The usual forms of leases of real estate assets are the following:
- Residential leases, which include the following subcategories:
- Ordinary leases (with a minimum duration of four years, renewable for a further four years) mainly regulated by Law No. 431/1998, as amended
- So-called agreed upon agreement (contratto convenzionato) (with a minimum duration of three years, renewable for a further two years)
- Temporary (transitorio) agreement (with a maximum duration of eighteen months)
- Non-residential leases mainly regulated by Law No. 392/1978, as amended, which include the following sub-categories:
- "Standard regime" leases
- Temporary leases
- So-called maxi lease (providing for an annual rent higher than EUR 250,000 and not involving "premises qualified as having a historical interest pursuant to a regional or municipality order" (locali qualificati di interesse storico a seguito di provvedimento regionale o comunale))
Most of the legal provisions provided by special laws applicable to leases cannot be derogated by the parties in a way detrimental to the tenant. The above does not apply to "maxi" leases where, instead, the parties are generally free to agree upon the lease terms with no restrictions.
The maximum term for leases is 30 years. According to prevailing case law, a 30-year limit does not apply where it is reached through renewal of the lease.
Leases longer than 30 days must be registered with the tax authorities and leases longer than nine years (renewals excluded) must also be executed before a notary public for the purpose of being registered with the real estate registries and, thus, become enforceable by third parties for the period exceeding the nine-year term.
Usual lease terms vary depending on the type of lease and type of asset.
The following applies to non-residential leases:
- "Standard regime" leases have a minimum duration of six years renewable for a further six years (for hotels or theaters, nine years renewable for further nine years).
- Temporary leases can have a duration shorter than the minimum provided for "standard regime" leases if the activity carried out is temporary by nature.
- "Maxi" leases can have a duration shorter than the minimum provided for (standard) leases if so agreed upon by the parties.
For parties' rights to prevent the automatic renewal of the lease, please refer to our response under "On what grounds may a lease be terminated?".
No, unless an extension has been granted in favor of the tenant in the lease.
As a matter of general principle, either party may terminate the lease in case of a material breach by the other party. Furthermore, either party may terminate the lease by serving a termination notice on the other party when such termination right is granted by operation of law, or if expressly agreed upon by the parties in the lease in compliance with law.
Generally, for non-residential leases, at the end of the first lease period and any further renewal periods, either party has the right to prevent the renewal of the lease by serving a written termination notice on the other party by the requested deadline. Some restrictions apply to the landlord's right to prevent renewal of the lease at the end of the first lease period.
In addition, if agreed in the lease, the tenant is allowed to terminate the lease "at will" and at any time by serving at least six months' notice on the landlord. If the lease does not include such clause, by operation of law, the tenant's right to terminate can be exercised only in case of "serious grounds."
The definition of "serious grounds" is not expressly provided for by the law; however, case law has stated that "serious grounds" can be identified as events beyond the tenant's control, unforeseeable by the tenant at the time of execution of the lease agreement and occurred after the establishment of the lease relationship, which resulted the lease becoming excessively burdensome for the tenant.
Similar renewal or refusal of renewal schemes apply to residential leases.
Rent is payable in local currency unless otherwise agreed upon by the parties in the lease agreement.
However, arrangements for payment of rent in foreign currencies are very unusual and may create issues with respect to the calculation of the applicable registration tax to be paid annually.
For non-residential leases, rent is usually paid in advance on a quarterly or monthly basis.
No rent review applies unless the parties to the lease have expressly provided so in the lease agreement. Most leases provide for annual indexation.
For non-residential leases, rent can be subject to a maximum annual increase equal to 75% of the annual variations of the consumer price index as assessed by the Italian National Institute of Statistics. This limitation does not apply to (i) "maxi" leases (as described in our response to "What are the usual forms of leases?") and (ii) leases with a duration (renewals excluded) exceeding the minimum provided by law.
Case law ruled that the parties to a non-residential lease may agree to a rent determination on an increasing basis over time unless the parties only intended to neutralize the effects of currency devaluation.
Unless derogated by the parties (with some limitations), basic obligations of landlords and tenants to leases of properties are regulated by the relevant provisions of the Italian Civil Code.
The following are usually required from landlords:
- Deliver the leased property in good maintenance status
- Keep the leased property in order to preserve the agreed (contractual) use
- Grant "quiet enjoyment" during the lease term from third parties' acts, faults or challenges of rights over the leased property
- Repair and maintain the structure of the rented premises (mandatorily)
The following are usually the basic obligations of tenants:
- Accept the delivery of the leased property and observe due diligence in managing the same (diligenza del buon padre di famiglia)
- Bear the ordinary maintenance of the leased premises
- Pay rent and service charges in accordance with the agreed terms
Unless otherwise agreed upon by the parties in the lease, the tenant may not assign the lease without the prior consent of the landlord. However, the tenant may freely sublet the leased premises.
Special rules apply to non-residential leases, unless a more favorable regime is agreed, where the tenant may assign the lease or sublease the leased premises without the prior consent of the landlord if the assignment or sublease is made within the context of a transfer or lease of the going concern related to the leased premises. However, the landlord may oppose the assignment or sublease for "serious reasons" (mostly related to financial capabilities of the tenant-assignee/sublessee) within 30 days from receipt of the notice sent by the tenant. However, the assignor-tenant will remain jointly liable with the assignee-tenant for all the lease obligations toward the landlord unless expressly released by the landlord.
Unless otherwise agreed upon by the parties, destruction of the leased premises is regulated by the relevant provisions of the Italian Civil Code.
Pursuant to the provisions and principles, where during the term of the lease, leased premises are wholly destroyed, the lease is automatically terminated by operation of law. The tenant will be held responsible if the premises are damaged or destroyed unless the tenant proves that destruction is not attributable to it.
The owner/landlord usually insures the owned premises. For non-residential leases, the tenant is usually responsible for insuring its belongings within the leased premises and the leased premises against damage caused in relation to the activity carried out within the premises.
Yes, if the lease has a fixed date (data certa) prior to the sale and unless the parties have otherwise provided for in the lease. Leases with a duration longer than nine years (renewals excluded) are also recorded with the real estate registries prior to the sale for the lease to continue with the new owner for the period exceeding the first nine years.
Leases are deemed to have a fixed date (data certa) upon registration of the lease with the tax authorities, execution of the lease before a notary public or exchange by registered mail or email.