• (Non-binding) offer letter

   

  Parties usually negotiate and sign a (non-binding) offer letter (lettera di intenti) or heads of terms for the direct or indirect transfer of real estate property, which usually contains the purchase price, the tax treatment of the sale, certain terms and conditions of the sale, the conditions precedent to be fulfilled (if any) and the timing of the transaction, including the timing necessary for the purchaser to complete its due diligence, and an exclusivity provision in favor of the buyer for the duration of the due diligence.

   

• Due diligence report

   

  Once the offer letter or heads of terms is signed, the buyer will usually carry out, through its legal, notarial and technical advisers, due diligence with respect to the property and/or the company that is in the process of being sold. The real estate legal due diligence is mainly aimed at ascertaining the ownership right, presence or absence of encumbrances as well as constraints or non-compliance or third parties' rights (such as statutory or contractual pre-emption rights), which may impair the use or transferability of the asset.

   

• (Preliminary) sale and purchase agreement (possibly subject to conditions precedent)

   

  After completion of due diligence, a preliminary (binding) sale and purchase agreement is usually signed between the promissory seller and the promissory buyer. The sale and purchase agreement, which may subordinate the execution of the final sale and purchase deed to the fulfillment of certain conditions, will contain the main legal and commercial terms and conditions for the transaction, including description of the real property, the purchase price, the tax treatment of the sale, payment of a deposit (if any) and representations and warranties granted by the seller. Preliminary sale and purchase agreements are executed before an Italian notary public to allow the registration with real estate registries and, consequently, to be enforceable by third parties.

   

• Final sale and purchase agreement

   

  Final sale and purchase agreement, which is executed by the parties before an Italian notary public (usually chosen by the buyer) to allow the registration with a real estate registry and, consequently, to be enforceable by third parties.

  Depending on the nature of the transferred real property, certain documents may be legally required as attachments to the sale and purchase agreement (such as the CDU and the Energy Performance Certificate (attestato di prestazione energetica)).

The Italian Civil Code sets out the following warranties made by the seller, unless waived by the buyer in the sale and purchase agreement:

• Warranties for absence of burdens or any third parties' rights
• Warranties for defects
• Warranties for eviction (which can be waived with some limitations)

Furthermore, special laws provide certain mandatory warranties that the seller must make in the agreement for the sale and purchase of real property (such as the cadastral compliance of the real property, and the details on the building titles).

In addition to the above, further seller's warranties are usually agreed upon in the agreement based on the outcome of the due diligence.

Generally, a sale is legally binding between the seller and the buyer once a written agreement setting out the main terms of the sale transaction (such as the subject matter and the purchase price) becomes effective.

A preliminary sale and purchase agreement does not cause the immediate transfer of ownership over the property, but only binds the parties to execute a final sale and purchase agreement for the transfer of the property at a later date, subject to the occurrence of the conditions precedent (if any).

However, all documents transferring ownership of real property must be recorded with the real estate registries for enforceability by third parties.

Title over real properties is transferred upon execution of a valid final sale and purchase agreement between the lawful title holder and the purchaser, except in those few cases in which the registration with the real estate registries is a requirement of validity of the transfer.

Ownership right can also be acquired by adverse possession (usucapione) (i.e., the uninterrupted and unchallenged use of the real property by someone who does not actually own the title), if certain legal conditions are met. However, adverse possession is contentious and difficult to prove.

The following costs are usually borne by the buyer:

• Buyer's agent fee (if any)
• Buyer's advisers' costs (such as legal, technical costs)
• Notarial costs
• Applicable taxes

The following costs are usually borne by the seller:

• Seller's agent fee (if any)
• Seller's advisers' costs (such as legal, technical costs)