1. Parties and Ownership – Who can own real estate and what types of ownership are there?


Any legal “person” may own real estate. This will include individuals, companies and other legal entities established by statute.

From 1997, unincorporated associations and charitable institutions can also freely own real estate (before that date real estate acquisitions by such entities were subject to government authorisation).

Owners of commercial real estate include private developers, insurance companies, pension funds, real estate funds, banks and other financial institutions, private or public property companies, charities, trusts, the government and local authorities.

There are no restrictions preventing EU nationals or companies from owning real estate. With regard to non-EU nationals, reciprocity conditions apply.


In Italy there is no distinction between classes of titles. However, there are different forms of ownership that can be summarised as follows:

  • Proprietà (ownership) – the right to use and dispose of a property in a full and exclusive manner, within the limits and in compliance with the provisions of the law
  • Comunione (joint or co-ownership) – the division of the right of ownership between a number of people or entities, with each of them having rights and obligations in respect of the others. As a consequence, each co-owner must contribute to the costs of maintenance and use of the property and other necessary outgoings. Each participant can request an end to the joint ownership. However, the court can postpone the end of the joint ownership, by a maximum of five years, if the division would be detrimental to the interests of the other co-owners. Co-owners can contractually agree to maintain co-ownership, thus inhibiting actions aimed at ending the comunione, for a maximum of ten years: such agreements would be enforceable against subsequent transferees
  • Multiproprietà (time-sharing) – on interest, first formally recognised and introduced in Italy 1998 and now mainly regulated by the Italian Consumer Code, the object of which is the right to use and enjoy one or more properties for more than one period of occupation.

Although the possessor of a property enjoys a certain degree of protection pursuant to Italian law, possession does not constitute title to a property. However, continued and uninterrupted possession of a property for a given number of years (10, 15 or 20, depending on the type of property and other circumstances concerning the possession) would entitle the possessor to acquire ownership of such property. Although title will automatically follow from continued possession (if relevant conditions are satisfied), its acquisition will have to be declared by a court of law.

2. Interests – What types of interest in real estate are sold?

Property interests which are usually sold in Italy include:

  • Proprietà (full ownership) – the right to use and dispose of a property in a full and exclusive manner, within the limits and in compliance with the provisions of law. “Piena proprietà” is the term normally used to describe the title of the person who has full ownership
  • Nuda proprietà (residual ownership) – the right that remains to the owner of a property over which a right of usufruct has been created in favour of another person
  • Diritto di Superficie (also known as proprietà superficiaria) (right of superficies) – the right to construct and maintain a construction on land belonging to another person. If the right of superficies was created for a limited period of time, at the end of the term the owner of the land acquires title to the building

Other relevant rights in rem or contractual rights relating to property are as follows:

  • Lease – a contractual right to use a property for a certain period of time and for a specific purpose. Assignment of a lease by the tenant usually requires the consent of the landlord unless the transfer occurs as a result of a sale of business as going concern (in which case the landlord may have limited ability to oppose the assignment). Term of a lease cannot exceed 30 years. Residential and commercial leases are regulated by different sets of rules. The provisions of Italian law on commercial leases are particularly strict (and pro-tenant) and usually cannot be amended. However, that regime was partially amended at the end of 2014 – only for so called “large leases” (annual rent in excess of EUR 250,000) – so as to allow the parties substantial freedom to determine the terms of the lease and alter the otherwise mandatory provisions of commercial lease law.
  • Option and pre-emption – rights to buy or first refusal respectively. Unless they originate from statutes (e.g. pre-emption right of tenant of retail premises), they are not enforceable against third parties and do not entitle the holder of the relevant right to seek to revoke a disposal of property carried out in violation of the option or right of pre-emption
  • Servitù (easements) – rights in rem, which burden one piece of land and benefit another. They are not personal but attach to the land itself. They include rights of way, right to light, right to use or lay pipes and cables, right to run a telephone or electricity cable or construct telecoms equipment as well as restrictions concerning use of land or activities permitted on the land (e.g. an obligation not to build). These rights can be either registered or unregistered, depending on how they were created
  • Usufrutto (usufruct) – usufruct is a right in rem enabling a person to use another’s property and to draw from the same all the profit, utility and advantage which it may produce, without altering the substance or use of the property. The holder of a usufruct may allow use of the property by third parties but is not entitled to dispose of the property. Usufruct can be created for the entire life of the beneficiary but if the beneficiary is a legal entity a statutory 30 year limit applies
  • Right of use or habitation – the right of use and habitation is a limited form of usufruct where the beneficiary is allowed to use and exploit a property (e.g. agricultural land) or occupy a property (e.g. flat) to satisfy his own needs and those of his family

3. Employees – What employment issues affect real estate acquisitions?

According to the Italian rules on the transfer of business, when a business (or part of one) is transferred from one party to another, the work relationships of the employees pertaining to such business or part thereof continue with the new owner of the business.

The sale of a property may fall within the above rules if a property transaction qualifies as transfer of a business and in some cases relating to property, even if there is no business transfer. This may be the case with regard to employees dedicated to management of a building or staff working on the premises (e.g. security staff or maintenance personnel).

According to article 129 of the National Collective Bargaining Agreement for Employees of Owners of Buildings the “transfer of title to the building does not entail termination of the employment contract and the employee shall retain the rights and obligations under the individual employment contract in place.”

The application of the rules on transfer of a business would entail, amongst others, the following consequences, namely that:

  • the buyer assumes responsibility for employees working in the business transferred
  • the rights of employees transferred, deriving from both their individual and collective employment agreements, would be preserved (e.g. salary level, fringe benefits, notice periods)
  • fully accrued rights of the employees against the seller would be assumed by the buyer as a consequence of the transfer of a business
  • the seller and the buyer are jointly liable for all the financial obligations of the seller, existing at the time of the transfer, vis à vis the employees and
  • information and consultation with the unions prior to the transfer may be required, depending on the number of employees employed by the seller

The transfer of business does not in itself constitute a justified reason for dismissal; the termination of employment is legal only when justified by reasons totally independent and autonomous from the transfer of a business i.e. economic, technical or organisational reasons entailing changes in the workforce (so called “ETO reasons”).

4. Procedure – What are the steps in a sale and purchase transaction?

Steps in real estate transactions would typically differ for “commercial” transactions involving professional investors and operators and “private” sales and purchases concerning, for instance, residential properties.

A “private” transaction would normally involve the following steps:

  • submission of an irrevocable, binding purchase offer, often accompanied by payment of a small deposit and usually received by an agent on behalf of the seller;
  • execution of a preliminary agreement (contratto preliminare di vendita, often referred to, although improperly, as compromesso), which will not transfer title but will create enforceable obligations to respectively sell and purchase the property, usually accompanied by payment of a larger deposit (ranging from 10% to 30% of the agreed price). The preliminary agreement would typically allow a certain period of time before the parties are required to complete, for instance to allow the buyer to obtain a loan or finalise the sale of another property whose proceeds are to be used to finance the new purchase;
  • execution of a notarised deed of sale (atto pubblico di vendita) transferring title to the property and simultaneous payment of the price (or outstanding balance if a deposit has been paid). After its execution, the deed of sale will be filed at the tax office and recorded by the notary at the Land Registry, thus making the transfer fully enforceable against third parties.
  • Steps of commercial transactions or transactions involving professional investors and operators tend to be more complex and would typically involve the following:
  • non-binding offer or expression of interest issued by the prospective buyer, setting out the valuation given to the property (i.e. price offered) along with key terms of the transaction, including whether it would be subject to financing.
  • the parties would then usually enter into an exclusivity agreement to allow the prospective buyer sufficient time to carry out due diligence investigations on the property and confirm the initial valuation/price. The exclusivity provisions may also be included in other documents (heads of terms or memorandum of understanding) where the parties would require more detailed recording of other key terms of the proposed transaction (e.g. assumptions underlying the valuation, key warranties or other relevant provisions) before respectively undertaking or allowing full due diligence. Although usually those documents will expressly state that they are non-binding (except for provisions concerning exclusivity and confidentiality), they may still generate potential pre-contract liabilities (e.g. in case of subsequent refusal to proceed further with the transaction in the absence of justified reasons) or be held to be binding if a court establishes that, despite the language used, that was the true intention of the parties.
  • once exclusivity agreements (or heads of terms/memorandum of understanding) are in place, the purchaser will usually conduct due diligence over the property, normally with the assistance of third parties (lawyers, notary, architects or land surveyors, other technical advisors).
  • after completion of due diligence, the parties will negotiate, with the assistance of their legal advisors, a preliminary sale and purchase agreement recording in detail all terms and conditions of the transaction, including warranties, indemnities and, if appropriate, conditions precedents. The preliminary agreement would typically allow for a period of time before completion of the sale, either to satisfy any conditions precedent that may have been identified or simply to enable the parties to make the necessary final arrangements (e.g. setting up and funding of acquisition vehicle, liaising with banks holding charges over the property to arrange their cancellation upon completion, etc.).

Payment of a deposit by the purchaser would be less usual in commercial transactions and, when envisaged, it would be typically lower, in relative terms, than deposits usually agreed in private transactions.

Along with the actual preliminary agreement, the parties may also negotiate other ancillary documents or contracts, including, for instance escrow  agreements, to regulate either payment and release of the deposit or settlement of the price payable on completion.

  • The transaction will complete with the execution of a notarised deed of sale, which will effect transfer of title from the seller to the buyer. 

In most cases the final deed of sale will largely replicate terms previously included in the preliminary agreement, including warranties and indemnities. However, in certain cases, confidentiality reasons and/or tax concerns (i.e. risk that certain provisions may, if included in a document submitted to the tax office for registration, attract further taxation) may lead the parties to either confirm the continuing validity of certain provisions of the preliminary agreement after execution of the deed of sale or enter into side agreements (typically concluded by exchange of commercial letters, to avoid an immediate obligation to submit the agreement to the tax office for registration) to supplement the terms of the deed of sale.
  • After execution of the deed of sale the notary will complete its filing and registration at the tax office and Land Registry, thus making the transfer of title public and enforceable against third parties. 

Where concerns exist that third parties may record charges or other encumbrances over the property pending registration of the sale at the Land Registry or however for larger transactions, funds for payment of the price (or of the balance if a deposit had been previously paid) may be transferred to an escrow agent prior to execution of the deed of sale and released to the seller only after confirmation that the transfer of title has been property recorded, free from third parties rights or other encumbrances (other than those previously known and accepted).

5. Contract terms – What provisions does a real estate contract contain and what is implied by law?

Provisions of the contract

A distinction should be made between the preliminary sale agreement and the deed of sale.

The preliminary sale agreement must be made in writing and notarisation is not required unless the parties intend to record it at the Land Registry.

The preliminary agreement typically contains detailed provisions relating, amongst others, to the obligations of the parties pending execution of the deed of sale, deadlines for satisfying conditions precedents, if any, and terms and methods of payment of the purchase price, including down-payment(s) made by the buyer and the consequences of one party refusing to execute the deed of sale.

The preliminary agreement also usually contains detailed representations and warranties in relation to the property and matters affecting it as well as indemnity provisions. Specific warranties will usually be given in relation to any lease under which the property is occupied (e.g. validity of the lease, due performance by the seller, timely payment of rent). Where the purchase is of a property in the course of construction, the terms for payment, details of bank or insurance guarantees in relation to the developer, the date by which the property must be constructed and details of any subcontractors must be set out.

The deed of sale must be made in writing and notarisation is required, though only for the purpose of complying with publicity requirements (registration at the Land Registry) and not for its validity.

Usually the representation and warranties made in the preliminary agreement will also be repeated and confirmed in the deed of sale along with any indemnities and the preliminary agreement will be superseded by the deed of sale.

However, where reasons of confidentiality or risks of attracting additional tax liabilities exist, the parties may agree that certain obligations under the preliminary agreement will survive the execution of the deed of sale and continue to apply afterwards. Alternatively side agreements (often concluded as exchange of commercial letters, not to trigger a duty to submit the agreement to the tax office) may be put in place to supplement terms of the deed of sale.

Only one original deed of sale is executed and the notary, who is required by law to keep the original in his/her records, is authorised to issue certified copies to the parties as well as to public offices to which the sale must be notified (e.g. Land Registry).

Like a preliminary agreement, the deed of sale must clearly identify the property, by indicating its boundaries and cadastral details, and set out the price agreed for the sale.

The deed of sale usually contains an acknowledgement of payment of the price (quietanza). Should such acknowledgement be missing, and specific waiver by the seller not included in the deed of sale, the Land Registry will automatically record a mortgage over the property as security in favour of the seller for payment of the price.

Over the years, several provisions have become mandatory for deeds of sale in addition to those that would be required, under the general rules of the Civil Code, for other contracts. Examples of such mandatory provisions or mandatory information that would need to be stated in a deed of sale include:

  • details of original planning permission issued for the construction of the property as well as details of subsequent instruments or authorisations, however called, issued for any works carried out at the property;
  • details of method of payment of purchase price (including for instance details of cheques or banker’s drafts delivered or of banks accounts used to transfer and receive the price);
  • confirmation that the property is duly recorded at the cadastral office and that cadastral records (including floor plans) are correct and up-to-date;
  • details of real estate agents or brokers who assisted in the sale, including their tax/VAT numbers, details of their license and the amount and method of payment of relevant fees;
  • information on energy performance of the property and obligation to provide a copy of the relevant energy performance certificate (previously known as ACE – Attestato di Certificazione Energetica, now being progressively replaced by the APE – Attestato di Prestazione Energetica. Actual requirements may vary according to regional legislation).

Failure to comply with the above requirements and/or to provide the relevant information would typically affect the validity of the deed of sale and, as a matter of fact, would prevent the completion of a sale whilst the provision of false or incomplete information would give rise to criminal liability.

Moreover, additional mandatory requirements apply in case of sale of newly built properties to individuals, including the obligation of the developer to deliver to the buyer an insurance policy, valid for ten years, relating to structural defects at the property.

Terms implied by law

The following provisions would normally be included in property transactions and would usually also apply if no reference to them is made in the deed of sale:

  • Warranty for Defects – regardless of the investigations and the inspections carried out by the buyer prior to the purchase, the seller may remain liable to the buyer for latent defects in the property that would render the property unfit for its intended use or which may negatively affect its value. Any agreement or provision excluding or limiting this warranty would have no effect if the seller acted in bad faith and concealed the defects. A claim for defects in the property must be notified to the seller within eight days of discovery (unless a longer period is agreed) and claims are subject to a period of limitation of one year from the delivery of the property to the buyer.
  • Warranty for Eviction (loss of title) – Italian law requires the seller to give a warranty on title. The warranty also covers rights of third parties that, though not affecting ownership of the property, may affect the ability of the buyer to use or occupy the property. If a third party successfully claims title to the property from the buyer, even if the parties have excluded the warranty on title the seller would be liable to return the price to the buyer and reimburse the costs incurred by the buyer to purchase the property. If the parties want to exclude completely statutory warranty for eviction, the agreement must state clearly that the sale was made “at buyer’s risk and peril” (which would be extremely unusual).
  • Price of property determined as a whole (a corpo) or with regard to size (a misura) – properties are usually sold a corpo (as a whole). This means that price is not determined on the basis of the actual size of the property, which however may still be indicated in the preliminary agreement or deed of sale. In that case price adjustments would be permitted only if the difference between the size stated and the actual size exceeds 5%. If, instead, the price of the property is determined having regard to its size (vendita a misura), any discrepancy would allow a price adjustment. Differences exceeding certain thresholds may also allow the parties to withdraw from the agreement.

6. Due Diligence – What investigations does the buyer normally make?

The buyer of an Italian property would normally instruct different professionals, depending on the type and size of deal, to carry out investigations on the property and, in case of share deals, on the target company.

Investigations are usually carried out before a binding offer to purchase a property is made, before execution of a preliminary agreement for sale or in any case before a substantial deposit is paid. However, in certain cases, the offer may be made or the preliminary agreement may be executed subject to a condition that the investigations to be carried out or completed will not reveal any material issue or defects. This is often the case where the buyer is already generally satisfied with the result of a preliminary due diligence and only a few aspects need to be investigated or finalised.

Usual investigations carried out for property transactions include:

  • inspection of title, carried out by reviewing the entries made at the Land Registry and relevant documents registered (deeds of sales and other acts or instruments, e.g. mortgage instruments). Records of the Land Registry are the ultimate evidence of title, subject only to limited exceptions (e.g. unregistered easements, prescriptive rights and adverse possession, unregistered leases). Title inspection may be carried out by lawyers or, more often, notaries. A notary’s report on title is always required by banks before granting a loan to be secured by a mortgage over the property (usually followed by an updated report on title, issued after the registration of the mortgage at the Land Registry and confirming its proper creation, as a condition for the drawdown)
  • review of building permits, for the purpose of ensuring that the necessary permits were obtained and that no unauthorised works were carried out on the property. This review is usually carried out with the support of land surveyors, qualified architects or similar professionals, due to the technical skills required. Notaries will also require copies or details of all relevant permits before the deed of sale is executed
  • site visits and inspection of the property, including inspection of systems and equipment as well as review of relevant certificates and maintenance records (e.g. certifications of compliance issued by initial supplier/contractor, log-books and other documents issued in connection with periodical inspections and tests);
  • review of cadastral registration of the property. The Cadastral Office, created for tax purposes, records details of ownership, rateable values, property categories and plans. The cadastral register is divided into two sections (land and buildings). Though cadastral records do not constitute proof of title, they affect, amongst other matters, taxes payable on the property as well as its transfer. In fact, the seller of a property is required to confirm, in the deed of sale, that cadastral records of the property (and floor plans filed at the cadastral office) are correct and up-to-date whilst improper or out of date cadastral records would prevent a valid transfer
  • where the property is occupied by tenants, leases are usually reviewed by lawyers appointed by the buyer to establish, amongst other matters, the prima facie validity of the leases and their terms, including break options and security for payment of the rent and other obligations of the tenant
  • review of documentation concerning existing financing arrangements and related security package, including not only mortgages but also other securities that may have to be lifted at closing (e.g. charges over rental payments or insurance policies) and
  • in the case of share deals, lawyers are usually instructed by the buyer to review the main corporate documents to ensure, amongst other matters, the transferability of the shares and any limits to their transfer. Review of the company’s accounts, accounting books and tax documents is usually also required in order to assess potential tax liabilities

7. Registration and Notarisation of real estate – What are the basic requirements?

Agreements or other instruments transferring title to a property or creating, modifying or transferring rights in rem concerning a property must be recorded for publicity purposes with the Italian Land Registry (now part of the Italian revenue agency, Agenzia delle Entrate). Usually there is a Land Registry office for each province although for larger provinces there are usually more offices, each having jurisdiction over a certain part of the territory of the province.

Registration of the above agreements and instruments is required to ensure that they are enforceable against third parties (as opposed to enforceability limited to the parties to the agreement or instrument).

Also, the creation of charges and encumbrances (e.g. mortgages, court orders concerning title to the property or other rights in rem created over the property) requires compliance with publicity requirements to ensure that such charges and encumbrances are enforceable against third parties. However, registration with the Land Registry is permitted only for those instruments and agreements that are specifically identified by Italian law (e.g. registration of an option for purchase of a property is not permitted).

It should be noted also that lease agreements may have to be recorded at the Land Registry, where their initial terms exceed nine years.

In general, notarisation (either in the form of certification of signatures by a notary or of a proper public deed, drawn up, signed and sealed by a notary) of contracts transferring title to a property or creating, modifying or transferring rights in rem concerning a property is not required for the validity of the contract itself but is required to allow the agreement to be recorded at the Land Registry.

However, notarisation is a validity requirement for certain types of transfers of title to or other interests in a property (e.g. a public deed is required for transfers by way of gift).

8. Permits – What permits are required for the use and occupation of real estate and are they personal?

Applications to obtain a planning permit to develop land must be filed with the municipal authority, which has the responsibility for controlling the use and development of land in the relevant territory.

The approval of an application for a building permit is subject to compliance of the proposed development with, amongst others, planning instruments and building regulations. Additional consents and approvals may also be required, either as a condition of applying for a planning permission or as part of that process, because of the nature of the proposed development or the area concerned, which may be subject to environmental, heritage or landscape restrictions. Construction fees and contributions towards costs of infrastructure are usually payable.

The decision on an application for a building permit should be issued within statutory time periods set by applicable legislation.

If an application for a building permit is rejected, the applicant is entitled to challenge the decision before the Regional Administrative Tribunal (TAR). Challenges before TARs are also available to third parties that may be affected by the development.

In addition to obtaining a building permit, at the end of the works it is necessary to notify to the competent authorities that the works were completed and to certify that the construction was carried out in accordance with, applicable building regulations as well as health and safety and sanitary regulations. A certificate of fitness for use (Certificato di Agibilità) must be obtained (also through tacit- approval procedures) from the competent local authorities, as confirmation that the property is suitable for use and occupation.

Works to be carried out on existing buildings require a prior approval by the municipal authority. However, in most cases the formal approval is replaced by a prior notification to municipal authorities, usually accompanied by a statement issued by a qualified professional (chartered surveyor, architect or civil engineer) describing the works in question and confirming that they comply with applicable planning instruments and other relevant rules and regulations.

Properties with artistic or historical value (listed buildings) may be subject to restrictions and works to be carried out on such properties will require a prior approval by the local agency of the Ministry of Cultural Heritage (Ministero per i Beni e le Attività Culturali – MIBAC).

In general, building permits are granted to the owner of the land or building or to a third party that, by virtue of a contract with the owner or of an interest held in the land/property, is authorised to carry out the works for which the permit is requested. The building permit can be transferred to successors, assigns or transferees only jointly with the land or property concerned (or such other underlying right that enabled the transferor to seek the permit in the first place).

9. Insurance and Risk – What insurance will the parties effect and when does the insurance risk pass at the time of sale?

The owner of a property usually takes out and maintains insurance covering both the property and its fixtures and fittings. Property insurance usually covers both damage to and destruction or loss of the property caused by a number of events including fire, explosion, lightning and road vehicles or, in some cases, aircraft collisions. Property insurance coverage would usually also protect the owner against claims for damage caused to equipment of third parties installed at the premises (e.g. equipment of utility companies) and may also cover loss of rent.

The owner of a property may – and normally would – also take out insurance against third party liabilities (e.g. damages suffered by third parties that occupy or have access to the property). Insurance for damage caused by water (e.g. pipe bursting), riots and terrorism, storms (including rain, hail or snow) or earthquakes may require additional special heads of cover.

Tenants are usually required by the lease to take out additional insurance cover for damage caused to the leased property or the entire building (e.g. by fire, water and explosion) or to third parties that have access to the leased property.

Risks relating to a property pass with title (though the seller may remain responsible for custody of the property until delivery of the property is effected). The seller would usually maintain insurance on the property until the execution of the deed of sale and it would be the buyer’s responsibility to take out new insurance for the property with effect from the date of transfer of title.

10. Environmental – What are the common environmental issues?

The main environmental issue arising in connection with a real estate transaction concerns potential soil and groundwater contamination resulting from current or past use.

Although the key principle regarding contamination of land is “polluter pays”, the buyer of a property, although not being the person directly responsible for contamination, would still be subject to certain reporting obligations, obligations to adopt protection measures (i.e. measures aimed at preventing an immediate threat or potential future damages to health or the environment) and may be exposed to potential liabilities for costs incurred for de-contamination of the site and such consequences usually attach to the site itself.

If a site is found to be contaminated, competent authorities will have a duty to try and identify the person responsible for the contamination and ensure that such person carries out the de-contamination activities required (or however that such activities are conducted at the polluter’s expense). If the person responsible for the contamination cannot be identified or however does not proceed with the required de-contamination (and no other interested party proceed with it), the ultimate responsibility for such de-contamination will lie with the local municipal authority or, failing it, with the regional government. Such authorities will be entitled to recover those costs from the polluter but if the polluter cannot be identified or the costs cannot be recovered the authority may seek to recover those costs from the then current owner of the property up to a limit equal to the value of the property.

If decontamination works are carried out by public authorities, a legal charge may be created on the site and such charge would result also from the Certificato di Destinazione Urbanistica, a certificate issued by the municipality showing the permitted use of the land. Such a charge will also imply that costs incurred for the de-contamination of the site would be given priority over the proceeds generated by the sale (including a forced sale) of the site.

In relation to buildings, asbestos is usually the main environmental concern, particularly if the building is to be used as place of work (offices, retail properties). Asbestos found in the building should be removed or properly contained.

When the characteristics of a property or the circumstances concerning its former use suggest that there might be potential environmental risks, environmental due diligence would normally be carried out. The main aspects and documents to be considered for a preliminary assessment of environmental risks and to establish whether further investigations should be carried out are:

  • the history of the site/property (e.g. previous owners)
  • maps, planning and zoning instruments
  • building permits and authorisations issued for the site/property
  • Certificato di Destinazione Urbanistica (certification of permitted use of the land)
  • the register of potentially contaminated sites and sited to be de-contaminated
  • Regional Plan for Decontamination
  • certificates issued after decontamination of the site
  • documentation concerning previous activities carried out on the site or in surrounding areas and
  • accounts of the seller/target company

In general, environmental risks are addressed by specific provisions in the contract. In addition to general provisions that are often included in preliminary agreements and sale agreements, specific provisions will be included if particular risks are identified, so as to ensure that costs for decontamination are either deducted from the price or secured by specific (bank) guarantees.

There remains growing attention to energy efficiency of properties and several regulations have been introduced (e.g. requiring energy performance certification of properties) aimed at increasing consciousness of energy consumption and therefore environmental impact of properties or introducing stricter requirements during construction or renovation of properties (e.g. heating and air conditioning systems). Besides legal requirements and new regulations on energy efficiency, there has been a growing interest of investors in energy efficient properties (and in the lower operating costs associated to it) which resulted in adoption of voluntary energy efficiency certifications and schemes (such as LEED and BREEAM) in connection with both new developments as well as renovation or refurbishment works.

11. Pricing/Valuation – What sets the price/valuation of real estate?

Prices of commercial properties are usually determined on the basis of the expected revenues that the property can generate (rent) as well as on the average market value of similar properties in the same area. Should a property be capable of being converted from residential to non-residential or vice-versa, the value (usually calculated per square metre) of non-residential properties (or residential, as the case may be) in the same location and area could be used as a reference, taking into account also likely conversion costs.

Whilst the expected revenues that a property is capable of generating are usually calculated on the net area capable of being leased, the value of the property (per square metre) is usually calculated on the so called “commercial size” of the property (total area of the property, including areas occupied by partitions and external walls). Certain areas of a property or a building (e.g. balconies, entrance hall, parking spaces, storage rooms) are usually taken into account only for a portion of their actual size.
When a building is acquired with a view to its demolition and reconstruction, the value of the land where the building is located and the planning provisions applicable to such land are considered, together with estimated construction costs and fees.

12. Taxes and Costs – What are they and who pays them?

Taxes payable in connection with a real estate transaction would greatly vary depending on a number of circumstances. In particular, the sale of a property may be subject to value added tax (VAT) or registration tax (stamp duty), depending, amongst other factors on the nature of the property sold (residential or commercial), whether or not the seller is VAT-registered (and in that case whether the seller opts to apply VAT), on the activity carried out by the seller and on the right of the buyer to deduct the VAT paid in whole or part.

Additional charges (known as imposte ipotecarie e catastali i.e. mortgage and cadastral charges) will also be payable, either based on the value of the property or in fixed amounts, for registration of the sale at the Land Registry and cadastral office.

In general:

  • in a typical commercial real estate transaction (i.e. commercial property sold by a VAT-registered seller to a VAT-registered buyer), although the sale would be VAT-exempt (and therefore subject to proportional registration tax, based on value of the property), the seller would normally opt for application of VAT at the then prevailing rate. In those cases, a so called “reverse charge” scheme would apply, with the practical implication that no VAT will actually be paid by the buyer to the seller on top of the price.
  • Moreover, a fixed registration tax as well as proportional mortgage and cadastral taxes (at a combined rate of a percentage of the value of the property) would also be payable. with regard to a “private” transaction (e.g. residential property sold by non-professional seller to a non-professional buyer) proportional registration tax will normally be due (usually charged at a percentage of the value) along with fixed mortgage and cadastral taxes. Lower rates would apply to the purchaser of a residential property to be used a main residence by the buyer (so called “prima casa” regime).

In theory, the seller and the buyer are both liable for payment of registration tax as well as cadastral and mortgage charges, unless they agree otherwise. As a matter of fact, standard practice is that all tax costs arising in connection with a real estate sale are borne by the buyer (although both parties will continue to remain jointly liable vis-à-vis the tax authorities).

Similarly, the buyer would usually appoint the notary for the execution of the deed of sale and will pay the notary’s fees and expenses. Notary’s fees used to be determined on the basis of an approved scale fees system, ranging from 2% to 0.15% of the value of the transaction, with limited room for negotiation. Due to recent changes in relevant legislation, there is now a greater flexibility and the notary’s fees may vary, sometimes also significantly, from one notary to the other.

The buyer will also pay the costs for conducting searches on title and on matters affecting the property as well as, in general, costs for the due diligence review of the property and any valuations or audits he may require.

Each party will bear the costs for its own consultants (e.g. lawyers).

According to Italian law agents and brokers (mediatori) would normally be entitled to seek commissions from both parties, even in the absence of a prior explicit mandate or instructions. For that reason, preliminary agreements and/or deeds of sale usually contain provisions not only regulating payments to agents and brokers (i.e. stating who will pay whom) but also providing for an obligation of each party to indemnify the other for claims that may be made against the latter by agents or brokers engaged or involved by the indemnifying party.