Buying a property in Italy and paying the deposit and price securely, how does it work?
Nowadays, after the 2017 Reform Act 124, a deposit or price payment mechanism, well-known in France and the UK, is increasingly in vogue, providing additional security for the parties and placing the notary and title registry at the centre of the matter. Let us see why and how it works.
It often happens that the buyer does not want to expose himself in giving sums as a deposit in the hands of the seller before being "sure" that the deal will go through.
In fact, the practice in Italy provides for the mechanism of the Carrara confirmatoria, which entails the payment of a sum - usually between 5 and 10 percent in the seller's hands, which acts as a guarantee of the sale, with the "penalty" of double repayment by the seller in case of default by the latter.
The down payments are divided into two different figures: the deposit and the penalty deposit. The first is intended to guarantee the precise fulfilment of the agreement, while the second is only the payment for any unilateral withdrawal.
A valid mechanisms, but which sometimes clashes with the practice of confusing the deposit as a down payment and thus as a sum not confirmatory but advanced on the entire price, or with the security deposit mechanism, often used for rent or lease and with the purpose of compensating in advance for any damage.
It should be noticed, in fact, that while the security deposit is subject to the double repayment mechanism, i.e., the seller who received it is obliged to return it in double amount if he or she defaults, the penitential deposit is the consideration for the right of withdrawal, meaning that above mentioned sum will be lost if the person who paid it, exercises withdrawal by a certain date.
The sore point of this mechanism is that the sums, even if small in amount, are already in the possession and availability of the seller.
We aren't talking about re-Payment guarantees, such as bank or insurance guarantees.
They are financial commitments that require the debtor to make a repayment based on the terms outlined in the original debt agreement. Sometimes, the payment guarantee is backed with some form of collateral, such as property.
In this article we are talking about a third subject such as Notary that help the parties to perform the contract so that both, the promisor, and the promisee have fulfilled their respective obligations, which the contract placed upon them.
So after this premise, here is the mechanism proposed by the 2017 Law reform.
Therefore, if you want to avoid materially delivering the deposit into the hands of the seller and you want, therefore, a greater guarantee, also, with the help of professionals, it is possible to insert in the preliminary sales contract, drawn up by a lawyer or notary, a mechanism providing for a fiduciary deposit.
The Fiduciary Deposit is therefore a deposit of the down payment, or price, not to the viewer but to the Notary, who will register these amounts in a special register, called the Sums and Values Register.
This payment in the hands of the Notary will have the same value as the payment at the seller, and you can have:
- payment of sums and values, for example sums or checks as a down payment or deposit.
- payment of the entire price to the Notary.
In the first case, the deposit will be inserted in a specific clause of the preliminary contract. In the second case, however, the Notary will insert this mechanism in the deed itself and release the sums deposited in favor of the seller once the deed is completed.
To proceed with these formalities, however, a specific request will be necessary, and a special mention pursuant to the new art. 63 of law 147 2013, post reform 2017, in relation to the register of sums and values provided for by law 22 January 1934, n. 64;
In the case of a transaction involving a bank transfer, even in the case of a foreign sale, it will be possible to proceed only if a specific preliminary sale has been drawn up, and registered, as being sums destined to the current account of the notary, but separated from it is subject to the controls of the Revenue Agency, and this in order to avoid evasive activities. Unlike the case of the use of both a bank check and a cashier's check, in this case the "good value" will be noted in the register by the notary and should not require any further registration.
You should read: "Law Guarantee"