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also be repeated and confirmed in the deed of sale along with any indemnities and the preliminary agreement will be superseded by the deed of sale.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