That moment has finally arrived! You’ve found the perfect house after months of searching. You are incredibly anxious as you need to move rapidly yet with caution and want to get the best possible price.
At Our Toscana, we know how important this crucial moment is for you. With our purchase assistance package, we will move rapidly and screen the property to quickly understand where the issues are. The property arena in Tuscany is a minefield with a staggering 75% of older properties falling short of compliance, with a mix of minor and major irregularities. That means delays, extra costs or sometimes defaulting!
At Our Toscana, we separate the routine problems from the major show stoppers and line up a plan to resolve them. Remember, that as a buyer, you are at a huge disadvantage as you pay a significant sum of money and get a piece of paper in return (a preliminary contract). Enforcing a contract means entering into the infamous Italian judicial system which can take years to resolve. That’s why you need to be absolutely sure from the onset before you sign any documentation or release any funds. The buying process can be simplified around three important milestones: the offer, the preliminary contract and the deed of completion. We will guide you through this process taking all the risk and stress out of buying!
Our Purchase Assistance Package Includes:
- Examination of deed of provenance for compliance
- Perform detailed cadastral/land registry searches
- Check for restrictions & encumbrances on the Property
- Verify zoning that may have future impact on the Property
- Review active and passive servitudes (rights of way)
- Obtain previous building permits or amnesties
- Check compliance against granted planning
- Identify corrective actions for planning irregularities
- Contractual wording of Offer/preliminary contract
- Translation and explanation of preliminary contract
- Review /prepare technical report for Notary
- Pre-emption rights procedures
- Follow up on zoning certifications for deed of sale
- Review plant compliance & energy certification
- Accompany & assist you at signing of contracts
- Technical, administrative & contractual advice
Installing a swimming pool is becoming “an absolute must” nowadays. Not only can you enjoy a refreshing dip during the hot Summer months, but it also adds lots of resale value thus making good investment sense. For those thinking of setting up in the hospitality industry, it will give you lots of competitive edge. If having a pool is important for you, then you need to have an outline idea as to feasibility right from the start. This means identifying the potential location(s) on the site and having follow-up discussions with the planning department to understand if the zoning policy allows the construction together with any existing restrictions (soprintendanza) or hydro-geological. This will impact timing of getting permits authorized (one to six months) and price of installation. We can advise you as to outline costs depending on the pool characteristics and the presence of additional retaining works that may be necessary.
Listed Building / Protected Area
This generally involves buildings or property of architectural or historical importance and also extends to areas of natural beauty, parks etc. It is important to establish if the building that you are buying is listed and understand the exact restrictions. Such restrictions are generally associated with the façade of the building or any important architectural feature. The local authority will have access to a file on the building with detailed descriptions and photos and it is not uncommon to have restrictions internally. Any planning submittal will be subject to the additional consent of the Sovrintendenza and will generally add a further 3 months onto the approval process.
Reparation / Restoration Costs
One of the big questions that needs answering (at least approximately) is how much is it going to cost me to carry out repairs, renovate or simply personalise the property? Additional funds are often required shortly after the sale and should be factored in to the overall equation early on in the game. A balanced approach is key here, in that if we get too analytical on costs, we’ll never commit and likewise we’d don’t want to become total “dreamers”. Structural work will generally require lots of money and patience so if in doubt get a survey done. Internal services and finishing are much easier to control or phase depending on size and funds available. For those of you planning on buying a “shell” (ie four walls), then you’ll need to factor in renovation cost of about 1100 – 1500 euro / m2 depending on quality of finish.
This is generally becomes the most common “show stopper” on many sales thus making it very important to establish any irregularities as early as possible in the process. To do so, the archives of the local planning department need to be consulted after a detailed search in the submittals registry for any permits, declarations or communications under the vendors name. Armed with such documents, we can make comparison with the current state of the property to see if there are any unauthorized additions or modifications. Unfortunately, nearly all vendors have some skeleton in the cupboard and it is important to establish how to rectify such irregularities. It sometimes happens that the price gets renegotiated if the buyer decides to “absorb” such issues (generally very minor – e.g. missing shutters), or the completion date gets put back by several months while retrospective planning is applied for. Vendors are obliged by law to declare that there are no irregularities in the deed of sale, however without the help of a professional, the vendor is often unaware of such irregularities and their consequences. Purchasing a property with planning irregularities can potentially incur fines (together with a demolition order) or obstruct subsequent submittals for alterations or renovations and should never be taken lightly!
Floor & Land Areas
One of the first checks to be carried out on the property is the actual net floor area and the areas of associated plots. Unfortunately, many estate agents tend to exaggerate on these matters (often through misinformation relayed by the vendor). It is not uncommon to see an advertised 50,000 m2 of land (5 hectares) becoming just over 35,000m2 part of which is located a couple of kilometres from the main property! If this is an important factor for the buyer, then it needs to be checked immediately. For holiday farms (agriturismo) there are minimum requirements on agricultural land, and likewise “too much” land may require formal written agreements with local municipalities regarding it’s maintenance and upkeep. Moreover, properties in Italy are valuated using euro/m2 of floor area. This can provide a “sanity check” on the asking price and will certainly become an important consideration if the house is sold at a later stage to an Italian. The outcome of floor areas may also classify the house as a “luxurious” property if greater than 200m2 meaning no discounted stamp duty for primary residence (ie. you pay 10% instead of 3% of declared value). Those who contemplate expanding, the potential to create an extension to the property is often regulated by net floor areas (eg. one may have the right to increase from 90m2 to 130m2)
Availability of Services/Utilities
Italy is no different to any other country with regard to services and utilities. It is important to know up front if the property has a number of basic services available that could otherwise present a significant cost following the completion. Such services include water, electricity, gas, telephone (or cell phone coverage), waste water and refuse collection. It is important that all outstanding bills are paid before completion and that the vendor cooperates in the administration of the changeover of ownership to be communicated to the respective companies. For a more detailed insight, see the section dedicated to Utilities Setup.
Title of Vendor
Once you’ve decided to commit on your Italian house, we must ask the question if the vendor has proper title to sell the property. This is the normal work of the notary public, however given that the notary generally gets involved later in the process (often after the signing of the preliminary contract), it is important to get some outline answers up front. There are many ways a vendor can come into possession of a property the most common being: through a deed of sale, an inheritance, a division, a donation, an exchange, uscaption, an auction, or leasing. Each of the mentioned means of possession has a specific set of rules that need to be adhered to so that possession is legitimate and suitable for sale. The checks on titles must cover the previous twenty-year history to ensure that there are no existing claims on the property. For co-owners, it is important to make sure that the preliminary contract is signed by all thus ensuring consensus. If the vendor is married with shared ownership of estate “in comunione dei beni” and he/she came into possession of the property after marriage, then the consensus of the spouse will be necessary.
Pre-emption rights is quite a complex and delicate matter for the foreigner who wishes to purchase property, especially in rural areas. The most common case of pre-emption rights are those of farmers adjoining the land in question (coltivatore diretto). This gives the person in question (who tends the land) the pre-emption right to buy the land at the same conditions as per public deed of sale. To mitigate such risks, the Vendor is obliged to notify such farmers with the agreed conditions of the proposed sale to which they can exercise their rights to buy within a stated period as per Italian Law. The professional working on behalf of the vendor will have to generally have to do quite a lot of legwork and will generally need good interpersonal skills given the peculiar circumstances that often arise. The value of the land to be declared needs to be decided up front and is split from the entire sale price. This amount is explicitly stated in the notification document and subsequently used to pay registration taxes if the farmer waives his/her right.
Insolvency of Vendor
If the vendor owns a company, it may be worth your while to getting a search done at the chamber of commerce for details of the company and then ensure that there are no proceedings through against him/her through the Bollettino dei Protesti, or that the company is encumbered with debt which may lead to subsequent bankruptcy. In Italy, the liquidator can revoke a sale for a period of two years after the declared bankruptcy in favour of its creditors. For this reason, you should never under declare the sale price when buying under such circumstances.
Arrange Special Power of Attorney
Special power of attorney can be arranged if you wish to have another person sign official documentation on your behalf. This can be very convenient if you foresee problems in attending the signing of contracts due to other commitments or you simply prefer not to fly around the world! This document is prepared by a notary public in Italy or through an Italian consulate abroad. For the sale of a house or land, you will need all the land registry details. The document will precisely list all the operations allowed and generally cover the signing of all contracts pertaining to the property sale, arranging of payments through the bank of the vendor, acceptance of possession, arranging of all tax declarations and the change over of land registry details. The person to whom you sign over power of attorney is technically an “extension” or “proxy” of your signature and it is imperative that this is a person that you know and is trustworthy.
Generally you will require an Italian bank account to pay the vendor, taxes and various fees (notary, estate agent & geometra) To open an Italian bank account, you will need your passport, fiscal code and some money. Generally a non-resident’s account will be open with current accounts reserved for Italian residents. The operations is somewhat overwhelming with an enormous amount of signatures necessary! To carry out payments, you will require a cheque book. Make sure that you get the IBAN code for the account and the SWIFT code if you are based in the US. These codes are essential for transferring money afterwards. When choosing a bank, do think about it’s convenience as a bank that is in the town of the estate agent may prove very awkward later especially if it is 20km away from your new home. In addition, the costs of closing an account in Italy is ridiculously high.
Once your Italian bank account has been open, then you’ll need to electronically transfer the funds necessary to cover the price, taxes and fees. There are two main systems namely IBAN (European based) and SWIFT (US based). Each bank will have their own charges and timing for transfer. If the destination bank is a small branch, then the money will first hit the local headquarters and may require an additional day or two to transfer into your account. Exchange rates may vary considerably for non-euro countries so it makes sense to shop around for the best brokers. You will also need to control this operation to ensure that funds have arrived! To do so, most Italian banks now offer online internet banking. For a small fee, you can monitor you account or for the more daring carry out payments. The alternative to an electronic transfer are international bankers’ drafts. These are generally considered to be slow and expensive and it is important to consult if he/she will accept them as means of payment.
This is a tax number generally required in all official documentation. For the sale of a property, you will need to visit the local branch of the inland revenue armed with your passport or a local Italian consulate. The alphanumeric code is calculated based on your name, middle name, surname, gender, date of birth and place of birth. It is important that you give them your full name including middle name(s) as an omission will lead to an incorrect code. Generally the estate agent will facilitate this operation which is one of the more simple and straight forward. You can also visit the inland revenue’s website to calculate the fiscal code (see tools section).
There are a few number of taxes that the buyer may inherit temporarily or permanently and therefore precautions need to be taken as a safeguard. The government has fiscal privilege on a property if there are outstanding taxes unpaid. The formulation of the completion contract foresees a declaration stating that the vendor has regularly submitted his/her tax returns up to that point in time. Another form of tax that is applicable to rural properties is know as oneri verde. This translates as green taxes and is levied on rural buildings since 1995 in Tuscany. The logic behind such taxes is that owners who no longer use the rural building for agricultural use are penalised. Green taxes are due when a planning submittal is made for renovation. Even though the contract safeguards the buyer, it is always difficult to get money back from the vendor and often involves the assistance of lawyers.
Restrictions on Property
This is a generic term that refers to a series of scenarios which need to be considered when buying a property. Such restrictions generally affect the enjoyment of the property to varying degrees and consequently it’s commercial value. Servitudes are a common example and are generally in favour of third parties which may be a right of way thus allowing people to walk through your property. For white or gravel roads, it is important to understand who pays for the upkeep and maintenance as this may result in significant costs if such roads are hundreds of meters in length. Another example may be a gas/water pipeline. This may present problems if you contemplate an extensions depending on the contractual conditions stipulated in the servitude. More generically, we can have clearance restrictions around railways, national roads and forestry. From a natural & heritage perspective, there are environmental, archaeological, historical & architectural restrictions. There may also be a hydro-geological in areas susceptible to landslides or river valleys.
Mortgages & Encumbrances
To ensure that there are no mortgages or encumbrances against the property, it is necessary to carry out a search at the deed and mortgage registry (Conservatoria dei Registri Immobiliari) with the general details of the Vendor (name, surname, date of birth and codice fiscale). The mortgage follows the property and therefore it is possible (although unlikely) that the buyer may inherit such a debt. Before the completion date, the vendor needs to pay off and cancel any mortgage(s) he/she may have on the property. This is done with the assistance of a notary public. In fact it is quite common for the Vendor to use the same notary for both the sale and clearance of the mortgage. Given that the banks need a guarantee that the mortgage will be paid off by the vendor, such operations are often carried out in the chambers of the bank in question, together with the completion. The other alternative would be to take over the mortgage meaning spreading payments over a greater period for the buyer (at a discounted price) and no early redemption penalty fee for the vendor. Other encumbrances include judicial liens, fiscal privileges and sequestration orders all of which are verified by the Notary Public.
This is a certificate now issued by a registered architect, geometra or engineer who attests that the dwelling is suitable for habitation. The main considerations include the net ceiling heights (minimum of 2.7m), the amount of natural illumination in the various rooms (window area to be one-eight of net floor area), ventilation, the existence of parapet walls where necessary, removal of obstruction for disabled access (Legge 13/1989), safety requirements of electricity and heating, contained heat dispersion (Legge 10/1991), appropriate water supply and waste water system. The mentioned criteria are obviously a function of the applicable laws at the time of building or modification. The omission of this certification is a good indicator that there are some form of irregularities which may prove costly to the potential buyer.
This is one of the most common sources of disputes throughout Italy and needs to be carefully considered when purchasing a property. Boundaries tend to be somewhat “flexible” with a hand-shake agreement between two farmers in the past often giving rise to court cases among their heirs today! One of the questions that needs to be asked is if the vendor has any formal or informal disputes with neighbouring properties. Visual inspection with respect to the land registry maps can often reveal anomalies and become preamble for further investigation. If in doubt, then get a surveyor to peg out actual boundaries. If such boundaries are contested, then there is a specific formal procedure that can be followed. Boundaries are of critical importance if there are plans to construct swimming pool, extensions etc in their vicinity and there should be absolutely no doubts with regard to their definition.
In Italy, every 8 to 10 years, we tend see a building amnesty (condono edilizio) where retrospective planning is granted to unauthorised buildings, extensions or modifications upon the payment of a fee. This is quite a controversial topic in Italy, as it undermines the purpose of having a planning system in the first place and questions the effectiveness of controls. Having said that, it is always quite an attractive revenue generator for the government in office. When buying a property, it is extremely important to identify planning amnesty applications and proceed with the right precautions when drafting a preliminary contract. Not all illegal modifications are accepted, and the greatest risk at stake is to have to demolish an extension that gets rejected. Issuance of retrospective planning can take up to 10 years and so it is not uncommon to find many cases pending. If the application has been made to the local planning authorities with all the foreseen documentation, it can be considered accepted after 1 year in municipalities with less than 500,000 inhabitants and 2 years for larger municipalities unless the planning authorities state otherwise. The buyer should always seek professional advice as accepting such applications in good faith is fools game.
Land Registry Compliance
A land registry search (Catasto Edilizio Urbano) is generally a good starting point to establish if the vendor is correctly entered as the owner of the property in question. This is divided into two sections, one for buildings classified for residential or commercial use, and the other for agricultural land and associated annexes. Here we get outline but valuable information regarding, co-owners and their details, cadastral definitions on the land map n°, plot n° and sub section n° all of which need to be written in the deed of sale, notional income, references on deeds of sale and the name of the notary public, inheritance, donations & judicial rulings. From the land registry maps where we can see the location of buildings and the land. The existence of buildings or land boundaries on such maps are not final and conclusive and can be contested through other documents or procedures.The land registry floor plans of the property needs to tie to the current state. If this is not the case, then the buyer will have to pay a professional to update such plans which may have a cost of at least 600 euro.
Area Development Plan
It is vital to consult the area development plan to understand if there are any planned or upcoming structural changes in the area. Such changes might not necessarily be in the vicinity of the property, however they may adversely affect it’s commercial value. A good example are plans for nearby quarries, where a relatively quiet country road suddenly becomes host to endless (and dusty) lorries 12 hours a day. Other projects to watch out for may be road widening schemes, incinerators, state roads or motorways, or the rezoning of land for residential or light industry. Remember there may also be benefits to be derived from consulting the Area Development Plan with the construction of a nearby railway station or a motorway entrance a couple of kilometres away.
It goes without saying that purchasing an old property, may well present many defects not apparent to the untrained eye. The section dedicated to property surveys deals with a variety of defects in an exhaustive manner. Unfortunately there’s the false dilemma of paying for a survey up front and deciding not to proceed based on the results. Money wasted?? The flip side of the coin is a property we recently came across that commanded a price of 160,000 euro only to reveal significant defects 2 years later costing the foreign buyer 25,000 euro with lots of aggravation and stress! The smartest thing to do is proceed with caution and ensure that the right conditional “get-out” clauses are inserted in the purchase offer or at the very latest the preliminary contract of sale. Remember you’re investing your hard earned money in a dream home in the sun, at least make an informed decision!
Extending or Modifying
Often, the viewed property may be a little on the small side or not exactly to our taste, so the potential to modify or extend is quite important to know early on in the process. From consulting the urban development plan through the local planning authorities, we are able to see how the area is zoned and together with the characteristics of the property, we can ascertain the possibility of building an extension or even converting a barn or outhouse. Sometimes there are height restraints in the property we buy, making the upstairs area impossible to use say for conventional bedrooms without a deviation request on the standard net floor height (usually 2.7m). Some area plans allow the raising of eaves level to accommodate this problem. It is clearly evident that such upfront knowledge has a significant commercial impact on the viewed property.
Before the big day, we prepare a translation of the final contract and go through it point-by-point explaining the legalities with straight forward examples. You will need to decide if you want to sign an official translation of the contract or assign power of attorney for us “understand” and sign on your behalf. On the day of completion, the Notary Public will carry out checks on mortgage clearances and the buyer pays the vendor.