Legal requirements for preliminary contracts in “Off plan” transactions
May 11th 2009, 9:14 am
#1
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Joined: May 2009
Posts: 17
Legal requirements for preliminary contracts in “Off plan” transactions
Dear all.
As I’ve had many positive reactions on my previous post about how to get out of a off-plan transaction, I decided to continue my contribution by translating another piece of relevant Italian legislation.
The legislative decree 122/2005 introduced very strict requirements for preliminary contracts concerning “off plan” transactions.
Following art.6 of the above mentioned legislative decree the preliminary contract should also contain:
• Full description of the parties.
• Identification details of the property, including the cadastral reference of the plot. A description of the property is required inclusive of those outbuildings for the exclusive use of the buyer, the object of the contract..
• Details relating to the building license or the request of the building license. The law explicitly requires the mention of any burden connected with the building license.
• Technical data relating to the building. The law requests a summary of the technical data in the preliminary contract. Such data will be described in detail in the attachment concerning technical specifications (capitolato). Such specifications cannot be modified without the agreement of both parties.
• Deadline for completion.
• Method of payment. The entire price should be declared, also specifying the amounts paid as a deposit. Payments should be executed by using bank transfers or other means that are traceable and that will leave a clear trail.
• Details of the bank guarantee. The bank guarantee should be delivered at the signing of the preliminary contract. Such a guarantee should be issued prior to or upon the signing of the preliminary contract.
• The presence of mortgages or any other type of burden. In the presence of a mortgage opened by the construction company covering an entire compound that shall be parcelled out amongst several buyers, the notary will not be entitled to sign the Deed of Sale until the parcelling out of the said mortgage to the individual buyers has been completed.
• The presence of the contractors together with proof of their identities.
The preliminary contract should also have the following attachments:
• Technical specifications of the property, detailing all the materials to be used in the construction, a list of agreed finishes and fitments.
• Copy of the Plan submitted to file the request for the building license
What are the consequences if the Preliminary contract lacks one of the mandatory elements set out in art. 6?
A preliminary contract not in compliance with the requirements of articles 6 could be affected by nullity on grounds of it contrasting with mandatory rules (public policy).
Since the above mentioned legal requirements are set in order to protect the interests of the buyer, the invalidity of the preliminary contract can be objected to only by the buyer.
I hope this is of value and brings trust to those who love Italy and consider it as a place to relax or to retire.
I wish you all a nice day in Spring from Southern Italy.
Avv. Giandomenico De Tullio
(SNIP)
As I’ve had many positive reactions on my previous post about how to get out of a off-plan transaction, I decided to continue my contribution by translating another piece of relevant Italian legislation.
The legislative decree 122/2005 introduced very strict requirements for preliminary contracts concerning “off plan” transactions.
Following art.6 of the above mentioned legislative decree the preliminary contract should also contain:
• Full description of the parties.
• Identification details of the property, including the cadastral reference of the plot. A description of the property is required inclusive of those outbuildings for the exclusive use of the buyer, the object of the contract..
• Details relating to the building license or the request of the building license. The law explicitly requires the mention of any burden connected with the building license.
• Technical data relating to the building. The law requests a summary of the technical data in the preliminary contract. Such data will be described in detail in the attachment concerning technical specifications (capitolato). Such specifications cannot be modified without the agreement of both parties.
• Deadline for completion.
• Method of payment. The entire price should be declared, also specifying the amounts paid as a deposit. Payments should be executed by using bank transfers or other means that are traceable and that will leave a clear trail.
• Details of the bank guarantee. The bank guarantee should be delivered at the signing of the preliminary contract. Such a guarantee should be issued prior to or upon the signing of the preliminary contract.
• The presence of mortgages or any other type of burden. In the presence of a mortgage opened by the construction company covering an entire compound that shall be parcelled out amongst several buyers, the notary will not be entitled to sign the Deed of Sale until the parcelling out of the said mortgage to the individual buyers has been completed.
• The presence of the contractors together with proof of their identities.
The preliminary contract should also have the following attachments:
• Technical specifications of the property, detailing all the materials to be used in the construction, a list of agreed finishes and fitments.
• Copy of the Plan submitted to file the request for the building license
What are the consequences if the Preliminary contract lacks one of the mandatory elements set out in art. 6?
A preliminary contract not in compliance with the requirements of articles 6 could be affected by nullity on grounds of it contrasting with mandatory rules (public policy).
Since the above mentioned legal requirements are set in order to protect the interests of the buyer, the invalidity of the preliminary contract can be objected to only by the buyer.
I hope this is of value and brings trust to those who love Italy and consider it as a place to relax or to retire.
I wish you all a nice day in Spring from Southern Italy.
Avv. Giandomenico De Tullio
(SNIP)
Last edited by Mitzyboy; May 18th 2009 at 11:10 pm. Reason: Commercial URL removed
May 18th 2009, 9:55 pm
#2
Just Joined
Joined: May 2009
Posts: 9
Re: Legal requirements for preliminary contracts in “Off plan” transactions
Can you tell me if this relates to contracts signed afer this date
OR
to contracts signed if the builder has applied for building permission afer this date?
eg
building permission was granted before 122/2005 was introduced
BUT
the buyer signed the contract after.
OR
to contracts signed if the builder has applied for building permission afer this date?
eg
building permission was granted before 122/2005 was introduced
BUT
the buyer signed the contract after.
Last edited by Paul K; May 18th 2009 at 10:28 pm.
May 19th 2009, 1:58 pm
#3
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Joined: May 2009
Posts: 17
Re: Legal requirements for preliminary contracts in “Off plan” transactions
I would like to add that particular care during the due diligence concerning off plan transactions should be given to the examination of bank guarantees.
The bank guarantee is an essential legal element of the preliminary contract provided by the law in order to protect the deposit of the investor in case of bankruptcy of the vendor.
An attentive examination of such bank guarantee and a search of the company issueing it will prevent serious troubles for the investor should the builder face financial troubles.
The bank guarantee is an essential legal element of the preliminary contract provided by the law in order to protect the deposit of the investor in case of bankruptcy of the vendor.
An attentive examination of such bank guarantee and a search of the company issueing it will prevent serious troubles for the investor should the builder face financial troubles.
