The Cortona area of Italy is poised for strong appreciation in the coming years. Cortona is popular with foreign visitors and is known for its acclaimed Tuscan Sun Festival of classical music held each August. This splendid medieval city is topped by the magnificent Church of S. Maria delle Grazie al Calcinaio. Cortona and the Manzano area are known historically and today as one of the most important agricultural regions in the Val di Chiana. Property values have risen dramatically over the past several years despite media reports of worldwide declines that have been disseminated.
Cortona and its surrounding areas offer a plentiful supply of real property. The residences at Borgo Syrah provide an excellent opportunity for buyers who want to vacation, retire or live part- or full-time in Tuscany or make a meaningful investment with the expectation of high-level returns. The acquisition of a Tuscan villa or private apartment at Borgo Syrah secures all property owners shared ownership of one of the most renowned vineyards in all of Italy – Tenimenti d’ Alessandro, a winery producing the Il Bosco and Magliara Syrahs, honored with rave reviews from wine enthusiasts world-wide and rated 95 and 98, respectively, by Wine Spectator magazine. This combination not only provides the above-cited elements, but adds an unusual element not found in a standard type purchase and/or acquisition—excitement!
There are certain aspects to the process of buying real property in Italy that buyers and their brokers need to know. At first, the task seems daunting. But it isn’t. By working with a Certified International Property Specialist (CIPS) here and/or abroad, out-bound buyers will experience a manageable and, yes, enjoyable, real estate transaction in Italy.
The first step in purchasing anything in Italy is to think and act Italian. This means obtaining a “Codice Fiscale”—an identification code identifying you by name, birthdate and place of birth (bring your birth certificate)—and opening an Italian bank account. Think of a “Codice Fiscale” as an Italian social security card. It will not get you retirement benefits in Italy, but legitimizes your position in the country as a person who travels, lives and conducts business in Italy. Foreign buyers need a bank account in Italy not only to transfer funds for the completion of the sale (final payment is in Italian bank drafts), it also allows them to activate utility services and have accounts automatically paid.
An offer to purchase in Italy is often via handshake agreement. However, it is best to send a written formal offer to purchase (“lettera de intenti” or “proposta de acquisto”) to the seller and/or his agent. If the seller agrees to the offer letter, signs and dates it, he promises not to sell the property to anyone but the buyer until a certain date.
In addition to being represented by a CIPS designee like myself, it is important that foreign buyers of property in Italy retain the services of an attorney who practices real estate law in the area of purchase. In Cortona, the attorney will run a title search by personally going to the Urban and Land Property Registry office (“Catasto”) to ensure the property is registered to the seller and to examine the title for liens or other encumbrances. A meeting with the notary will confirm or dispute clear title to the property. Email and texts do not replace direct communication in this wonderful country.
Purchasers at Borgo Syrah need not be concerned about obtaining marketable title to their apartment, villa or residence, as I have worked with the owners of this fine development to assure unobstructed and clear title. It is always prudent, however, to have an independent inspection of title performed by your own Italian “legale.” This important and recommended procedure does not add significantly to the cost of the purchase.
The “Compromesso,” or preliminary agreement of sale, is separate from the “lettera de intenti” and should be agreed upon and signed as soon as possible after assurance of clear and marketable title. It is not possible to keep a property off the market in Italy for a long period of time without a deposit, and 30% (or more) of purchase price is typical in these transactions. There is an important article of the Italian law called “Caparra Confirmatoria” also known as Article 1385 of the “Codice Civile” which regulates the deposit payment. If the seller withdraws or fails to complete the transaction, the buyer is entitled to a refund of twice the amount of the deposit; if the buyer withdraws or otherwise fails to complete the transaction, the buyer will forfeit the “caparra confirmatoria” to the seller. I am skilled at coordinating this phase of the transaction and work with “legale, beni immobiliare” (Italian real estate agents) and others to avoid this potential pitfall.
Now it is time for a date for the final deed (“Rogito Notarile”) to be arranged among the parties. Usually this will take place between one to six months from the date of the “compresso,” although buyers at Borgo Syrah can decrease this time substantially. The “Atto di Compraventi” is a public contract which after having been read by the notary, is signed by both the seller and the buyer in the presence of the notary (another trip to Italy) and authenticates the document with his signature and his stamp. At this time, the purchaser takes full title and possession of the property and the remainder of the purchase price is paid by bank draft.
At time of final purchase deed, the buyer pays the notary’s fee (approximately 2.4% of the property’s declared value), as well as the property’s purchase tax, called “Imposa di Registro.”
If a first-time buyer to Italy applies for residency within 18 months from the date of closing and completion of the sale, there is the strong likelihood that the foreign buyer will pay 3% of the declared value of the property instead of the customary 10% of value. Does establishing an Italian bank account sound more attractive now? It is important for the foreign buyer of real estate in Italy to instruct the notary to note on the deed that the buyer has requested the reduction. Failing to do so at the time of “Rogito Notarile” may jeopardize the buyer’s ability to exercise this right.
Please note that some commissions in Borgo Syrah transactions are paid by the sellers. This is in contrast to the common practice for buyers of Italian real property to assume the cost of all commissions paid to agencies. Foreign buyers need to establish with their representative agents what (if any) commission the buyer brokerage is to receive from the buyer prior to making an initial offer to purchase property in Italy.
Within a period of six to eight weeks, the notary is responsible for registering the deed at the “conservatoria dei registry immobiliari.” The title now becomes effective at the Land and Urban Property Registry and the notary will be able to provide a copy of the title deed (ask for this service at time of “Rogito Notarile”).
A note on the declared value and property taxes in Italy and Borgo Syrah. Every property in Italy has what is called a “Rendita Catastale” which is a value the property is identified with at the Property or Land Registry. It does not correspond at all to the actual price of the property and is almost always lower.
The concept of living in Italy and owning or investing in property there, despite the rising Euro against the U.S. dollar, is more attainable now than at any time in the recent past. Prices in Tuscany and elsewhere in Italy (and throughout much of Europe) have adjusted to meet current global economic reality. The inventory volume of advantaged real property in Italy and other parts of Western Europe makes this part of the world a buyer’s market. The time for your clients (and yourself) to act is now. With the present advent of a worldwide economic globalization, your clients (and yourself) must become more innovative in positioning yourselves in advantageous hedge positions where earned USD can deliver greater value returns on a going forward basis than the more traditional type of properties that you are used to dealing in.
“Vivere una vita buona e sana in Toscana. Ore e il momento di comprare. Ottimo investimento. La dolce vita!”
Linda Harrington, PhD, REALTOR®, GRI, Green, e-PRO, CIPS, TRC, ICREA
Principal Broker – Nsight Realty, LLC