How to Buy a Property at Auction in Italy: Complete Guide 2024
If you are interested in a property in Italy that meets all your needs but is being sold at auction, don’t panic! With this guide, we aim to show you how to be successful in achieving your goal of buying a property at auction in Italy. We are confident that by the end of this read, all your doubts will be cleared.
Nowadays, turning to the system of property auctions in Italy proves to be a beneficial alternative compared to the excessively burdensome possibilities offered by the traditional market.
Buying a Property at Auction in Italy Can Be Done in Several Ways
Italian law provides for two types of property auction: judicial and public asset disposal.
Let’s briefly discuss the purchase of a property at a judicial auction in Italy
The judicial auction in Italy is a specific instrument for the forced sale of a property owned by an individual or legal entity. The latter undergoes expropriation due to unpaid debts. Such sales take place at the court or in the offices of professionals delegated by the judge.
Who Can Buy a Property at a Judicial Auction in Italy?
Any individual or legal entity (company or institution), except for the debtor and the subjects mentioned in Art. 1471 of the Italian Civil Code. The subject can offer a sum of money to secure ownership of the property.
Why is Buying a Property at a Judicial Auction in Italy a Advantageous Alternative?
Because it is possible to obtain a property at a significantly lower cost compared to its commercial valuation. Moreover, whenever an auction is deserted, i.e., when the property is not awarded, it will be re-auctioned a few months later at a price reduced by 25%. The main elements of judicial auctions in Italy are:
- The expert appraisal: contains detailed information about the property (for example, the floor plan, cadastral identification, maintenance status, and any issues such as unauthorized works). The expert is responsible for setting the base selling price, considering the local market conditions.
- The sale order: with it, the judge defines the terms and conditions of the auction.
- The judicial custodian: appointed by the judge for the preservation, administration, and management of the seized property.
- The auction notice: a public document drafted by a professional containing information such as the location, date, and time of the auction, the base price, the amount of the minimum bid increment, the deadline for submitting offers, the address of the property, the website on which the appraisal report is published.
How Does a Judicial Auction Occur in Italy?
There are two modes of judicial auction: without bidding and with bidding.
In the non-bidding mode, governed by Art. 570 et seq. of the Italian Code of Civil Procedure, the purchase offer must be personally drafted. A legal representative of a company, if authorized, can act on behalf of the same. The participant must submit the offer in a sealed envelope, and the price cannot be lower than that indicated in the auction notice. Additionally, a deposit equal to 10% of the offered price is required.
If there are multiple offers, the property is not awarded to the highest bidder, but a competition among all participants starts from the highest price, with a minimum raise.
The non-bidding sale is characterized by its irrevocability: in case of adjudication, it is definitive.
The bidding auction, governed by Art. 567 et seq. of the Italian Code of Civil Procedure, consists of a public competition among the participants.
It is arranged after a non-bidding sale has failed. Participants can attend personally, through a lawyer, or through an agent with a special power of attorney made by public deed or authenticated private writing.
In this case, the offers that are advanced are not secret but public and can be revoked. The adjudication is provisional, subject to a possible increase of 1/5 to be made within 10 days following the auction: it becomes definitive only if this period expires without any further bids being presented.
The definitive winner must pay the adjudication price, minus the deposit paid, within the deadline and in the manner indicated in the auction notice.
Additionally, participants in the auction in Italy can apply for and obtain mortgage loans.
When the sale is valid, the judge issues the transfer decree, governed by Art. 586 of the Italian Code of Civil Procedure, cancelling mortgages or seizures. This decree constitutes the title for the registration of the sale and the executive title for the release.
Now, Let’s Examine the System of Dismissive Auctions
When, instead, the State or a public entity believes that a property (e.g., a building or land) is no longer suitable to meet certain needs, they decide to sell it to raise money to invest in other sectors of public interest. This is the system of dismissive auctions.
Who Can Participate in Dismissive Auctions?
Anyone who is interested. These auctions are an excellent option for various reasons, such as security issues. Generally, such properties are not burdened with mortgages since the seller is the State or a public entity. The main reason is economic: there are many properties disposed of by the State at a starting price lower than the market price.
Online Auctions
The auctions we have discussed so far, whether judicial or dismissive, can also be carried out electronically. Those who resort to the electronic mode are those who operate within the national market. Online auctions in Italy provide guarantees, particularly those related to safety, transparency, and especially the speed of procedures. We recommend reading this article if you want to know what taxes and duties apply to your awarded property.
Conclusions
Here are the key features related to the discipline of auctions in Italy. Securing a property is much easier than you think! Everything becomes simple with the support of a professional in the field. If you need advice, contact one of our Italian lawyers specialized in real estate transactions.
