After many months the real estate agency has forwarded us the preliminary contract draft for the house we are selling in Italy (we live in the UK).
The states that if the buyer doesn't obtain their mortgage by the proposed date of completion, the contract will be invalidated and the buyer entitled to the return of any money paid, even the small down payment.
While we assume that the buyer has spent the last few months setting up a mortgage deal and I imagine it wouldnt be a problem to obtain one (very senior medical professional), we were wondering if it is normal/reasonable to expect even the down payment to be returned in case they are refused a mortgage?
The contract would also be invalidated if the agibilita' is not granted 2 months before the proposed completion date.
While most of the bureaucracy to obtain the agibilita' has been completed, there are minor alterations that need to be made to the plumbing and electrics to get the required certifications. These alterations are expected to take less than a week of work at the property and about a month to get the actual certificate (we also had our own geometra confirm this time/work assessment)
It's been agreed that the buyer will carry out the works and while we are ‘paying' for this work in the form of a small discount to the price originally agreed, the buyer will actually pay the contractor and organise the work. Everyone we consulted advised it was better to do it that way round as this way the buyer has the responsibility and motivation for carrying out the works in the best possible way.
Payment schedule is immediate first payment of about 5%, by cheque; 15% in a couple of months to be paid to their notary; balance to be paid to notary on completion day.
It's understandable that they would be entitled to the return of the down payment in this second case because if they don't get the agibilita' they still will have forked out some funds (equivalent to about a third of the proposed initial down payment). But having to return the downpayment if they are refused the mortgage seems extreme?
Second query: for the first down payment can we ask for a bank transfer rather than a cheque – we only have a UK bank account so can't do anything with a euro cheque. And for payments 2 & 3 could notaio bank transfer to UK?
Many thanks
House sale - contract conditions
The way we worked our contract as buyer is that we make the down payment into an escrow account we had the notary set up (this did cost 2,000 Euros). If either the seller or buyer backs out for any reason, they must not only pay back the deposit but DOUBLE the deposit.
Our notary said we should make the deposit into the seller's account and the rest of the money for the final sale will go into escrow. He said it would save us money. However, we aren't that trusting. We requested that the deposit go into escrow as well, not into the seller's account. Just safer that way.
Not sure if this helps but good luck!
Yours is a very common problem. The laws and practise regarding property and those regarding fiscal matters are now hopelessly out of line.
Bear in mind that to get a mortgage in Italy the bank will do nothing until it has a registered copy of a preliminare (compromesso) and in some cases a certificate of agibilità. Only then will the wheels begin to slowly turn.
Nowadays it is normal for a contract to be declared null if the mortgage isnt granted, and the preliminary will say this. The agibilità is not yet obligatory for a sale if the property is old and hasnt had structural interventions in the last 20 years. In such cases, the buyer should pay for the agibilità if he needs it.
I also presume that the estate agent is going to want his commission even if the sale falls through. (They have the legal right to ask for it). On that basis I would tell the agent that you would be willing to sign if they waive their commission if there is no sale - and get it in writing. If they wont agree then dont agree to waive the return of the initial deposit at proposta, as otherwise you could end up out of pocket. The deposit at proposta is usually held by the agent until the caparra is paid at compromesso, (but is payable to you. There is no reason why the monies cant be sent to the UK but obviously this can only be done with full agreement between the parties. The notaio may or may not do this, its his choice - and you will pay for the notaio to keep the money in his escrow account. Obviously the choice of notary is the buyers so you have to wait and see whether its possible.
You sound very knowledgable on Italian law. So I have a question for you. We are buying a place in Italy. Our agent and notary suggested that we place our deposit into the seller's account. We trust our wonderful agent, but business is business and we said even though it will cost us more to place the deposit into escrow (which we have already set up), we want it in escrow. Is this a reasonable request to you? Didn't want to sound distrustful, but curious!
It depends what you mean by deposit. The caparra paid at the proposta should not be paid to the seller, the caparra at preliminare yes, but not before anything has been signed. Its easy enough to write a clause saying that the money will be paid (for example) within 3 days, and you just provide proof of the bank payemnt with the TRN (ex CRO) number. To me its not a good idea giving people money before they have signed anything - if they dont turn up to sign, you've just given someone a very nice present.
Thanks to both for your replies. Modicasa I'm grateful for your pointing out the need to clarify with agency whether they would expect their commission if the contract is declared null. I was so focused on the terms with the buyer that it hadnt even occurred to me that we could find ourselves in the nightmarish scenario of having to pay thousands in commission without a sale!
It's also helpful to know that the invalidation of the contract in the case of a mortgage being denied is normal. It just remains for us to clarify the agency's terms and also ask them to make sure the notaio would be willing to do a bank transfer to the UK.
Thanks again
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