PROPERTY AUCTION IN ITALY
Property Auctions represent a fast growing trend on the Italian real estate market.
Due to the last decade financial recession(2007-2016) and the latest Reform approved by the Government (2015), property investors discovered how interesting and convenient could be this alternative way to buy real estate in Italy.
There are two types of property auction in Italy: Vendita con incanto and Vendita senza incanto. In both types of auctions a reserve / minimum sale price will have been set prior to the auction.
A vendita con incanto auction happens publicly and openly. The property is sold to the highest bidder on the condition that the bid is at or higher than the reserve price.
Prior to a vendita senza incanto auction, notice will be given for participants’ bids to be submitted by a certain date – in sealed envelopes. Sealed bids cannot be under the reserve price in order to assign a property. Even if there is only one sealed bid, it may be sufficient to acquire the asset.
Vendita senza incanto is certainly the most spread and convincing option to be chosen when it comes to buy property through the Court.
Generally, in Italy property is sold at auction for two reasons:
A) Asta giudiziaria – it is an auction ordered by the courts. The property will have been seized or sequestered by the Italian State perhaps because the owner has been involved in a criminal prosecution or because the State has decided to raise funds to pay off the owner’s outstanding taxes, debts and or mortgage payments, or it could even be that the courts have ordered the auction to resolve an inheritance dispute.
B) Asta fallimentare – it happens because the owner has been declared bankrupt and the property is being sold to pay off creditors.
Anyone can participate the auction of a seized property, except the owner.
If you are considering buying an Italian property at auction, you need to take even greater care than you would when buying property through conventional channels.
The most important peculiarity of this kind of sale is the total absence of the eviction: due to the fact the seller is the Court, the sale will not be provided with the ordinary Rogito guarantee; in other words if the property documentation does not match with the legalities, the buyer (new owner) – if possible – will have the possibility to legalise at his own expenses the abuse within 120 days from the transfer.
Participation in an Italian property auction involves registering to participate, which means amongst other things that you must have an Italian tax code, codice fiscale, and you need to obtain a receipt proving that you have paid a 10% deposit on the estimated value, or starting bid price of the property that interests you. You can also elect a third party (your Lawyer) to bid for the property on your behalf. This requires giving your nominated party a Limited Power of Attorney.
The Title of ownership will be the Decree of Transfer, issued by the competent Court and filed/registered in the Revenue Agency and Land Registry.
Ordinary real estate tax criteria apply to this kind of transaction.
In conclusion then, I would always recommend to seek independent professional advice before you decide participating in an Italian property auction. There are many potential pitfalls and legal ramifications to consider. It can be done safely, but is definitely not an ordinary or standard procedure.