The price deposit: a guarantee when buying a property, especially for foreign customers

Buying a house is an important step, full of expectations and, let's face it, also of some fear. For those buying in a foreign country, these concerns can increase. That's why the price deposit institution represents a fundamental guarantee, a tool that can make buying a property more peaceful and secure.

What is the Price Deposit?

The price deposit is a mechanism introduced in Italy in 2013 and made optional in 2017, which means that the money for the purchase of a property is not handed directly to the seller, but is deposited with a notary. The notary, in turn, is required to pay these sums into a special dedicated bank account, separate from his or her personal assets.

This system of ‘custody’ of the money aims to protect the buyer from possible problems that could arise between the signing of the sales contract and its transcription in the property registers. Imagine, for example, that after the signing of the contract, but before the transcription, the seller incurs debts that lead to a mortgage on the property you are buying. Without the deposit, you could end up with a property burdened by other people's debts, and a long and complex legal battle.

How does the deposit work?

The mechanism is simple but effective:

1. Request: The buyer (or one of the parties) asks the notary to hold the sale price in deposit until the deed has been transcribed.
2. Payment: The buyer pays the sum due to the notary by bank draft or bank transfer.
3. Deposit: The notary deposits the amount in a special bank account, separate from his personal assets and specifically intended for this purpose.
4. Transcription: Once the sale has been transcribed in the property registers, and it is certain that there are no encumbrances, the notary releases the money to the seller.

This system guarantees that the seller receives payment only when the buyer is certain that he has purchased a property free of mortgages, foreclosures or other problems.

Why is the Deposit an Important Tool for Foreign Buyers?

Foreign buyers purchasing property in Italy can benefit from the deposit in several ways:

• Protection from Unexpected Risks: Buying a property in a foreign country can be complicated, with the possibility of encountering procedures and regulations that are different from those you are familiar with. The deposit offers concrete protection against any surprises.
• Transparency and Reliability: The escrow system helps make the transaction more transparent, reassuring foreign investors about the fairness of the process.
• Guarantee against Seller's Problems: Escrow protects the buyer from any financial problems the seller may have after signing the contract, such as mortgages or foreclosures.
• Overcoming Slow Bureaucracy: The Italian judicial system is sometimes perceived as slow and complex. The deposit price offers a solution to avoid long and costly legal disputes.
• Familiarity with International Practices: Deposit with a notary is a widespread practice in other European countries, such as France, where it has been used for over a century. This can reassure buyers who are accustomed to these procedures.

The Deposit Price: Protection for the Seller as well

Although it is often seen as protection for the buyer, the deposit price also offers advantages for the seller.

• Certainty of Collection: The seller is certain to receive the agreed sum as soon as the sale has been duly registered.
• Elimination of the Risk of Insolvency: If payment of the price is postponed until after the contract has been signed, the deposit eliminates the risk that the buyer will not pay.

Costs and Methods of the Deposit

The cost of the deposit varies from hundreds to five hundred euros, but can vary depending on the agreements made with the notary, given that he is a freelancer. Generally, the cost is borne by the buyer. The sums can be paid by bank draft or bank transfer.

Additional Uses of the Deposit

The deposit price not only serves to protect against encumbrances after signing, but can also be used in other cases:

• Mortgage or Foreclosure: The price is paid only after these formalities have been cancelled.
• Legal Pre-emption: The price is paid only after the possibility of pre-emption by third parties has been excluded.
• Immobile Non Agibile: The price is paid only after the presentation of the certificate of habitability.
• Immobile Non Libero: The price is paid only after the property has been delivered free of people and things.
• Debts of the Seller: The notary retains the sums necessary to cover any condominium debts of the seller.

The Role of the Notary

The notary is a central figure in this process. He doesn't just ‘guard’ the money, but plays an active role as guarantor of the legality and transparency of the transaction. The notary, in fact, must:

• Note the sum deposited in the register of sums and values.
• Include a specific clause in the contract, indicating the request for deposit of the price, the assignment conferred, and the payment methods.
• Verify that the deed has been transcribed and that there are no encumbrances.
• Only release the price in favour of the seller after verification.
• Manage the sums in a dedicated bank account, separate from your personal assets.

In addition, the notary has the right to request that the parties pay, at the same time as or before signing the deed, the taxes, fees and expenses relating to the deed itself.

The Earnest Money Deposit is Optional

Unlike in France, in Italy the earnest money deposit is optional. The buyer can decide whether or not to use it. However, it is advisable that this decision be made in agreement with the seller and communicated in good time, preferably at the time of signing the preliminary contract.

Conclusion

The deposit represents an important guarantee for those who purchase a property, especially for foreign clients who may not be familiar with Italian procedures and regulations. This instrument not only protects against possible risks and unforeseen events, but also contributes to making the transaction more transparent and secure.

Choosing to use the deposit price means investing with peace of mind, protecting your investment and ensuring a worry-free purchase with no surprises. It is an opportunity for both buyer and seller, as well as for the notary himself, to ensure that the real estate transaction is completed in the safest and most correct way possible. In an increasingly complex and globalised property market, tools such as the deposit of the price become indispensable to protect the rights of all parties involved.

Remember that the choice to make use of this guarantee can make the difference between a peaceful purchase and a nightmare. And remember, the Italian notary is there to guide and advise you in the best possible way.

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