PAYMENT ISSUES WHEN PURCHASING A PROPERTY

Payment issues that might arise when buying a property in Italy

Foreigners deciding to purchase a property in Italy will have to check multiple aspects such as the existence of any outstanding debts on the property, as well as ensure that all the paper work is in order and pay particular attention to payment issues. When the parties, i.e. seller and buyer, have reached an agreement as to the timing and price, it is important that the buyer be aware of a very specific clause related to payment, specifically to the first instalment due on purchase confirmation: what is called the caparra. This is regulated by article 1385 of the Italian Civil Code and literally stands for the deposit due on confirmation. If the party that has paid the caparra does not then fulfil its contractual obligations then the other party, i.e. the seller, can withdraw from the contract and ask for an amount equal to double the caparra. Italian law in this specific case states that the party may choose between asking for the said sum or asking for termination of the contract and claiming damages. It should be noted, in fact, that the aim of the caparra is to turn it into compensation for the party that has not breached the contract. So in a property sale, the buyer, if she/he breaches the agreement, will lose the caparra and also be liable to pay twice the sum for dropping out of the agreement. On the other hand the seller will be able to opt between receiving the double amount as compensation or else asking for the termination of the agreement and compensation for damages. As established multiple times by the Italian High Court of Justice, as also in the order dated 16 April 2021 n. 10178, the two options are alternatives, therefore it will not be possible for the seller to claim for the double payment of the caparra and also ask for compensation for damages suffered.

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