Preliminary Contract in Italy [not-so-secret mini-guide]

Let’s start with some basic facts about buying property in Italy and an eye-opening conclusion no one ever tells you:

• If the seller accepts your purchase offer, it becomes a preliminary contract.
• In Italy, the preliminary contract is legally binding for both parties (buyer and seller), and if either wants to back out, penalties will apply.
• Without transcribing the preliminary contract, a less-than-honest seller could theoretically resell the property, taking a second deposit.

It's crucial to choose your payments and steps in the buying process wisely. Fixing mistakes later could be both costly and time-consuming, so it's best to proceed with caution and ensure you're making informed decisions.

Now that I’ve terrified you a bit, let me also reassure you that buying property in Italy can actually be a breeze. Legal disputes in real estate here are rare compared to countries like the USA. With my 15 years of experience working with international clients, I can guide you through the process with confidence.

Curious? “Andiamo”!

What is a Preliminary contract (Compromesso)?

Before we dive into textbook definitions, here’s a quick overview of what buying a home in Italy generally looks like:

• Purchase offer: binding only for the buyer.
• Preliminary contract: binding for both buyer and seller.
• Final deed of sale.

Why do I say "generally"? Because technically, you can skip one or even all these steps and go directly to the final sale contract. It all depends on the case and the agreements between the parties.

The Purchase Offer

In most cases, I recommend presenting this offer using a specific form, along with a deposit payment. Associations like FIAIP and FIMAA provide pre-printed forms to simplify the process (contact me if you'd like a copy!).

Pro tip: Often, purchase offers include a mechanism that automatically turns the offer into a preliminary contract upon the seller’s acceptance, according to Article 1326 of the Civil Code^[1].

The Preliminary Contract?

In Italy, the terms "Compromesso" and "Preliminary Contract" refer to the same legally binding document that secures the real estate transaction before the final deed.

Legal basis for preliminary contracts under Italian civil law

Articles 1350^[2] and 1351^[3] of the Italian Civil Code stipulate that contracts transferring ownership of real estate, including preliminary contracts, must be in written form—either as a public deed (with a notary) or a private agreement (without a notary)—otherwise, they are considered null and void. Under Italian law, only written preliminary contracts are legally binding. Verbal agreements hold no legal value.

Moreover, if you are buying a property that is under construction or not yet built, Article 6 of Legislative Decree No. 122/2005 requires the preliminary contract to be formalized in the presence of a notary.

Buying property in Italy? Avoid costly mistakes! Get expert guidance from a real estate specialist who’s helped international buyers for 15+ years.

Essential components of a Preliminary contract

For the preliminary contract to be valid and effective, it should include:

• Buyer and seller information (including Italian tax code “Codice fiscale”).
• Property details include the cadastral data, address, description, and any accessories or dependencies (e.g., garage, storage).
• Price, payment methods, and schedules for deposits or down payments.
• Date and place for the final contract signing.

Additional (but handy) clauses might include:

• Right of Substitution (“Riserva di nomina”): This nifty clause (not always included, but highly useful) lets the buyer name someone else to step in and buy the property before the final sale. So, if you suddenly want your favorite cousin to take over the purchase, no problem! Just make sure it’s before the closing date.
• Real Estate Agent Info: I’d highly recommend having the agent’s REA registration and Chamber of Commerce details noted in the contract. Why? Because if your agent isn’t registered, they lose the right to claim their commission! Want to check? Here’s how to verify an agent’s registration.
• Property Origin (“Provenienza dell’immobile”): Knowing how the seller acquired the property—purchase, inheritance, or gift—can be more important than you’d think. It affects the risk of inheritance claims by other heirs (yes, drama!) and even impacts mortgage eligibility for the buyer.
• Deposit and Penalties (“Caparra e penali”): Typically, the preliminary contract includes a deposit (“confirmatory” or “forfeitable” or a price advance) as a commitment from both parties to stick to the terms. If one side backs out, penalties or refunds apply. Think of it as a security blanket against cold feet.
• Automatic Termination Clause (“Clausola risolutiva espressa”): This clause clearly spells out the severe conditions under which the contract can end without a judge getting involved. For instance, the contract terminates if the city municipality doesn’t approve a pending permit by a specified date. Simple, but lifesaving.
• Penalty Clause (“Clausola penale”): Article 1382 of the Civil Code^[4] lets you set an exact amount payable if one party fails to meet a commitment or is late—think €100 per day for each day the property isn’t handed over on time. That adds up fast!
• Suspensive Condition (“Condizione sospensiva”): If a specific condition is met, the contract is binding; if not, the contract simply dissolves. Typically, a buyer guarantees to buy the property only if the bank approves their mortgage by a specific date.
• Other Handy Elements: Occupancy status (vacant or rented), records of encumbrances, energy certifications, and system compliance certificates all fall into this category.

Types of Deposits in Italy

Difference Between Confirmatory Deposit, Penitential Deposit, and Advance Payment

A deposit is an upfront payment, usually between 10-30% of the property's final price, serving as security for both the seller and the buyer. Here’s how it works: if the buyer backs out, the seller keeps the deposit. But if the seller walks away, they must return double the deposit to the buyer. Not bad, right?

Now, let’s get specific:

• Confirmatory Deposit: This option provides even more protection. The “innocent” party (the one not at fault) can demand additional compensation for damages and, in certain cases, even request a Court order to enforce the sale. Think of it as a robust safety net for serious buyers and sellers.
• Penitential Deposit: This type is a bit simpler—no extra claims or damages are possible beyond the deposit itself. It’s a straightforward “no hard feelings” kind of deposit.
• Advance Payment: Unlike a deposit, an advance payment is simply a portion of the upfront price. If the deal doesn’t go through, the seller has to return it (unless they decide to seek damages for the failed deal, but that’s another story).

Each type offers different levels of commitment and security, so choosing the right one depends on how much protection you want (or need) in the transaction.

Notary and registration requirements

Real estate agents and private citizens can’t register the preliminary contract themselves in “Conservatoria”, but they must file it with the Revenue Agency (“Agenzia delle Entrate”) within 30 days of acceptance. This involves a fixed tax of €200, €16 in stamp duties, and either 0.5% of the deposit or 3% in case of an advance payment. Most of these registration costs will be deducted from the taxes owed at the final sale.

How to handle the deposit

After all those definitions, legal articles, and theories, we finally get to something practical: money. As we've said, the deposit is your insurance against second thoughts from the other side. But how much is right: 10%, 30%, or nothing at all?

While every situation is unique, here are some general guidelines for structuring your payments:

• Purchase Offer: Commit to making a bank transfer as a deposit within three days of the seller's acceptance. This payment should go directly to the seller (and no one else) and can be a modest amount—say, €10,000 should do the trick.
• Preliminary Contract with a Notary: To block the property from being sold to third parties, increase the deposit to around 10-20% when signing the preliminary contract with a notary.
• Final Sale Deed: Pay the balance at the final sale closing.

Alternatively, you can pay directly to the notary’s escrow account in Italy instead of paying the seller directly. The notary will then release the funds as agreed.

And don’t forget to prepare and hand over the due diligence documentation!

Buying property in a foreign country can feel overwhelming—let’s make it simple! With 15+ years of experience helping international buyers, I can guide you step by step to ensure a smooth, stress-free purchase. Let's talk!

Legal protection and dispute resolution

Why a preliminary contract is essential

The preliminary contract is the backbone of any real estate transaction between buyer and seller in Italy. As a written agreement detailing all sales terms, including the deposit, it legally binds both parties, discourages second thoughts, and helps prevent disputes. It even has a practical edge: it gives each side time to secure a mortgage, plan the move, and potentially find a new home.

What happens if a party refuses to sign the final deed

If one party backs out of signing the final deed, the other party (the "innocent" one) can take legal action and obtain a Court order enforcing the sale under Article 2932 of the Italian Civil Code. In other words, the courts can ensure that the transaction proceeds, even if one side tries to derail it^[5].

Missed deadlines and how to protect yourself

What if one party fails to meet a deadline? What are the consequences of non-performance?

A well-drafted preliminary contract includes a series of deadlines—typically covering payments, due diligence delivery, and the final sale deed signing. It should also outline consequences for missed deadlines, offering legal protection to the party that fulfills its part of the agreement. This way, everyone knows where they stand if things go awry.

Elena Manzhos: Mother of two beautiful children, wife, and real estate agent for over 15 years. More than 20 years ago,  I moved to Italy from Eastern Europe. I have always had a deep-seated passion for houses; as a child for the Barbie house, and now as a real estate professional, my love for luxurious properties is unwavering.
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