1. First step –The irrevocable purchasing proposal
When the purchaser finds the property he would like to buy he must send to the seller (through registered mail, fax or by signing a contract which is then given to the broker) the IRREVOCABLE PURCHASING PROPOSAL. This is a written document with which the purchaser commits himself to buy the property at a certain price, terms and conditions.
It’s essential to include all the following information to the Irrevocable Purchasing proposal:
The purchaser and seller personal data;
The Real Estate identification data (address, description, etc.) and the proposed price.
The due date or deadline for the proposal acceptance by the seller. By that date the seller has to accept or refuse the offer.
The methods and terms of payment.
The date and place where Preliminary Contract will be signed.
It’s important to specify that the Irrevocable Purchasing Proposal is a unilateral deed and it only commits the purchaser for the time indicated in the contract.
The seller has the right to reject the proposal but if he decides to accept it he then has to sign it. The signed document will be sent to the purchaser by the estate agency.
If the seller doesn’t reply to the purchaser’s offer within the deadline indicated in the proposal than the purchaser is to be considered free from any obligation.
A deposit (warranty check) calculated on the selling price is enclosed to the purchasing proposal. The total amount of the agreed selling price should be paid within the terms and conditions indicated in the proposal. In this step the real estate agency will ask to the purchaser to sign a document in which it’s indicated the commission for the brokerage services. The commission will be paid only if the seller will accept the purchaser proposal.
2. Second Step – PURCHASING PRELIMINARY CONTRACT
Usually after one or two weeks after the signature of the Irrevocable Purchasing proposal the purchaser and the seller will sign the AGREEMENT TO SELL or THE PURCHASING PRELIMINARY AGREEMENT which is the contract that forerun the deed of sale. In this document the two parties must clarify all aspects that will be later officialised in the Final Deed of Sale.This is a very important step because the preliminary contract confirms the purchaser right to acquire the property at the terms and conditions set by the parties.
Usually when the preliminary contract is signed the purchaser will pay a deposit to guarantee and confirm his intention to purchase the property (this is an amount of money the purchaser pays to the seller to guarantee his commitment to buy before the formal signature of deed of sale. This money will be retained by the seller as a penalty in case the purchaser withdrawal without just cause). This is also the time when the purchaser will pay to the estate agency the agreed commission for the brokerage services.
If the purchaser terminates the contract the seller has the right to keep the deposit as a compensation. If the seller terminates the contract the purchaser has the right to receive a compensation double the amount of the deposit he paid down (art. 1385 of the Italian Civil Code).
The Preliminary Contract has necessarily to contain the following information:
The purchaser and seller personal data;
The detailed description of the property (cadastral data, cadastral plan, etc.)
The agreed price for the property.
The payment methods and terms (bank transfer, cheque, banker’s cheque, etc.)
The date when the final deed of sale will be signed.
The deed of origin of the purchased property.
The possible presence of any possible restriction on the property (mortgages, servitudes, etc)
The property compliances with the current city planning, building codes and zoning.
The applicable legal penalties in case of termination of the contract.
The arbitration clause for dispute resolution to use in case of termination of the contract.
The contract signing date and contractors signature.
By law the contract must be registered at the Agenzia delle Entrate (Revenue Agency). The cost of registration can change depending on the contract number of pages, on the number of attachments and on the amount of the down payments written in the contract.
In order to register the contract it’s necessary to put a € 14,81 revenue stamp every 100 written lines of the contract itself and a revenue stamp of € 1 for each A4 size attachment. All revenue stamps must be released on the same day or on any day before to the contract signature date.
As far as the advance payments stipulated in the contract are concerned, the parties will pay a sum of money in the amount of 0,5% of the down payment and of 3% of the payments on account.
The mortgage registration tax (a registration fee) will also be paid in the amount of € 168,00.
The purchaser can also decide to transcribe the PRELIMINARY CONTRACT also known as the PRE-SALE PURCHASE ARRANGMENT at the Conservatoria dei Registri Immobiliari (Land Registry); the registration will be done by deed with notary. The transcription cost changes depending on the value of the business transaction.
The registration cost and/or the Preliminary contract transcription at the Land Registry costs are totally on the purchaser’s expense.
3.THIRD STEP – THE NOTARY DEED OF SALE
After the signature of the preliminary contract (after a period that can vary from 2 to 6 months or more depending on the agreement signed by the parties on the preliminary contract itself) the purchaser and the seller will sign the DEED OF SALE. The notarial deed will be draw up by a Notary therefore it will have the effectiveness of public act according with the Art. 2699 of the Italian Civil Code.
The drawing up of the contract will take place in the presence of both parties and of the real estate brokers. The document is draw up in writing and it’s read out by the Notary acting as a legal functionary. The notary will than authenticate the purchaser and the seller signatures. This way the transfer of property is formalized.
The notary, prior the deed of sale signature, must check the property compliance to the current city planning and to the tax regulations. He also has to verify that the property is not burdened with mortgages or other outstanding accounts.
Usually the notary deed of sale includes the same agreements and conditions previously stipulated in the pre-sales agreement (preliminary contract) with possible changes, corrections or alterations the parties agreed upon after the stipulation of the preliminary contract.
The day when the deed of sale is signed the purchaser must pay for the balance in order to acquire the property. He also has to pay the notary note of fees (which includes the registration fees, registration taxes, and the cost of the contract transcription in the Land Register)
The most common method of payment is the Bank Transfer (paid in advance into the notary bank account; the notary will then issue a Banker’s cheque) or the Banker’s cheque (direct) which requires a previous agreement with the purchaser bank in order to issue the check with the exact recipient name and the exact amount.
The notary deed of sale has necessarily to contain the following information:
The date written in letters and not numbers of the year, month, day, municipality and place where the deed is signed.
The notary personal data together with the identification of the local district where he/she is registered.
The purchaser and seller Personal data.
The witness and/or interpreters personal data.
The exact identification of the sold property (the detailed description, the cadastral data, the bordering properties, the plan of the main property and of it’s accessories (basement, attic, garage, etc.)
The deed of origin of the purchased property (the previous contract of transfer of property)
The indication of any possible limit and restriction to the possibility of the property to be sold (possible presence of positive and negative easements upon the property)
The clauses already included in the preliminary contract which have been integrated with further clarifications or corrections.
The price of the property and the payment methods and terms (bank transfer, cheque, banker’s cheque, etc.)
The agreements concerning the property delivery terms and conditions and the assumption of possible other obligations if those are not contextual to the deed of sale.
The certification of energy performance.
The obligation to enclose to the deed of sale the declaration of conformity to the Plant Safety Regulation (L.46/90) and to the Safety Regulation in force at the time the plant was installed or after any modification has been abrogated with the Decree-Law 112/2008 (art.35) for those interventions which took place after the year 1990. However, even though it’s not necessary to enclose the declaration mentioned above it is better if the conditions of the plant and their compliance to the safety regulation are specified in the contract.
The notary will be in charge of deed of sale registration at the Italian Revenue Agency registry office and of the transcription at the local Land Registry. In this step the notary will proceed to the registration of all proprietary rights such as the right of housing, the right of usufruct, the easements, the long lease right, etc.
If the purchaser asks for a loan/mortgage to buy the property the notary will be also in charge of the Loan Act and of the mortgage registration in favour of the Bank. Usually in this case a bank legal representative will assist to the contract stipulation. It is necessary to wait from 2 to 4 weeks to receive a certified copy of the contract after it’s registration.