Conclusion and registration of:
- preliminary contract;
- transfer of ownership;
- mortgage contract;
- contract rent to buy.
PRELIMINARY CONTRACT: the Italian Civil Code includes neither a definition nor a systematic and consolidated regulation of the preliminary contract. It only confines itself to regulating its form (Article 1351 of the Civil Code); its registration (Article 2645 bis of the Italian Civil Code, introduced by Article 3, paragraph 1, of Decree Law No. 669 of December 31, 1996, turned into Law No. 30 of February 28, 1997) and the remedy against non-compliance, or the specific performance of the obligation to contract (Article 2932 of the Italian Civil Code) set forth in a constitutive judgment pursuant to Article 2908 of the Italian Civil Code issued by the court seised. In case of defects, differences or non-conformity of the item, of charges and burdens pursuant to Article 1489 of the Italian Civil Code or of detrimental registrations, the promissory buyer may anyway try to obtain that the judgment pursuant to Article 2932 of the Italian Civil Code reduces the price agreed in the preliminary contract or condemn the promissory seller to eliminate the defects or differences.
However, given that the main effect of the "preliminary contract" is to oblige the parties to sign the "final sale contract", for a safe purchase it is essential that the "preliminary contract" is drawn up by Experts who ascertain and examine the mortgage and zoning situation of the building. In fact, in this way, the buyer will avoid the risk of being involved – against his/her will - before the competent Court in very complex and expensive legal proceedings having an uncertain outcome, which may even drag on for many years, thus also precluding his/her possibility of buying other properties as long as the commitment undertaken to settle the price to the seller is not removed consensually or judicially.
It is also noted that it is in the buyer's interest to register the preliminary contract.
In fact the registration of the preliminary contract provides further guarantees to the buyer. In the past it has always been thought that the preliminary contract for the purchase of a building was not subject to registration, also because it was not included in the mandatory list of deeds subject to registration pursuant to Article 2643 of the Italian Civil Code.
Nevertheless this held true until the enactment of Decree Law No. 699 of December 31, 1996, n. 669, turned with amendments into Law No. 30 of February 28, 1997 which - pursuant to Article 2645-bis – provided for the possibility of registering the preliminary contracts concerning the conclusion of final contracts which, in relation to real estate, transfer the ownership; create or transfer rights of usufruct, superficies and emphyteusis, rights of communion and joint ownership , rights of easement, use and housing.
However not all preliminary contracts can be registered. La trascrizione è ammissibile solo se tali preliminari risultano da atto pubblico o da scrittura privata con sottoscrizione autenticata da un Notaio. Registration is admissible only when these preliminary contracts result from a public deed or a private deed with a signature certified by a Notary Public. In case of registration of the preliminary contract, the subsequent registration of the final contract shall prevail over the registrations made against the promissory seller after the registration of the preliminary contract, by sheltering the promissory buyer from the contingent contractual consequences , namely from bad surprises to his/her detriment. This is the reason why - with the strategic aim of preventing problems - the careful investor avails himself/herself of his/her own Lawyer and of the Notary Public to draft and register the preliminary contract with the in the Land and Real Estate Registry.
SALE CONTRACT: it is a contract having "real effects" (the transfer of ownership) and "mandatory effects" (the payment of price, the obligation to deliver the item purchased, the obligation to guarantee against defects and eviction). The Notary Public shall translate all the various needs of the Parties into proper legal language and shall provide for the registration of the sale contract with the Land and Territorial Agency, thus making it "binding" upon third parties. Furthermore, where necessary, the buyer will be assisted by a Lawyer also after the sale until the actual transfer of possession of the property and he/she will be protected if he/she finds that (contrary to the guarantees given by the seller in the contract) the property has defects. Under penalty of expiration or invalidity, such defects shall be reported to the seller within eight days since their ascertainment. In the event of any attempted settlement being unsuccessful within one year since delivery (under penalty of expiration of the statute of limitation), a specific case shall be listed for trial before the competent Judicial Authority so as to obtain the termination of the sale contract or the reduction of the sale price: in both cases the buyer may always ask for damages. However, in order to do so he/she will need a trusted Lawyer who knows the specific case and its evolution in detail.
LOAN OR MORTGAGE CONTRACT: it is a contract regulated by Articles 1813 and se. of the Italian Civil Code. It is a contract under which a Bank, known as lender, delivers to the buyer of the house or to the person who intends to build it, known as borrower, a sum of money the borrower shall use to pay the sale price or to carry out the construction works. Article 1815 of the Italian Civil Code lays down that, unless otherwise agreed by the Parties, the borrower shall pay interest to the lender, with reference to Article 1824 of the Italian Civil Code for implementing the provisions relating to their setting. In particular, the prevailing legal doctrine views interest as valuable consideration for the right in rem on the capital acquired by the borrower. Usually, when the loan agreement is concluded, a mortgage is also established to guarantee the bank in the event of the borrower not fulfilling his/her obligations - hence not paying the loan instalments or, in any case, not fully repaying the capital principal and not paying the interest due. Hence the main effect of the mortgage is to enable the bank to recover its credit - in an alternative way - through the compulsory sale (real estate foreclosure) of the mortgaged property. With a view to well weighing his/her choices, the buyer shall ask the paying Institution (i.e. the subject lending money) to provide an information sheet containing the economic terms and conditions and the main clauses regulating the contract. In this way, the prospective borrower will have the opportunity of comparing the various offers and evaluating which of them is the best in his/her own interest. Before concluding the contract, however, the prospective borrower is entitled to have a full copy of the contract, which in no way does commit him/her to conclude the contract. Hence a summary document shall be attached to the contract, designed to highlighting the most significant contractual clauses for the borrower. The conclusion of the loan and mortgage contract will involve a financial commitment staggered over several years - if not various decades - for the buyer. It is therefore advisable to proceed with the utmost caution by requiring – where necessary also through a Lawyer - the implementation of the protocols that the Italian law envisages for consumer protection.
CONTRACT RENT TO BUY: for those who do not want or cannot avail themselves of a loan and mortgage contract, there is this type of contract that is a contract of enjoyment as a function of the subsequent sale of real estate.. It was introduced into our system by Article 23 of Decree Law No. 133 of September 12, 2014 (the so-called "Decreto Sblocca Italia"), turned with amendments into Law No. 164 of November 11, 2014. Article 23 defines it as follows:
"contracts, other than financial leasing, which provide for the immediate granting of the enjoyment of a property, with the right of the tenant to purchase it within a specified period imputing the portion of the fee indicated in the contract". Basically making use of this contract the buyer can avoid resorting to bank credit (through the classic mortgage) but obtaining the immediate availability of the property how? paying the "royalties" which will then, according to the chosen contractual scheme, be charged against the price of a sale whose effects are postponed over time to a later date, more or less distant. We talk about rent to buy. It is also possible (and the practice of these years confirms it) that in the contract it is agreed that the tenant has only an option to purchase and not the obligation to buy the good. This is achieved through the stipulation of a clause, for the option, to be included in the contract, which provides that the grantor is constrained to sell under the conditions established in the contract, while the tenant only has the right to purchase, faculty that must exercise within the time limit set in the contract. If, within the agreed term, the tenant exercises that right, he will also be obliged to purchase, and at the same time the right of the grantor to sell will also arise, while he will not exercise it, within the agreed term, the tenant's right and the lessor's obligation they will lose effectiveness. However, the type of these contracts is really very articulate, which is why they are "tailored" to the needs of the buyer by true artisans "artisans of Italian law" or notaries and lawyers.
The tax treatment of these contracts is quite particular: with Circular no. 4 / E of 19.2.2015, the Inland Revenue has decided to distinguish the contract, for the purposes of taxation, between the part relating to the enjoyment of the property and that relating to the transfer, establishing that, as regards the enjoyment, it must to be treated, for tax purposes, to the lease of the property and therefore, for the portion of the fee charged to the enjoyment of the property, the provisions envisaged, both for the purposes of direct taxes and indirect taxes, for leases .
With regard to the portion of the fee charged to the transfer, the Inland Revenue has considered that it is an advance payment of the transfer fee and therefore must be assimilated, for tax purposes, to the price advances of the subsequent sale of the property . In this regard, the Office of the National Council of Notaries has carried out many detailed studies to which reference is made (see http://www.notariato.it/it/news/rent-buy-la-nota-del-consiglio-national -on-questions-Agency-of-revenue).