Buying a property at auction in Italy

Two kinds of sale

The first kind is the court sale in an enforcement procedure (a creditor has had the property seized) or a bankruptcy. The second is the notarial auction, where a notary, appointed by the court or by a public body, runs the sale. The Notariato’s portal says sales may take place with or without a “bidding round” (con incanto or senza incanto), and that you must read the order or notice of sale for the rules of each auction, because they differ procedure by procedure.

All the notices appear on the Portale delle Vendite Pubbliche. A notice contains the order or notice of sale, with the property’s identification, the base price and minimum offer, the deposit and how to pay it, the type of auction (traditional or online) and extracts of the valuation report. The valuation report (perizia di stima) is part of the sale notice and is the document to read most carefully. To view the property, you book a visit through the “visit request” function inside each notice on the portal.

How an offer works

The Code of Civil Procedure sets the frame for a court sale of a seized property:

• Anyone may bid except the debtor, in person or through a lawyer.
• The bid states the price and the time and manner of payment.
• It is ineffective if it arrives after the deadline, if it is lower than the price set in the order by more than a quarter, or if the deposit is less than a tenth of the price offered, paid in the way the order specifies.
• The bid is irrevocable, unless the judge orders an auction round or 120 days pass without acceptance.

If the offer is at or above the value fixed in the order, it is accepted. If it is lower by no more than a quarter, the judge may still proceed to the sale when he believes there is no serious possibility of a better price from a new sale and nobody has applied for assignment. In arithmetic terms, the lowest effective bid is 75% of the base price (a calculation from the quarter rule). Individual orders can set a higher minimum, so the minimum stated in your notice governs.

Bids are filed on paper in a sealed envelope or digitally, depending on the type of auction. For a digital offer, the portal says you use the “make an offer” function inside the notice, and that the credentials to join the auction arrive about an hour before it by certified e-mail and text message. You may also take part through a special attorney with a notarial power of attorney, a point the Notariato’s FAQ confirms. If you live abroad, see buying with a power of attorney from abroad; you also need an Italian tax code (codice fiscale for property buyers).

Taxes and costs

An auction purchase is not tax-free. The Notariato describes two cases, and the difference is large.

• The relief case: €200 × 3. Under D.L. 18/2016 (converted by Law 49/2016), transfers in enforcement and insolvency procedures can be taxed with registration, mortgage and cadastral taxes at a fixed €200 each, €600 in all. The conditions: a company buyer must declare that it will resell within two years; a private individual buying a prima casa has no duty to resell, but must state the wish to use the first-home relief promptly, at the auction or at its end.
• The ordinary case: 9%. Outside those conditions the relief does not apply. The registration-tax schedule (DPR 131/1986, Tariffa art. 1) lists “compulsory transfers” at the ordinary 9% rate, and the Notariato says that in all other cases the “prezzo-valore” rule applies to enforcement and insolvency sales (see the cadastral-value guide).

Ask the notary or the procedure which regime applies to your lot before you bid.

The notary’s fee in a notarial auction “is equivalent to that of an ordinary sale, usually 0.5 to 1% of the purchase price”, plus the expenses listed in the auction rules, according to the Notariato. This is the only place where a percentage can be quoted, and it applies to auctions, not to ordinary purchases. As a calculation on a €100,000 purchase, that range gives €500 to €1,000. Where the Notariato says a notary’s intervention is required for the transfer, the fee comes on top of the price.

The permit trap

Article 46 of DPR 380/2001 makes deeds void when a building begun after 17 March 1985 has no permit details stated by the seller. The article then exempts “acts deriving from enforcement procedures, individual or insolvency”: the deed is not void. The buyer, if the property could qualify for a retrospective permit, must apply for it within 120 days of notification of the court’s transfer decree. In other words, the law that protects an ordinary buyer from unlawful building does not protect you at auction, and the cost of regularising lies with you. Read the valuation report’s section on planning and cadastral compliance and have a technical professional confirm it. See urban planning compliance.

Other points to check in the notice and report: whether the property is occupied, whether any rights of third parties survive, outstanding condominium expenses and the state of the energy certificate. See property due diligence in Italy.

Which professional to consult

A surveyor can read the valuation report against the building before you bid. A notary can tell you which tax regime applies to your lot and handle the transfer when the procedure requires it. A lawyer familiar with enforcement procedure can advise on a bid made through a representative, a point outside Payotte’s directory.