Italian and international property law. You should also be aware that Italian law provides for pre-contractual liability. In the event of one of the parties feeling aggrieved by the other party’s behaviour, the first one can claim reimbursement for any expenses incurred.

In our experience, many of our clients make the mistake of contacting our firm when they have already signed the Prenotazione or Proposta d’Acquisto, the reservation agreement, when the buyer has already paid a small deposit to the agent, as a sign of serious interest in the property. This approach is often problematic as the seller is unfamiliar with the Italian language and market. It would therefore be much more difficult to renegotiate or amend the general terms and conditions of the purchase.

Having said that, a foreign vendor should be warned that given the legal, technical and practical difficulties involved in a property sale in Italy, it is highly advisable to seek the assistance of specialised Italian lawyers at a very early stage, possibly before signing any documents.

Real Estate Agent in Italy

Under Italian law, the estate agent is usually paid a proviggione, or commission, which is usually between 2.5% and 3% of the purchase price by both the buyer and the seller. However, in some circumstances, it is possible to agree to other financial arrangements whereby the agent is only paid by either the buyer or the seller.

Getting ready to sell: checklist before selling your property

In order to complete the sale of your property in Italy it is necessary to carry out some preliminary checks before you commence:

• Engage a geometra: a geometra is a surveyor and architect rolled into one. They will carry out a survey to provide you with an estimation of the property. With a similar estimation, you will have a clear idea of the best price you can obtain from the sale at the current property market. Also, they make sure the property is up to code, including preparing the Energy Performance Certificate. You can instruct one yourself or take advantage of our in-house architects.
• Drafting a Special Power of Attorney: If you are not able to attend the completion it will be necessary to draft a special power of Attorney that allows your selected attorney to represent you before the notary. A special Power of Attorney is a written document in which one person (the principal) appoints another person to act on his or her behalf, by granting powers limited to specific matters, such as selling or purchasing a real estate property, handling some bank account or executing a limited partnership agreement. A power of attorney may expire on a date stated in the document or upon written cancellation. Usually, the signer acknowledges before a notary public that he executed the power, so that it is recordable if necessary, as in a real estate transaction.
• Provide an Energy Performance Certificate (APE): Before completion, the seller is required by law to deliver to the prospective buyer a copy of the applicable Italian Energy Performance Certificate (Attestato di Prestazione Energetica or APE for short).

Understanding the Letter of Interest during the sale negotiation

A Letter of Interest is a non-binding pre-contractual document that both parties exchange to set out clearly and precisely the terms of the negotiation for the sale of a property. It is aimed at avoiding data and content incompleteness and approximation of the negotiation that would lead to misunderstandings and loss of time for both parties. For these reasons, it must be complete and precise, specifying clauses and information that will be included and binding in the following preliminary contract.

The letter of intent may be either unilateral or bilateral. It is unilateral when it is instructed by just one of the parties, such as the potential buyer, without any direct negotiation with the seller-owner, or bilateral when it is agreed and negotiated directly between the parties and undersigned by both, the buyer and the seller.

Regardless of whether it is unilateral or bilateral, it may become binding on the parties’ intentions or not. For this reason, it is necessary to thoroughly check, preferably with the help of a lawyer, whether the letter of interest received from the buyer contains specific clauses to avoid any misunderstanding regarding its binding or non-binding nature.

Due diligence when selling your property: searches and checks on the buyer

The whole negotiation and the completion of a property sale procedure are based upon faith and loyalty. Good faith and fairness are some of the main values of a transaction between parties. Unfortunately, good faith and fairness can fail during the negotiation or the completion procedure. For this reason, it is important to know your counterparty and it is essential to complete a preliminary due diligence carrying out some preliminary searches on the buyer’s solvency and reliability (either natural or legal person) before signing any letter of interest or preliminary contract. These searches (e.g. employment, pay slip/salary, assets, solvency, debts or credits, etc…) help the vendor to get to the completion avoiding any dangerous and annoying surprise or any potential misunderstandings.

Securing your sale: the Preliminary Contract

The preliminary sale contract is a private agreement between the “prospective” buyer and the “prospective” seller. This legally binding contract commits both parties to the transfer of ownership and to complete the purchase, paying the balance of the agreed price on a specified future date. For this reason, the Contratto Preliminare or Compromesso acts as a preliminary contract, as another final contract or deed will have to be executed upon completion of the acquisition.

The preliminary contract is a complex legal document, which should always be considered with the assistance of specialised Italian lawyers before signature, to avoid the many pitfalls that plague the property market.

The preliminary agreement will contain the following:

1. Identification of the parties: full names, place and date of birth, passport number, nationality and tax identification number must be provided. In the case of companies which are selling, they must provide their value-added tax number and their legal registration number.
2. Indication of the location of the property (commune and province)
3. Identification in the National Land Registry (NCT) or urban areas (NCEU): such identification is achieved by reporting the cadastral details of a recent title search. In case the property sale refers to:
   1. a portion of a property: sellers must obtain at their own expense, the new portion identification, known as frazionamento, in the National Land Register. Such action must take place before the final completion before the notary;
   2. a plot of land and/or a portion of a building: a map extract from the National Land Registry must be attached to the contracts and signed by both parties.
4. Indication of the deposit

Parties are free to agree on the amount of the deposit. Usually, upon the exchange of the compromesso, a deposit will be payable ranging between 10% and 20% of the sale price, depending on what has been agreed. Once signed by both parties, it locks in the price of the property.

Deposits in Italy: Caparra Confirmatoria vs. Caparra Penitenziale

Under Italian law, the type of deposit the buyer pays when making an offer on a property can significantly impact your rights and obligations which can have serious implications for foreign buyers. A distinction is made between two types of deposits: Caparra Confirmatoria and Caparra Penitenziale.

Caparra Confirmatoria

If the deposit paid is defined as Caparra Confirmatoria, it means that in case of default in completing the sale of the Italian real estate on the agreed terms, the purchaser will automatically lose the whole of the deposit paid. Conversely, if the vendor is to blame, he will be under a binding legal duty to pay the buyer twice over, the sum originally received as a deposit. In addition, further sums may be payable if it is proved that the damages exceed the amount of the deposit.

Caparra Penitenziale

If the deposit is defined as Caparra Penitenziale then, subject to the actual wording of the contract, it will enable either or both parties to the contract to withdraw from the transaction, by allowing the vendor to keep the deposit paid, in the case of the buyer withdrawing, or compelling the vendor to return the deposit received, where the vendor wishes to terminate the contract:

• Verification on whether any limitations exist to the title, e.g. judiciary or bank obligations, inheritance or property rights, rights to the first choice of purchase, or any other limitations that reduce or in some way curtail the right to the full title of the property. The seller must commit him/herself to eliminating such limitations prior to, or simultaneously with, the final sales act;
• Identification of all servitudes that might weigh on the property (roads, trails, pipelines, etc…, that transit through the property to be purchased) and those from which the property should benefit (access to water from nearby natural sources or wells, rights of passage, and rights to access to pipelines etc);
• Building licenses issued after 1967;
• Building licenses in the process of being issued: in the case of the purchase of a building to be constructed, agreement to purchase and total payment must be conditional on the issuance of the required license.
• The sale price indicating the amounts paid at signature as a deposit, the eventual instalments and the balance to be paid at completion. The anticipo, or initial payment, should be identified as the down payment (caparra confirmatoria). In case the sellers decide that they no longer wish to sell, they will be asked to compensate the damaged buyer with twice the amount of the initial down payment.
• The completion date. It must be at least 60 days after the exchange of the preliminary contract.

The Compromesso proves the intention to buy and it is binding by law if registered with the Inland Revenue Office. Once both parties have signed the Compromesso they are both committed to the property transfer. This contract is very rarely broken and inevitably leads to the signing of the final deed of sale (Rogito).

Other restrictive clauses may be included in the documentation submitted for signature to the foreign buyer, such as limitations of liability, lack of any legal commitments on the part of the seller, etc. The presence of these one-sided clauses is usually shown by the request for a double signature on the same document. This is a requirement of Italian law for unfair, unbalanced or unusual clauses, and should be a warning to the foreign buyer not to sign the particular document, without prior legal advice.

In the event of the buyer deciding not to pursue the purchase, the compromesso will be forfeited or you may seek legal action to enforce the purchase. On the other hand, if you back out, you will be liable to pay double the amount you received as a deposit.

The mortgage during the sale of an Italian property

Where the Italian property for sale is subject to a mortgage, known as Mutuo Ipotecario, or the purchase is to be completed with the assistance of a mortgage, it would be necessary to agree with the vendor that the existing mortgage will be paid off, and the corresponding entry on the Land Registry cancelled before completion of the acquisition. For this reason, the assistance of a local Italian real estate lawyer or notary is required in Italy, as the procedure may be expensive and time-consuming.

Alternatively, it is possible to agree with the vendor and the bank that the buyer will “take over” the mortgage, known in Italy as Accollo del Mutuo, but, in this case, it is essential to check the state of past repayments and the terms of the original mortgage agreement.

Finalising your sale in Italy: notary, final deed and completion

When all the arrangements for the sale have been completed and the draft of the preliminary contract has been agreed the signature of two identical original Preliminary Contracts should take place, both by the vendor and the purchaser before a notary.

According to Italian practice, the notary is usually chosen by the buyer, although the notary acts on behalf and for the benefit of both parties, as they are completely neutral. Notaries do not act on behalf of either the buyer or the seller.

The signature of the deeds of sale, or rogito, before the notary, together with the negotiations and the preparation of the preliminary contract, is the most delicate stage of the whole purchasing process, especially if you do not speak Italian.

For this reason, you will need the assistance of a lawyer throughout the procedure:

• The two original contracts will be read by the notary to double-check that everything stated before is respected and to avoid any misunderstandings of the legal terms.
• Then the contracts are signed by both parties and exchanged.
• At this point, the vendor will receive the remaining price amount from the buyer.

An assegno or assegno circolare (a cheque or a banker’s draft) for the deposit will be handed over to you, finalising the formalities of this stage of the transaction. Alternatively, it will be possible to complete the payment through a bank transfer.

As mentioned before, in case the vendor cannot attend the final completion it will be also necessary to draft a special Power of Attorney that allows the lawyer to represent you before the notary.

Further, to avoid penalties, the original Italian Energy Performance Certificate or APE (Attestato di Prestazione Energetica) must be attached to the final deed signed by both parties.

Costs of selling a property in Italy: fees, taxes and expenses

The additional costs of selling a property in Italy can vary, and foreign vendors should keep these in mind when budgeting for their sale. These costs can add up and can significantly impact your overall profit. When calculating the costs and expenses of selling your Italian property, factor in the fees, taxes and expenses associated with the sale, which can include the following:

Agency fees

Agency fees, as we mentioned earlier, are usually divided equally between buyer and seller, ranging between 2% and 3%. We strongly recommend that you always check the fees with the agent before you begin looking at properties. Notary fees depend on the sale price – a lower sale price equals a higher percentage. That percentage is unlikely to exceed 2.5-3%.

Taxes when selling a property in Italy

There are two main taxes to consider when selling a property in Italy. Registration tax applies to existing properties, while VAT applies to new constructions. This means that you never have to pay both registration tax and VAT on the same property. Please note that non-residents typically pay a higher tax rate than residents.

Registration Tax on Italian property purchases

This tax applies only to the sale of existing properties. The rate varies depending on the type of property and the buyer’s residency:

• 3% for a main residence purchased by a resident.
• 7% for non-residents purchasing any type of property.
• Up to 15% for agricultural properties (regardless of buyer residency).
•  

VAT (Value Added Tax) on Italian property purchases

This tax applies only to the sale of new properties. The rate again depends on the type of property and the buyer’s residency:

• 4% for a main residence purchased by a resident.
• 10% for non-residents or a second home.
• Up to 22% for luxury properties (the exact rate can vary depending on the specific property).
•  

For more up-to-date information refer to L’Agenzia delle Entrate (Italy’s Revenue Agency) official website at https://www.agenziaentrate.gov.it/portale/web/english

Land registry taxes in Italy

Land registry tax is also payable at a fixed sum of about 130 Euros for a main residence or 1% of the purchase price for non-residents.

Other expenses when selling your property

Beyond the typical transaction costs of a sale, there may be other expenses to factor in when selling a property in Italy:

• Professional Fees:
  • Surveyor Fees:  A surveyor can provide a valuation and identify any potential issues with the property.
  • Architect Fees:  An architect may be needed for drawing up plans or dealing with any building permits.
  • Solicitor Fees:  While a lawyer is highly recommended, a solicitor may be engaged for specific tasks like obtaining property searches.
• Utilities and Connections:
  • Connection Fees:  Costs may be incurred for disconnecting utilities like water, electricity, or gas.
• Currency Conversion:
  • Exchange Rate Fluctuations:  Consider potential currency conversion fees when receiving payment in a different currency.
  • Currency Exchange Services:  Using a reputable currency exchange service can help minimize these fees.
• Moving Costs:
  • Packing and Shipping:  Estimate the costs for packing and shipping your belongings, especially if you’re moving internationally.

For a brief description of the transaction costs please have a look at the chart below:

While it’s possible to sell your property yourself, using an Italian real estate agent offers several advantages. They have experience with the local market, can help with pricing and marketing, and can navigate the legalities involved. This can save you time, stress, and potentially lead to a faster sale.

The timeframe for selling an Italian property can vary depending on several factors, including location, property type, market conditions, and pricing strategy. Generally, it can take anywhere from a few months to a year or more to find a buyer and complete the sale.

Even if you don’t reside in Italy, you can still sell your property. Granting a power of attorney to a trusted lawyer in Italy allows them to handle the sale process on your behalf. This includes tasks like attending meetings with the notary, signing documents, and receiving payment.

Our team of Italian lawyers are experts in Italian real estate and will be able to guide you through the sell process of your property in Italy, collecting the relevant documentation, informing you if you need any documents to be apostilled, legalised and/or translated.

Contact us today and get the legal help you need to sell your property faster. Send us an email at info@theitalianlawyer.com and book your initial FREE ASSESSMENT CALL, during which we will provide you with all the details to proceed with the sale of your Italian property.

Discover our network of law offices strategically located across the UK and Italy, providing convenient access to expert legal services. With our presence in key jurisdictions, we ensure seamless support and personalized assistance tailored to your needs, wherever you are.

OUR NETWORK OF OFFICES IN ITALY