There’s been some recent discussion over a proposed amendment to the liberalisation bill (Disegno di Legge Liberalizzazione), which concerns the real estate sector. More precisely, under the provisions of this bill, lawyers will be empowered to authenticate real estate transactions involving properties with a valore catastale of up to 100.000 euro. This opens up the competition in a market that has been traditionally dominated by the Notariato. In fact, the president of the Notariato has contested the amendment saying that such a move strikes the very heart of the Italian system.

Unlike England or the USA, completing a property transaction in Italy is done via the Atto Notarile, an instrument executed by a Notaio (Notary Public). The Notaio is a legally trained professional and a specialist in documentary transactions. Notaries in Italy are independent professionals yet they have a public function and are empowered by the state. They are vested with important powers and public authority to cover a broad spectrum of functions from drafting, approving, authenticating, notarising and registering legal acts. Because Notaries have a legal duty to ensure that all entries in the public registers are correct, they not only have to verify and guarantee the identities and bona fides of all parties who appear before them to conclude a business transaction, they must also see to it that all parties fully understand the legal effects of the transaction in question and that the wording in the documents are unambiguous and reflect their intentions.

Being a public official, a notary cannot represent a client the same way that a lawyer can and won’t be able to advise on the specific merits of a purchase or contract. The counter argument by lawyers is that deregulation and liberalization would not only help simplify each transaction, it would make them more competitive with regards to cost. Some lawyers are, moreover, already very capable and skilled in the area of property and contract law, as well as negotiating favourable terms for their clients. Lawyers also argue that Notary’s are mainly objecting to this amendment because they see it as a direct threat to their monopoly (you no longer need a Notaio when completing the purchase of cars or boats for example) and therefore, a threat to the reputation and prestige of the tightly ring-fenced Notarial profession.

Some proponents will say that there is absolutely no need to appoint a lawyer and that you should simply do things the Italian way because the Notarial system has many advantages, otherwise the poor old buyer will end up paying the estate agent, a Lawyer and a Notaio for essentially the same service. I think the real issue here is not about which legal system is right or wrong, or which legal professional one should turn to. The central theme is about being prudent and about managing risk. The Italian way of doing things neither constitutes a foolproof guarantee nor a reliable formula and as such, buyers should be aware that since there is no such thing as a standard purchase it would be very unwise to assume that all transactions will run smoothly. Whereas many people have indeed purchased properties in Italy without using a lawyer, there have equally been instances when, technical issues notwithstanding, the buyer’s problems stemmed from legally related snags.

So many seem ready to take the plunge and just rush in with hastily prepared plans whilst knowing next to nothing about Italy, its language, culture, laws, contractual liabilities and amount of red tape involved. The problem is that many buyers make false assumptions about their legal rights and obligations. This is understandable because Italy has more laws than any other European country and despite the fact that the country is so painfully legalistic, much of the points of law are inaccessible to overseas buyers. The tendency of throwing caution to the wind and entering into precarious contracts can have potentially negative repercussions.

So, what precautions should you take? This very much depends on your particular purchase situation. There’s always the matter of cost of course and some disparity in legal fees across the market is noticeable. The important thing to remember when searching for a lawyer is to find one who is experienced in property and contractual matters. It is no good appointing one specialised in canon law for example. When in doubt it is always wise to seek professional and independent legal advice and not to leave matters in the hands of just anyone, especially those who have a vested interest in seeing the sale go through in a hurry. The cost of this advice compared to the investment you are about to make should be the least of your concerns.

Whether the powerful Notariato will be able to withstand the pressure resulting from deregulation and liberalisation remains to be seen. For certain though, over the next few years the competitive environment should create new opportunities and open up playing field for professionals with a clearer focus on particular services. Personally, I believe that the future of conveyancing in Italy lies in greater efficiency with an up-to-date knowledge of the law and a deeper understanding of what works in ever-changing markets as well as in fast-moving and fast-changing areas of law and practice.

Would be interested to hear what others think

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CJ
Magical Marche &
Luchetti & Partners Studio Legale Tributario