First thing to have in mind (especially for those who live in a common law country): Italian legal system is a ‘continental’ one; it means that proprietary rights are construed along the conceptual lines of the late Roman law, as they evolved in the continental Europe. The Italian modern law is very similar, in this respect to the French one, having been largely influenced by the Napoleon Civil Code (1804), although a notable influence of the XIX century German jurisprudence should also be considered.
For what it’s worth, a basic distinction is made between rights over a good (what we call diritti reali, lat. iura in re, realia[1]), and rights vis-à-vis other person/s, stemming from a contract or analogous source of obligations (lat. iura in personam, personalia).
When we buy a property, there are two conceptual steps to consider: firstly, we make an agreement with the seller to that purpose – and this gives rise to an obligation for the latter to pass the property of the house onto us (either immediately, or at a given time in the future), and a corresponding obligation for us to pay him the relevant price; secondly, when we become the owners of that house, we have a full dominium (proprietà) over it.
The distinction between iura in re, and iura in personam[2] is also particularly interesting in case of transactions relating to a house (or a building, or a piece of land – things do not change), in terms of how we may enjoy it. From a practical point of view there are, in fact, two ways one can get a house in this country: either by buying, or renting it. When you buy it, you get a (potentially perpetual) ius in re vis-à-vis everybody, based on a deed of transfer; on the contrary, when you rent it, you get a (temporary) ius in personam vis-à-vis the landlord only, based on a contract. (There is indeed the possibility to oppose the rental to any subsequent landlords, but this is another story).
Renting a house
To rent a house simply requires a private agreement of locazione to be made. No need of a notary, and no particular costs involved, although any signed contract for rentals exceeding 30 days is to be registered for fiscal reasons at a fee of 2% p.a + €16 for any 4-page portion of the agreement[3]. Tenant’s and his/her family generalities must be also passed to the police, for security reasons. In most cases, the deal is struck directly with the owner, who usually takes care of registration. Short term rentals (1 to 18 months) are common, and usually refer to a furnished house. The standard term for longer rentals is 4+4 years, with a 6-month exit-window for the tenant. A deposit (in the measure of some 2-3 monthly rentals) is customarily requested, to be returned at the end of the contract unless repair costs are to be charged to the tenant.
Buying a house
Any restrictions? Italy is fairly liberal in allowing foreigners to buy a property based in Italy. Only nationals whose country does not respect reciprocity are barred from purchasing a real estate, unless they already have been granted residency here[4].
Real Estate Agents. Unless you are brave enough to embark in finding a fit property by yourself, the easiest way is to retain a real estate agent. There are plenty of them in Italy, and they usually work on exclusive basis (this is not mandatory, though) at a fee rate of minimum 3%. A good agent may significantly help you not only in finding the most convenient opportunities, but also to take care of all the most important preliminary paperwork connected to the purchase.
Other consultants. Usually, it is advisable to employ a property surveyor to inspect the property and advise you on any possible hidden defect, or required remedial works to be made. Also, a lawyer may look after all the legal conundrums, the kind we mentioned above…). Their costs may vary a lot, according to the amount of time and work involved. It is always advisable to ask for an estimate.
The deal. As hinted above, to buy a house you’ll need to make a sale-purchase agreement with the owner/s. This will be subject to formalities, i.e. it should be made in writing, before a public notary in order to allow its transcription with the local public Real Estate Registry (Registro immobiliare)[5]. Once the parties are determined to go ahead, it is customary to strike a preliminary agreement, and make an advance payment in order to avoid last-minute second thoughts[6]. In fact, the whole transfer process takes its time (for enquires about the origin of the estate, for arranging the financing, or simply because the house is still in construction, …). In practice, a preliminary agreement consists in the reciprocal promise to buy, and sell the property within a given time (e.g. 3, or 6 months). It’s a typical in-person obligation, as depicted above: no transfer of property occurs, and no ius in re is thus created. However, some thirty years ago, a possibility to transcribe the preliminary agreement with the Land Registries was introduced. This gives the promised buyer an at least temporary protection – i.e. 1 year from the date scheduled for the deed, max 3 years from the registration of the preliminary agreement – in the sense that buyer’s rights may be opposed to anybody else. This has some costs, but it can be deducted from the final deed’s costs.
… and the taxes. Finally, once the deed of transfer is completed, there will be taxes to pay, in addition to the notary fees (usually 1% to 3%) which are customarily borne by the buyer only. Apart some minor fixed taxes (imposta catastale and imposta ipotecaria), it is mainly matter of paying a Registry tax (imposta di registro) at 9%, or alternatively – in case the seller is a commercial operator – VAT (10% or 22% for upper-level mansions, the so called luxury properties that are labelled as A1 (High-class houses), A8 (Villas), and A9 (Castles and palaces of outstanding artistic or historical value) type). A significant reduction is provided for in case the property qualifies as prima casa (main home): namely Registry at 2%, or VAT at 4%. Interestingly, you won’t need to establish your residency in Italy, to be granted prima casa benefits. However, a luxury property cannot be granted any prima casa benefits. Additional costs (1.25% to 2.25% plus an insurance) are due in case a mortgage is attached to the house to finance the purchase.
And now enjoy your new home (as a king or a queen…). As said, once you become the owner of a house in Italy, you’ll be its absolute lord. The law emphatically say that you have the “the right to enjoy and dispose of it fully and exclusively…” (sec 832 It. Civil Code). Theoretically at least, since the same section 832 continues by adding “…within the limits and in compliance with the obligations laid down by the legal system”. So, there will be restrictions to your domain. In particular, a complicated and often variable system of municipal authorisations is in place, for changes to the external appearance and also to the internal structure of houses. Apart for that, you will have to consider the traditional rules in the relationships with neighbours such as the obligation to respect distances and easements (remember the iura in re aliena? – footnote no. 1), the prohibition of unjustified hostile acts; and also the condo rules, as the case may be. Finally, but this is definitely exceptional, your property may be expropriated in the public interest, e.g. the construction of a new road. In this unfortunate event, you’ll be compensated and also be protected under a treaty for the protection of foreign investments, where applicable.
As for taxation, your house will be considered to produce a figurative income per se, and it’s taxed accordingly at a municipal level (nothing terrible, still something to consider): this is called IMU (Imposta Municipale Unica) and it’s levied annually. It varies according to location and classification of the property). In addition, a contribution for the community public expenses is due, and it’s called TASI (Tributo per i servizi indivisibili). Again, it varies according to location and type of property. A prima casa is exempted from both IMU and TASI, provided it is not a luxury property. Finally, there’s a contribution for waste collection and disposal services. In many municipalities this is arranged by a specialized contracted firm (and you will want to pay their invoices); otherwise, it is the municipality itself that provides it and you’ll be charged a tax called TARI (Tassa sui rifiuti). In any case, the cost is usually split in two: a fixed component you pay just because you occupy that property, and a variable component you pay in accordance with your waste volumes. Both vary depending on property location and type.
And when you are tired, you can of course sell your property to others. All of the above applies in reverse. One satisfaction is that the transfer costs will be paid by the buyer.
Good luck! and if you need legal support, do not hesitate to contact us.
_______
[1] The most important ius in re, giving unlimited control over a property (dominium), is simply called proprietà (ultimate ownership). There are then other 6+2 more specific rights that can be exercised over another person’s property (iura in re aliena): superficie (sort of building lease), enfiteusi (sort of long lease), usufrutto (sort of life tenancy), uso (right to use), abitazione (a right to dwell), and servitù (easement). The last two, are intended to give a guarantee: ipoteca (mortgage) and pegno (lien).
[2] That does not exactly match the similarly sounding distinction made in common law between right in rem, and right in personam. Also, it is highly inappropriate to translate diritti reali as “real property rights” since the latter refers to parcels of land and attached structures, whereas the diritti reali may be created upon any type goods (lat. res), either moveable or immoveable, and even intangible.
[3] A rental agreement may be agreed upon orally only, in theory. However, in practice this is very seldom done, because the parties usually desire to have proof of it, and an oral agreement may be considered as legally null and void.
[4] Assessing reciprocity is made case by case, since relevant terms may vary overtime. Of course, no survey is necessary for nationals from any EEA State (EU plus Iceland, Liechtenstein, and Norway), and from the countries with whom Italy has a bilateral treaty in place. Moreover, the recent Italian caselaw tends to exonerate from the reciprocity rule situations where basic rights, such as having a roof to live under, are at stake. In a case decided in 2013, the Cassation court held that the purchase of a house for personal needs must be deemed as valid, irrespective of the fact that the buyer’s country – Iran, in that case – fails to meet reciprocity (decision no. 7210 of March 21, 2013). See also our previous post here for a case when reciprocity was denied in respect to Switzerland.
[5] In theory, a contract NOT finalised before a public notary is perfectly valid, and binding between the parties. However, it cannot be registered with a public registry, and thus cannot become opposable erga omnes (to any other persons).
[6] Sometimes, a simplified note of commitment is given by the perspective buyer together with a deposit (some 10% of the price) just in order to ‘book’ the seller, and prevent this latter from opting for an alternative buyer (in this case, in fact, seller should pay back the double).
