Preliminary agreement in Italy

What is a preliminary agreement?

A preliminary agreement is a contract by which the seller agrees to sell a specific property and the buyer agrees to purchase it at agreed conditions and within an agreed timeframe.

It does not transfer ownership of the property.

Instead, it creates a legally enforceable obligation requiring both parties to execute the final deed of sale at a later date.

This period between the preliminary agreement and completion serves an important practical purpose. It allows time for financing arrangements, legal investigations, technical inspections, mortgage discharge where necessary, tax planning and the preparation of all documents required for the final notarised transfer.

Rather than delaying the transaction unnecessarily, the preliminary agreement allows these activities to be carried out while both parties are already contractually committed.

Preliminary agreement or purchase offer?

International buyers often confuse the Italian preliminary agreement with the purchase offer signed through a real estate agency.

The two documents are not the same.

A purchase offer is a contractual proposal. Depending on its wording, it may be revocable or may be made irrevocable for a stated period. Once the seller's acceptance becomes effective under Italian law, the accepted proposal may already constitute a binding preliminary agreement if its contents and wording produce that effect.

This is precisely why signing standard agency forms without independent legal advice may expose buyers to significant risks.

Many buyers believe they are simply "making an offer", while they may in fact already be entering into a binding contract.

For this reason, wherever possible, it is preferable for the parties to negotiate and execute a properly drafted preliminary agreement that fully reflects their intentions rather than relying exclusively on pre-printed agency documentation.

What should the preliminary agreement contain?

A well-drafted preliminary agreement should already contain almost all the provisions that will later appear in the final deed.

The more complete the document is, the greater the legal certainty if disputes arise before completion.

Among the principal matters normally regulated are:

• identification of the parties;
• accurate description of the property;
• purchase price;
• payment schedule;
• completion date;
• delivery of possession;
• existing mortgages or other encumbrances;
• planning and cadastral situation;
• energy performance documentation;
• allocation of taxes and costs;
• contractual guarantees;
• remedies in case of default.

Italian law also requires sufficient certainty regarding both the property and the agreed price. An incomplete or uncertain agreement may become legally ineffective.

Why legal investigations should begin before signing

Many foreign purchasers assume that legal due diligence is carried out only before the final deed.

In reality, the safest approach is exactly the opposite.

The principal legal investigations and, where appropriate, the relevant technical investigations should begin before the preliminary agreement is signed, so that contractual obligations are undertaken with an adequate understanding of the property's legal and technical position.

Among the matters typically verified are:

• ownership;
• continuity of title;
• mortgages and registered charges;
• easements and other third-party rights;
• planning and building compliance;
• cadastral consistency;
• condominium matters;
• pending litigation where relevant;
• tax implications;
• restrictions affecting the property.

Carrying out these investigations at an early stage allows any issues to be identified before the parties become legally bound and greatly reduces the likelihood of disputes before completion.

Deposits, down payments and purchase price

The preliminary agreement usually provides for the payment of a sum of money before completion.

Under Italian law, however, different payments may have different legal consequences.

The amount paid may constitute:

• a confirmatory deposit (caparra confirmatoria), which performs both evidential and security functions and has important consequences if one party defaults;
• a simple advance payment of the purchase price, which follows different legal rules.

The distinction is extremely important because the legal remedies available to the parties may differ significantly depending on how the payment has been characterised in the contract.

For this reason, every payment clause should be drafted carefully and all payment methods should be properly documented.

What happens if one party refuses to complete?

Italian law provides several remedies when one party unjustifiably refuses to execute the final deed.

Depending on the circumstances, the innocent party may:

• require completion through a court judgment producing the same effects as the final deed;
• terminate the contract;
• claim damages;
• rely upon the contractual deposit where applicable.

The availability of these remedies demonstrates that the preliminary agreement is not merely a declaration of future intentions but a legally enforceable contract capable of producing substantial legal consequences.

Registering and recording the preliminary agreement

International buyers often hear two different concepts discussed in Italy:

registration and recording (transcription).

Although the words sound similar, they serve completely different purposes.

Registration is primarily a fiscal requirement.

Recording the preliminary agreement in the Land Registers ("trascrizione"), on the other hand, is one of the strongest forms of legal protection available under Italian law.

Where the preliminary agreement is executed in a form suitable for recording, normally a public deed or an authenticated private agreement, its recording creates the protective effects provided by Italian law against subsequent recordings and registrations capable of prejudicing the purchaser's position.

In practical terms, it protects the buyer against situations such as:

• a subsequent sale of the same property to another purchaser;
• later mortgages;
• judicial attachments;
• certain insolvency events affecting the seller.

Where recording is not mandatory, it is frequently advisable whenever there is a significant period between signing and completion or whenever substantial sums are paid before the final deed.

Special protection for properties under construction

Italian legislation provides a special mandatory protection regime for qualifying purchases of property under construction by natural persons from a builder.

Where the statutory regime applies and the relevant building permit or other qualifying building title was requested or submitted on or after 16 March 2019, the law requires:

• execution of the preliminary agreement as a public deed or authenticated private agreement before a Notary, on pain of nullity;
• tax registration of the agreement and its recording in the Italian Land Registers;
• delivery of a bank or insurance guarantee covering the sums and other consideration collected, or to be collected, before the transfer of ownership, in accordance with the statutory rules;
• delivery at the final transfer of the statutory ten-year indemnity insurance policy covering the risks identified by law.

These safeguards apply only when the statutory conditions are satisfied. Whether a particular off-plan transaction falls within the regime must therefore be assessed by the Notary on the basis of the individual development and the applicable building title.

The role of the Italian notary

Outside the cases in which Italian law requires notarial form, involving the Notary at the preliminary stage often provides significant practical advantages. Where the statutory off-plan regime described above applies, notarial intervention is mandatory.

The notary can assist the parties in identifying legal issues before they become contractual obligations, verify the ownership history and registered encumbrances, advise on the appropriate contractual structure and, where appropriate, record the preliminary agreement in the Land Registers.

When the same notary also completes the final deed, much of the legal work has already been carried out during the preliminary stage, making the completion process more efficient and reducing the likelihood of unexpected issues shortly before closing.

Related Guides

This guide explains the general legal function of the preliminary agreement. Depending on the characteristics of the transaction, you may also find the following guides useful:

• Recording the Preliminary Agreement in Italy, explaining how recording the agreement in the Italian Land Registers may strengthen the buyer's legal protection.
• The Preliminary Agreement for an Off-Plan Property, describing the additional contractual requirements applicable when purchasing a property under construction.
• Buying Off-Plan Property in Italy, providing a comprehensive overview of the statutory protection system governing purchases from developers.

Final considerations

For many foreign buyers, the preliminary agreement may initially appear to be an intermediate administrative step before the "real" purchase. Under Italian law, however, it is a legally binding stage in which the essential architecture of the transaction is established.

A properly drafted preliminary agreement, supported by the appropriate legal investigations and, where relevant, technical investigations and Land Registry recording, is one of the principal instruments for protecting the transaction before the final transfer.

The structure of the agreement must be adapted to the property, the parties and the transaction. Its final terms should always be assessed by the Italian Notary in light of the circumstances of the individual case.