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PRELIMINARY AGREEMENT FOR THE SALE IN ITALY

What the preliminary contract of sale should contain

The title of sale is generally preceded by a negotiation phase which is followed by another phase which is the signing (signature) of the preliminary contract of sale.

With this preliminary act, on one hand, the “seller" takes on the obligation to sell a particular property to the "buyer", which in turn assumes the obligation to buy at the price already permanently agreed. In the preliminary agreement it will be contained the description of the property and its price, as well as the agreed methods of payment, terms and payment deadlines for deposits and advance payments, the deadline within which the preliminary should turn into the final agreement of sale, and terms for delivery.

In the preliminary agreement, the parties can also define arrangements relating to expenditure, adjust between each other arguments of fact and law on which the property is located, share the costs of routine maintenance and extra repairs and expenses, agree terms regarding the conditions of the plants existing in the property, or establish that even some movable property pertaining to the property can be transferred together (e.g. closets, furniture and appliances in the kitchen or bathroom, the curtains alone, the furniture of the garden, the boiler or pump heating/cooling, air conditioners, etc.) as well as insert all other terms, conditions and clauses which the parties deem useful and necessary to clarify what is the subject to sale, the existence of constraints, the obligations of the condominium, the municipality or any other third parties to avoid future disputes and controversies.

In practice, very often, the phase of negotiation and signing of preliminary agreements is done with the help of a professional mediator, who will initially let the buyer subscribe an ‘irrevocable purchase proposal’ that must be rapidly accepted by the vendor, and which already contains agreements on the most important elements of the contract: description of the property, price, payment terms, delivery terms, etc.

With the preliminary agreement does not occur yet the ownership transfer to the buyer. With this agreement, in fact, both the interested parties commit to take on each other the obligation to sign a subsequent contract defined as "final", represented by the act of sale with the support of the Notary.

With the preliminary agreement the first part of the total price can be given to the seller by the buyer as a deposit (“caparra confirmatoria”). This means that if the buyer changes his mind and does not want to buy the property anymore, the seller is entitled to keep the money received for that purpose; if, instead, the seller who does not intend to respect anymore the obligation to sell the property, the seller must double the received deposit and return it to the buyer.

If the amount paid by the buyer is defined as an advance on the final price, and it is not possible to get to the signing of the final contract, such payments will be the returned to the buyer without being doubled.
If a party fails to appear at the signing of the final contract by the agreed deadline, the other party- in addition to the deposit - can use other schemes, under the law, as a guarantee. Furthermore, the party that has suffered the damage can sue the other party - for the resolution of the preliminary agreement - due to the counterparty’s failure to honor that agreement. In this case, the court will require the parties to pay back the benefits already received, but the compensation for the damages suffered by the party that has honored the agreement.

If the party that does not honor the agreement is the seller, the law provides a remedy to the buyer to require the court to issue a judgment to transfer the property ownership in the buyer’s favor simply replacing the final contract (Art. 2932 of the Civil Code), as long as the buyer proves the judge to be willing to pay the full purchase price. If you choose to enter into a preliminary agreement to purchase privately or through the support of a mediator (e.g. the real estate agency), the contract must be legally registered, with the payment of registration taxes in a fixed amount of Euro 200,00. If it is intended to make deposits and/or an account on the full price, it will also be due, respectively, 0.50% and 3% of the amounts already paid. These proportional registration fees, paid on down payments and accounts on final payments during the registration of the agreement, will then be deducted from the proportional registration fee due to the signing of the final contract of sale (notarial deed or rogito notarile).

The Notary will perform all the controls mentioned above and the preliminary contract will be drawn up in the form of a certified private deed or in the form of a notarial deed. This will imply for the notary the requirements of recording and transcript of the preliminary agreement with the effects of greater protection for the buyer. Recording taxes (Fixed tax and proportional taxes on accounts and deposits) of the preliminary agreement will be due in addition to the payment of the Notary for other charges, taxes, duties, stamp duties and fees.

IT IS IMPORTANT TO UNDERLINE THE SIGNIFICANCE OF TRANSCRIPTION OF THE PRELIMINARY CONTRACT OF SALE (Art. 2645 TER CIVIL CODE).

With the transcript of the preliminary agreement at the Registri Immobiliari offices (as the Office of Mortgage) causes a “booking effect” of the transcript effects of the final contract, in order to protect the interests of the buyer (which is typically recognized as the "weaker" part of the contract).

For example, if Caius promises to sell to Tom the right of the ownership of his apartment with a private unauthenticated preliminary form, the act itself, even if registered, cannot be transcribed.
If Caius - meanwhile incorrectly - promises to sell (and he can do it because he still owns the property) the same house to Harry, who is instead committed to have a Notary drawing up the preliminary act that will not only be registered, but also transcribed, Tom (first buyer) will have no protection that will allow him to regain the ownership of the property. He can only sue the seller, Caius, for damages.

Essentially, even if Tom has already signed a sort of preliminary agreement signing a simple private act with Caius, no one (including Harry through the Notary that will investigate into the proper office), will know it by simply consulting the Registri Immobiliari offices. Harry will, therefore, freely sign the agreement, and then buy the same property from Caius even though he has signed later, relying on the findings of the registry.

If, however, Tom (first prospective buyer) did write down in his favor the agreement and pushed to a formal transcription, even with no transfer of the property in his favor yet, he would have first reasonably prevented the new agreement between Caius (original seller) and Harry, as the Notary, while investigating, would have found that the apartment was already promised for sale to another person.

The transcript of the preliminary agreement in favor of Tom would ensure in advance (the booking effect) the unenforceability of the same acts transcribed after his preliminary contract: the purchase transcribed in favor of Harry (second buyer) after the registration of the preliminary act in favor of Tom (first buyer) is of no value. The booking effect has, by law, a limited duration. It says the art. 2645-ter, 3 comma, Civil Code that the effects of the transcript of the preliminary contract shall cease and shall be deemed as ever made if, within one year from the date agreed by the parties to conclude the final act and, in any event, within three years from the transcript of the preliminary, is not carried out the transcript of the final sales contract.

To be entirely exhaustive, it should be noted, finally, that only the Registri Immobiliari offices, and not the Catasto, assure and guarantee the ownership of real estate properties.

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