If you’re interested in purchasing property in Italy, it’s important to understand all the steps of the process. Once you have selected your dream home, two crucial documents come into play to finalize the deal. The first is known as the preliminary agreement, while the second is the final deed of sale, which officially transfers ownership. We have previously discussed both the preliminary agreement and the final deed of sale in more depth in past articles. The purpose of this article is to briefly define what the preliminary and deed are, and how to properly register or transcribe them.
What is a Preliminary Agreement?
The “contratto preliminare di vendita,” or preliminary agreement, is a pivotal element in the Italian real estate market. This private agreement outlines essential details of the property sale, including the full price and the specific terms and clauses governing the deal. It serves as a legally binding private contract between the prospective buyer, known as the “promissario acquirente,” and the seller, known as the “promittente venditore.” Both parties commit to finalizing the sale at a later date, contingent upon certain conditions being met.
The preliminary agreement carries genuine and binding effects, obligating the parties to move forward with the eventual sale. This stage can also include clauses related to property inspections, further ensuring the safety and satisfaction of the buyer.
However, the preliminary agreement does not transfer ownership of the property; instead, it secures the commitment to sign the final contract. Following the preliminary agreement, the buyer typically provides a deposit, often around 10% of the purchase price, although there is no rule defining minimum and maximum deposit amounts, as a sign of their commitment.
Does the Preliminary Agreement Get Registered or Transcribed?
Once both parties have signed the preliminary agreement, it holds legal significance and is fully binding. However, there is an administrative requirement to register the preliminary agreement with the Italian Revenue Agency (“Agenzia delle Entrate”). Registering the preliminary makes it known to the Revenue Agency that two people have made a preliminary agreement, allowing further tracing of the contract and keeping it in line with the fiscal norms.
While the preliminary agreement retains its legal validity even without registration, it remains subject to fiscal obligations. The associated registration costs comprise a fixed registration tax of €200 and a stamp duty of €16 for every four pages of the document. If the parties agree to payments such as a deposit, a proportional registration tax may also be applicable, usually at a rate of 0.50% of the deposit amount, or 3% if it is an advance payment.
The preliminary agreement can furthermore be transcribed into the public notarial registry through the intervention of a public notary. While transcription of the preliminary agreement is not mandatory, it offers significant benefits, ensuring the agreement’s priority over subsequent transactions involving the property. However, the effects of transcription cease if the final contract is not transcribed within one year from the agreed-upon date or within three years from the transcription itself.
It’s important to understand the distinction when deciding to register or transcribe the preliminary agreement. In the unfortunate scenario of a dishonest seller, if you have a preliminary agreement that has only been registered, you can only seek compensation, without challenging the deed of sale they have signed with someone else. On the other hand, if you have a transcribed preliminary agreement and the seller, before finalizing the deal with you, sells the property to another party, you have the legal means to challenge the deed of sale and potentially acquire the property.
Registering and Transcribing the Final Deed
The ultimate step in the Italian property buying journey is the signing and transcribing of the final deed of sale, known as the “rogito notarile.” This document officially transfers ownership from the seller to the buyer and is a mandatory requirement, prepared by a public notary.
The final deed of sale is always registered and transcribed, leaving no room for exceptions. Registration is done through the Italian Revenue Agency, while transcription involves public notarial records. Expect to incur notarial fees, which typically consist of a registration tax, amounting to 2% of the cadastral value (for primary residences) or 9% (for secondary residences), as well as fixed cadastral and mortgage taxes, usually around €50.
By law, the final deed must be signed by both the buyer and the seller. In cases where one party cannot be physically present, they can delegate power of attorney to a trusted representative, with the presence of a legal interpreter if language barriers exist.
This article has sought to define and differentiate the preliminary contract and final deed of sale as well as emphasize the importance of registering or transcribing them. Buying a home can be overwhelming, especially if done in a foreign country. That’s why we’re here to help. Contact us at email@example.com, and we’d be happy to assist!