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“Compromesso”: A Fundamental Document When Buying a House in Italy.

A Fundamental Document When Buying a House in Italy

1. What is the “compromesso”?
In Italian, the term “compromesso” is used to refer to the preliminary sale agreement concerning real estate.
It is a contract in which the parties agree to finalize a future sale—they commit to signing it at a later date. This contract creates an obligation for the parties to give their consent at the time of the future sale.
However, the transfer of ownership and payment of the price only occur with the signing of the final contract.

2. Why is the “compromesso” done?

In practice, the preliminary sale agreement is common for two reasons:

  • It allows the parties to bind each other for the future, ensuring that neither can back out of signing the final contract.
  • It gives more time to complete the necessary bureaucratic steps for the sale (for example, proceeding with the mortgage application).

3. What must the “compromesso” contain?

Firstly, it is important that the “compromesso” has the same form as the final contract, namely, a written form or a private agreement authenticated by a notary.. Therefore, it is not valid if made orally. It must also include the consent of the parties, the exact description of the property being sold (address, cadastral data, etc.), and the price.

Keep in mind that if the property is to be built or is under construction, the preliminary agreement must be made by a notary.

For example, a deadline for signing the final contract and the deposit is usually specified. Often, the seller requires the buyer to pay a sum of money to confirm the seriousness of the commitment (known as a down payment or earnest money). If everything proceeds smoothly, the deposit is returned or applied to the payment of the final contract price. However, if one of the parties fails to fulfill the obligations outlined in the preliminary agreement, the other party may withdraw from the contract, retaining the deposit received or demanding double the amount paid.

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The deposit can also be provided as a fee for the option to withdraw from the contract (known as a penal deposit). In this case, once paid, the party may choose to fulfill the obligations or withdraw from the contract: if they opt to withdraw, they must forfeit the deposit paid or return double the amount.

4. Does the preliminary agreement need to be registered?

Yes, the preliminary purchase agreement must be registered. Unlike rental agreements, the preliminary agreement remains valid and effective even if not registered, but only from a civil law perspective.

From a fiscal perspective, registration is mandatory, and failure to register results in penalties for the parties involved.

Registration must be done by the parties, the notary (if the preliminary agreement is in the form of a public deed or an authenticated private agreement), or the real estate agent who facilitated the agreement between the parties.

The deadlines for registration are:

  • 20 days if the agreement was privately made between the parties;
  • 30 days if it was drawn up by a notary;
  • 60 days if it was signed abroad but concerns a property in Italy.

Registration has associated costs, including:

  • a fixed registration fee of 200 euros;
  • a stamp duty (16 euros for every 4 pages of the deed or every 100 lines, or 155 euros if the deed is notarized).

If the preliminary agreement includes the payment of sums as a deposit or advance, an additional proportional registration fee applies:

  • 0.50% of the amounts paid as a confirmatory deposit;
  • 3% of the amounts paid as an advance on the purchase price if the advance is not subject to VAT. If it is subject to VAT, a fixed registration fee applies.
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5. Does the compromesso need to be recorded?

Preliminary agreements for contracts that transfer ownership of real estate must be recorded if they are made as a public deed or a private agreement with notarized or judicially verified signatures. Although not mandatory in all cases, recording offers significant advantages, especially for the prospective buyer, by rendering any subsequent transactions involving the property ineffective against them (e.g., selling the same property to another party).

For instance, if after the preliminary agreement is signed, the seller agrees to transfer the same property to another party, the recording by the prospective buyer, if done first, can be legally upheld against third parties, protecting their future purchase. Another advantage is that recording the final contract (or a court ruling in place of an unfinalized contract) has a “retroactive effect” (Article 2645-bis, second paragraph of the Italian Civil Code), making the purchase date back to the recording date of the preliminary agreement (or the judicial claim under Article 2932 of the Italian Civil Code).

Additionally, recording the preliminary agreement protects the buyer in case of the seller’s non-performance, granting priority to any claims arising from such non-performance over the property subject to the preliminary agreement.

However, an important aspect to consider is that the effects of recording cease and are deemed never to have been produced if the final contract, or another act executing the preliminary agreement, or a claim under Article 2932 of the Italian Civil Code, is not recorded within one year from the agreed date for the final contract or within three years from the recording date.

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6. How much does it cost to stipulate a “compromesso”?

The cost of stipulating a “compromesso” varies depending on the formal structure chosen by the parties. If they opt for an unauthenticated private agreement, the only costs are those of registering the agreement (see section 4.1). If they choose to have the contract notarized, in addition to the registration costs, there will also be the notary’s fee (which varies based on the value of the contract) and the cost of recording it at the Real Estate Registry Office (including a fixed registration fee of 200 euros and fixed recording fees of 35 euros).

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