BUYING or SELLING
How to look for or sell real estate in Italy
The purchase, or the sale, of a house is a difficult and costly but important stage, and the consumer who undertakes this should be aware of the many problems connected with it.
First of all, he or she has to decide whether to avail themselves of a professional, a real estate agent, or to handle it themselves personally: doing it personally obviously allows them to save the real estate agency’s commission, but on the other hand it makes it harder to find a buyer or a property to buy. The tools available today, besides ads in the papers, real estate publications and word of mouth, consist of the Internet, where both free and pay sites can be found, judiciary auctions and announcements via mobile phone text messages.
Secondly, and in any event, one must always move forward and stay alert in order to avoid having the stress and anxiety of looking for a house and the fear of “missing out on a great deal” lead one to make a commitment and sign contracts too hastily.
Lastly, one must pay attention to the rules and laws necessary for signing a private agreement between the seller and the buyer for a property sale that protects them from possible risks. Indeed, although it is true that a sale becomes final only with the notarial deed, the obligations between the parties begin initially with the preliminary contract, which will be legally valid until the signing of the final deed of sale.
How to buy and sell through a professional agent
Real estate agent
A “mediatore” – broker or agent – is “a person who brings into contact two or more parties in order to enter a contract, without being connected with any of the parties by a relationship of collaboration, employment or representation” (Art. 1754 Civil Code). This means that the broker, or agent – the roots of which go back to ancient Roman times – has the task of making the needs of the seller and of the buyer meet, bringing together the opposite interests of the two parties so as to arrive at the conclusion of the negotiation. The profession of Brokerage Agent is regulated by laws that require those who work as a broker of any type to be registered on the List of Brokerage Agents held by the Chamber of Commerce, which qualifies them and is valid throughout the entire country of Italy. This obligation also regards those who practice this profession only occasionally and/or for organized companies. The real estate agent generally provides a valuation of the property guiding the seller toward the actual market conditions, offers the property through advertising channels with the aim of reaching the potential buyer who can evaluate the possibilities offered by the market, and compares characteristics and costs. The agent must also be able to give information on the legal, technical and tax aspects before the signing of the preliminary contract, the moment in which the parties mutually bind themselves to the purchase and sale, in order to prevent them from having to face obstacles that may be insuperable. Therefore we ask the reader to follow attentively the information regarding the figure of the real estate agent or broker, in order to understand what are the rights and duties provided for by the law. The real estate agent must prove that they are registered by showing the identification card issued by a Chamber of Commerce, to which the consumer may also refer in order to receive information on the business and on the laws that regulate the field, or to file a petition or contestation if they wish to report conduct considered improper or if doubts or problems should arise. The law requires real estate agents to take out a professional liability insurance policy for the protection of its clients. Those who are not registered in the list kept by the Chamber of Commerce and who illegally practice the profession are subject to a fi ne of up to 15,000 euros. They must also Estero refund any commissions received to the contracting parties. In some cases, they may also be reported to the judicial authorities for criminal conduct. Those who instead are registered in the list and practice the profession as an agent or broker in an unlawful or improper manner, violating their duties and/or not complying with the obligations provided for by law, are subject to the disciplinary measures of suspension, cancellation and elimination from the list. The authority for disciplinary measures lies with the Chamber of Commerce Board. The real estate agent must act in the interest of both the two parties at the same time and, therefore, has the right to a commission from each of the parties, if the transaction is closed through his or her services (Art. 1755 Civil Code). The Civil Code also tells us that a transaction is considered “closed” at the moment in which the person who made the proposal learns of the other party’s acceptance (Art. 1326 Civil Code). Therefore, the real estate agent’s right to the commission arises at the concluding of the preliminary contract or agreement to sell/purchase (“compromesso”). Generally, and in conformity with the custom in the province, real estate agents follow the negotiations up to the signing of the notarial deed. As regards commissions, since 2006 it has been obligatory in all property sales to put into the notarial deed a sworn statement (“dichiarazione sostitutiva di atto di notorietà”), which indicates the amount of the commission paid to the real estate agent and the method of payment. This statement gives the agent’s personal data and registration number in the List of Real Estate Agents, as well as their VAT or taxpayer’s code numbers. Those who do not comply with this obligation when buying or selling real estate risk a number of penalties, including payment of a fine from 500 to 10,000 euros, as well as any possible penal consequences in the case of a mendacious statement. Furthermore, Law 4 August 2006, no. 248, introduced the possibility of deducting 19% on the commissions declared up to a maximum ceiling of 1,000 euros. Thus the agent must provide the client with a copy of the means of payment and related tax documents so that the client may avail themselves of the deduction when doing their income tax return.
Sometimes the real estate agent acts as an authorized representative, i.e. receives the assignment to represent one party and therefore acts exclusively in that party’s interest: in this case the agent has the right to a commission only from the party that has given that assignment, but the agent must still observe their own professional duty.
It is important to remember that real estate agents must not limit themselves to bringing together the buyer and the seller; they are also obliged to provide correct information according to the criterion of average profession diligence, which includes the obligation of informing the parties as to all the elements that are known or are knowable through normal professional diligence and that may have an influence on making a deal, as well as to carry out the enquiries and research necessary for the closing of the purchase/sale. It should be specified, however, that certain technical-legal enquiries (mortgage register and title searches, municipal authorization measures) must be defined in advance, including for the purposes of any possible and specific refunds. If there are any misunderstandings or complaints regarding the services of a real estate agent, it is important to know that the Chamber of Commerce supervises brokerage activities. Indeed, the law assigns to the Chamber of Commerce Board the task of examining, following reports by citizens, any irregularities in the services of those registered in the List of Brokerage Agents. If it determines that the work of an agent has created problems, it may decide to suspend the agent (for up to 6 months) or to expel them from the List. Real estate agents’ associations also watch over their members, in the interest of maintaining the reputation of real estate agents, through the creating of codes of conduct with which members must comply, through the evaluation of any complaints made by clients or by other real estate agents, and they also provide for warnings in the event that the complaint Estero is considered to be legitimate.
The agent and the consumer must therefore work together so that:
– The forms (assignment, purchase proposal, etc.) are filled out in their entirety, crossing out the items that are purposely to be left out;
– The aforesaid forms refer to the registration of the agent in the List of Real Estate Agents and, if it is a company, of the company itself as well as of the legal representative and/or the delegate. A copy of these forms must be fi led beforehand with the local Chamber of Commerce, which may be requested to verify the observing of this provision.
– The commission due to the agency, determined freely by agreement between the parties, is clearly indicated. If it is not given, it may also be determined by the Chamber of Commerce Board, on the basis of local practice.
– The sale price of the property is always established and stated exactly. It is necessary to firmly reject any “extra” proposal, i.e. the amount that the agent may be able to obtain from the buyer above the price agreed upon with the owner and is not included in the commission.
– The real estate agent gives a copy of any form that is signed, which must be countersigned at the same time also by real estate agent, both in the case of the acceptance of the sale or purchase assignment and for the receipt of sums left with the agent as a fiduciary deposit/down payment.
The following should always be stated:
– the duration of the assignment (generally three-six months);
– the period of validity of the proposal (period within which the seller’s acceptance must be given), which shouldn’t be more than fifteen days, with the exception of special cases which must be specified in the proposal;
– the existence of the sole right (exclusive agency) clause, if granted; – whether or not a tacit renewal is possible: this option must be provided for just one time, with the possibility of cancellation by means of registered letter;
– the existence of any suspension clauses such as loan applications, particular checks, amnesties, licenses to be obtained. In the case of a purchase by means of a loan application, it must be clearly indicated that the effectiveness of the proposal is conditional upon the disbursement of the loan and that it will not be valid if the client is not able to obtain it. All possible suspension clauses must always be specified so that, in this case, the proposal will have no effect until the suspensive condition has occurred;
– a detailed analysis should be given of any costs such as those outside of specifications, works for finishing the building and the outside areas, urbanization works, joint ownership rules, local property tax, waste disposal charges, etc.
If the client who formulates a purchase proposal gives the agent a cheque as a fiduciary deposit/advance payment/down payment, this should be made out to the owner of the property, and not to the real estate agent, and it should be nontransferable. In any event, these sums must never be cashed by the real estate agent, either as compensation for damages or in payment of the commission.
Obviously, the client must act properly and:
– Pay the real estate agent’s commission even if:
- the transaction is made directly by the client but with a person contacted through the real estate;
- the transaction is made directly by the client or through another real estate agent in the case in which the assignment contains a sole (exclusive) right clause.
– Always define all the details of the agreements, both those regarding the giving of the assignment to the agent, and those regarding the property purchase proposal. In particular, in the case of the accepting of the proposal, the client must always ask the real estate agent for written confirmation. It is a good idea to agree upon in writing the amount of the commission, the method of payment, and the services that are included and are not included in the commission.
– Provide all of the useful information and necessary documents so that the agent can work in a safe and transparent manner in regard to future buyers;
– In the case of giving an assignment to a real estate agent, whether exclusive or not exclusive, the client must:
a) Choose and respect the procedure with which the assignment is given to the agent:
the choice of an exclusive or sole right assignment puts restrictions on the client’s contract freedom, as it prohibits him or her from making the sale on their own or assigning the sale to another real estate agent, except by paying the penalties provided for, but it allows them to obtain a number of additional services that the client must indicate in writing. The alternative is a non-exclusive assignment, which provides for the obligation of the client to notify the agent promptly as to the sale of the property. In this case the agent shall not be required to provide all the services included in an exclusive assignment, such as the types of advertising, but the agent shall nonetheless be required to provide the services indicated in the contract, as well as those pertaining to the agent’s professional duty.