DUE DILIGENCE

Due Diligence When Buying Property in Italy

A beautiful property is not automatically a sound acquisition.

Views, architecture and atmosphere may create an immediate emotional response, but they do not establish whether a property is legally, technically and commercially suitable for purchase.

Due diligence is the process of investigating the property and the proposed transaction before the buyer becomes irrevocably committed.

The scope of the investigation depends on the property. A historic villa, agricultural estate, restored farmhouse, coastal home and apartment may each require a different combination of professional expertise.

START BEFORE SIGNING

Buyers sometimes assume that all investigations can take place shortly before the final notarial deed. That may be too late.

An offer, reservation document or preliminary agreement can create important obligations. The buyer should therefore understand the legal effect of a document before signing it and consider whether appropriate conditions or protections are required.

The exact timing should be determined with the buyer’s independent lawyer, notary and technical advisers.

OWNERSHIP AND TITLE

The legal investigation may include establishing:

• the identity and authority of the seller;
• how the seller acquired the property;
• whether the ownership information is consistent;
• whether mortgages, charges or other registrations affect the property;
• whether third parties have rights over it;
• whether there are rights of way, easements or other limitations;
• whether pending disputes, inheritance matters or other legal issues require attention.

The notary conducts the checks and performs the duties required for the notarial transfer. Depending on the transaction, an international buyer may also choose to appoint an independent lawyer to advise solely on the buyer’s interests.

PLANNING AND BUILDING COMPLIANCE

The physical appearance of a property does not establish whether every part of it was lawfully constructed or altered.

A technical professional may need to compare:

• the property as it currently exists;
• municipal planning and building records;
• authorised plans;
• subsequent renovations or extensions;
• cadastral plans and information.

Questions can arise from enclosed terraces, converted agricultural buildings, altered internal layouts, swimming pools, annexes, pergolas or other works completed over many years.

The existence of a structure does not automatically confirm that it is properly authorised.

Any discrepancy should be identified and evaluated before the buyer makes a binding commitment. The appropriate solution, if one exists, depends on the nature of the discrepancy and the advice of the relevant professionals and authorities.

CADASTRAL INFORMATION

Cadastral records are an important part of the property documentation, but they should not be treated as the only proof of legal or planning compliance.

A professional review may consider whether the cadastral plan corresponds with the property and whether the registered information is consistent with the proposed transaction.

The cadastral, legal and municipal planning position should be considered together rather than in isolation.

TECHNICAL CONDITION

A legal transfer does not guarantee that the building is in good physical condition.

Depending on the age and nature of the property, technical investigation may include:

• structural condition;
• roof and external walls;
• evidence of moisture or water ingress;
• electrical and heating systems;
• plumbing and drainage;
• private wells or water supply;
• septic systems;
• energy performance;
• retaining walls and land stability;
• swimming pools;
• outbuildings;
• evidence of pests or deterioration;
• estimated renovation and maintenance requirements.

A visual viewing alone cannot reliably determine the condition of all building components.

ACCESS, BOUNDARIES AND LAND

Country properties often require particular attention to access and land.

The investigation may need to establish:

• whether legal vehicle access exists;
• who owns and maintains the access road;
• whether third parties possess rights over the property;
• whether the physical boundaries correspond with the documentation;
• whether agricultural rights or obligations exist;
• whether water, woodland or land-management issues require attention.

A long private road, extensive land or isolated position may appear desirable while creating substantial maintenance and operational responsibilities.

RESTRICTIONS AND FUTURE PLANS

Tuscany contains protected landscapes, historic buildings, agricultural land and environmentally sensitive areas.

Buyers planning renovations, extensions, a swimming pool, new access, agricultural use or rental activity should not assume that the proposed work will be permitted.

The feasibility of future plans should be investigated with appropriately qualified professionals and, where necessary, the relevant authorities.

Informal assurances should not replace documented professional verification.

RUNNING COSTS AND OWNERSHIP PRACTICALITIES

Due diligence should also help the buyer understand the practical consequences of ownership.

Relevant matters may include:

• annual taxes and local charges;
• condominium costs where applicable;
• insurance;
• gardening and land management;
• pool maintenance;
• security;
• heating and cooling;
• utility availability;
• road maintenance;
• staffing or property-management requirements;
• expected renovation expenditure.

A property that is affordable to acquire may still be expensive or difficult to operate.

RENTAL INTENTIONS

If the buyer intends to rent the property, rental feasibility should be investigated separately.

Ownership of a property does not automatically confirm that every form of holiday or short-term rental is permitted or commercially realistic.

The buyer may need advice concerning registration, identification codes, safety requirements, guest reporting, taxation, local rules, insurance and operational management.

Requirements can change and should be verified for the specific property, ownership structure and intended rental activity.

RESALE QUALITY

Due diligence is also relevant to the property’s future resale.

A future buyer may investigate the same issues. Unresolved documentation, difficult access, excessive maintenance obligations or unauthorised alterations may therefore affect both present ownership and eventual marketability.

A sound acquisition should remain understandable and defensible when the time comes to sell.

COORDINATING THE PROCESS

Effective due diligence usually requires cooperation between several independent professionals.

The lawyer, notary, architect, surveyor, engineer and tax adviser each have different responsibilities. Their involvement should be appropriate to the specific property rather than based on a standard checklist alone.

L’AURA Escape Estates helps buyer clients coordinate relevant questions, documentation and professional input throughout the acquisition. Laura does not replace the independent specialists. Her role is to help ensure that the process remains organised around the buyer’s requirements and interests.

CONSIDERING A PROPERTY IN TUSCANY?

If you have already identified a property or want independent support throughout your search, speak privately with Laura about your requirements and the appropriate next steps.

REQUEST A PRIVATE CONSULTATION

Important information

This article provides general information only. It does not constitute legal, tax, notarial, architectural, engineering, surveying, financial or investment advice.

The investigations required depend on the individual property, buyer and transaction. Buyers should obtain advice from appropriately qualified independent professionals before signing documents, transferring substantial funds or making a binding acquisition decision.