When it comes to purchasing real estate in Italy, a purchase proposal is a crucial step in the process. At Berti Law Firm, we specialize in real estate law and have extensive experience in helping international clients navigate the complexities of Italian property transactions. In this article, we will explore the concept of a purchase proposal, its implications, and the relevant Italian legislation.
Glossary
- Proponente: The party making the purchase proposal
- Oblato: The recipient of the purchase proposal
- Irrevocable purchase proposal: A proposal that binds the proponente not to revoke it for a certain period
- Option contract: A bilateral agreement where one party remains bound to their declaration, and the other has the right to accept or reject it
- Preliminary contract: A bilateral agreement that binds both parties to the stipulation of a definitive contract
What is a Purchase Proposal?
A purchase proposal is a written declaration made by a potential buyer (the proponente) to a seller (the oblato), expressing their intention to purchase a property at a specified price. This document is particularly reliable and “serious” if it is irrevocable, meaning the proponente commits not to revoke it for a certain period, which must be explicitly determined to avoid nullity.
Irrevocable Purchase Proposal
An irrevocable purchase proposal is a unilateral act that binds the proponente, but not the oblato, until the proposal is accepted. If the proposal is accepted, the agreement can be considered concluded. This type of proposal is commonly used when the parties are distant, and it is not possible to stipulate a preliminary contract.
Upon receiving the irrevocable purchase proposal, the recipient has three alternatives:
- Accept the proposal
- Refuse the proposal
- Respond with a counter-proposal
In case of full and compliant acceptance, the contract can be considered concluded. However, the conclusion of the definitive contract or preliminary contract (compromesso) may be postponed to a later moment.
Key Aspects of an Irrevocable Purchase Proposal
According to Article 1329 of the Italian Civil Code, an irrevocable purchase proposal requires two essential elements:
- A specified term for the proposal to remain firm
- Completeness, meaning it must contain all the essential elements of the future contract
The proposal remains valid for a defined period, during which the recipient (oblato) can accept or reject it. Article 1326 of the Italian Civil Code establishes that “the acceptance must arrive at the proponent within the term established by him or within the term ordinarily necessary according to the nature of the business or according to the customs.”
Differences between Irrevocable Purchase Proposal, Option Contract, and Preliminary Contract
An irrevocable purchase proposal differs from an option contract, which is a bilateral agreement where one party remains bound to their declaration, and the other has the right to accept or reject it, often in exchange for a payment (premium). A preliminary contract, on the other hand, is a bilateral agreement that binds both parties to the stipulation of a definitive contract.
Binding Nature of a Purchase Proposal
While the law does not explicitly outline the content of an irrevocable purchase proposal, it is possible to define some essential requirements:
- It must indicate the express duration of the irrevocability
- It must be complete, containing all the essential elements of the future contract
- It must have a binding character, without the possibility of reserves
What Happens Once the Purchase Proposal is Accepted?
According to Article 1326 of the Italian Civil Code, the contract is concluded when the acceptance reaches the proponent. The acceptance must be timely and compliant with the proposal. If the proponent requires a specific form for acceptance (e.g., registered mail), this is not effective if given in a different form.
Consequences of Not Respecting the Purchase Proposal
If the proponent does not respect the offer, they may be liable for damages and even specific performance of the contract. Article 2932 of the Italian Civil Code allows the judge to issue a constitutive sentence that generates the effects of the definitive contract not stipulated due to the promisor’s buyer default.
When is a Purchase Proposal Revocable?
An irrevocable purchase proposal can be revoked in three situations:
- Before it reaches the recipient
- After the expiration of the term
- In case of non-acceptance or counter-proposal
Italian Legislation
Relevant Italian legislation includes:
- Article 1326 of the Italian Civil Code: Acceptance of a proposal
- Article 1328 of the Italian Civil Code: Revocation of a proposal
- Article 1329 of the Italian Civil Code: Irrevocable proposal
- Article 1330 of the Italian Civil Code: Effects of the proposal on the entrepreneur
- Article 1334 of the Italian Civil Code: Knowledge of the proposal
- Article 1335 of the Italian Civil Code: Presumption of knowledge
- Article 1419 of the Italian Civil Code: Nullity of the clause of irrevocability
- Article 1424 of the Italian Civil Code: Simple proposal
- Article 2932 of the Italian Civil Code: Specific performance of the contract
International Clients and Italian Real Estate Transactions
For international clients intending to purchase real estate in Italy, it is essential to work with experienced professionals who can guide them through the process. At Berti Law Firm, we understand the importance of navigating these complexities to ensure a smooth and successful property purchase.
To ensure a successful property purchase in Italy, international clients should:
- Work with a reputable and experienced law firm, such as Berti Law Firm
- Ensure that the purchase proposal is irrevocable and complete, containing all essential elements
- Specify the term for the proposal to remain firm
- Understand the implications of an irrevocable purchase proposal and its differences from an option contract and preliminary contract
Case Law and Jurisprudence
Italian case law provides valuable insights into the implications of irrevocable purchase proposals. For example, the Court of Cassation (Cassazione Civile, Sez. II, sentenza n. 20853 del 2 ottobre 2014) held that “the term within which the proponent binds himself to maintain the proposal, pursuant to Article 1329, first paragraph, of the Italian Civil Code, constitutes an essential element of the irrevocable proposal, and therefore must be fixed by the proponent himself.”
Practical Considerations
In practice, irrevocable purchase proposals are commonly used in Italian real estate transactions. They provide a level of security for both parties, as the proponente is bound to their offer, and the oblato can rely on the proposal being firm for a specified period.
However, it is essential to note that an irrevocable purchase proposal does not automatically lead to the conclusion of the contract. The oblato may still refuse the proposal or respond with a counter-proposal.
Counter-Proposal and Non-Acceptance
If the oblato responds with a counter-proposal, the irrevocability of the proposal expires, and the roles of the parties are reversed. The original proponente becomes the oblato, and vice versa.
In the event of non-acceptance, the proposal expires, and any sums paid as a deposit or earnest money must be returned.
Silence and Tacit Acceptance
According to the Court of Cassation (Cassazione Civile, sez. III, sentenza n. 10533 del 14 maggio 2014), “acceptance cannot be inferred from mere silence on a proposal, even if it follows previous negotiations between the parties, which show that it has taken account of them, assuming silence to have a contractual value only if, in given circumstances, the common way of acting or good faith, in the relationships established between the parties, impose the burden or duty of speaking.”
Risks and Liabilities
If the proponent fails to respect the offer, they may be liable for damages and even specific performance of the contract. The oblato may also claim damages for any losses incurred.
In conclusion, an irrevocable purchase proposal is a powerful tool in Italian real estate transactions. At Berti Law Firm, we understand the importance of navigating these complexities to ensure a smooth and successful property purchase. International clients should work with experienced professionals to ensure that their interests are protected and that the transaction is conducted in accordance with Italian law.
By understanding the implications of an irrevocable purchase proposal and working with experts in Italian real estate law, clients can ensure a successful and stress-free property purchase in Italy.
Recommendations for Buyers
For international buyers alike, it is essential to:
- Work with a reputable and experienced law firm, such as Berti Law Firm
- Ensure that the purchase proposal is irrevocable and complete, containing all essential elements
- Specify the term for the proposal to remain firm
- Understand the implications of an irrevocable purchase proposal and its differences from an option contract and preliminary contract
- Conduct thorough due diligence on the property and the seller
- Ensure that all necessary documentation is in order
By following this checklist and working with experts in Italian real estate law, clients can ensure a successful and stress-free property purchase in Italy.
Future Developments and Trends
The Italian real estate market is constantly evolving, with new trends and developments emerging. At Berti Law Firm, we stay up-to-date with the latest changes in legislation and case law to provide our clients with the best possible advice.
For international clients intending to purchase real estate in Italy, it is vital to work with experienced professionals who can guide them through the process. At Berti Law Firm, we have extensive experience in helping international clients navigate the complexities of Italian property transactions.