Property buying experience in Italy
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Due to the recent bad publicity of off plan property investments in one of the regions in Italy, I wanted to share with you my thoughts to achieve safe off plan investments.
Investing off-plan is where a purchaser makes a commitment to buy from a developer a property that has not yet been built or is in the process to be built.
This type of investment hides a number of risks, the major one being the builder going bankrupt and the buyer losing his money.
The Italian legislation provides a number of protections for the buyers of such type of properties.
The law 122/2005 declares the obligation of the builder to offer a surety bond. This is to guarantee the buyer for the money deposited prior to the transfer of ownership of the property, in case of bankruptcy or default.
According to art.1 of Law 122/2005 the builder is obliged to offer such surety bond at the latest at the moment of the signature of the Preliminary Contract.
In absence of such surety bond the Preliminary Contract will be considered void unless the buyer explicitly wants it to produce its effect. The surety has to be clearly mentioned in the Preliminary Contract.
According to article 2 of Law 122/2005 the surety needs to be a Bank, an Insurance Company or a Financial Broker authorized by Bank of Italy.
The surety bond guarantees to the buyer the repayment of the money paid as deposit.
In order to request the excussion(1) of the guarantee the buyer has to formally withdraw from the Preliminary Contract.
A written request of withdraw from the buyer, together with the evidence of the payments, will be sufficient to activate the guarantee.
The surety will be obliged by the law to pay the money back within 30 days.
According to art.3 of Law 122/2005 the surety bond will also cover damages consequence of building defects of the property also when discovered after the signature of the Deed of Sale.
The building defects of the property covered by art.3 are listed in art. 1699 of the Italian civil code. The guarantee for such defects last ten years since the finalization of the building works.
In case the seller is a different legal entity from the builder of the property, he is obliged to request to the builder a copy of the surety bond and give it to the buyer. This is part of his contractual obligations in reference with the Deed of Sale.
If you are considering to invest in a off-plan property in Italy our advice is to contact an independent separate legal adviser.
Such would not be the case when the lawyer is recommended by the Developer or the Real Estate Agent.
The issue needs off course more attention. If you’d like to speak with me about it, i’ll be speaking on a seminar about the legal issues concerning property investments in Italy. Please feel free to join me there. The registration is free.
Avv. Giandomenico De Tullio
www.detulliolawfirm.com05 Mai 2009, 02:02 Detullio