The 2005 regulation and the news of the 14/2019 Dlgs regarding the purchasing of a property to build: the buyer’s protection is increased.
The Dlgs no. 122/2005, known as the “property to build law”, is applied when the contractor is a sole entrepreneur, a company or a housing association, and the buyer an individual or a housing association partner.
Its purpose is to protect the individuals who, with a company, sign a contract for the non-immediate transferring of a property under construction. The risk of this contract is the one of losing the deposits payed for the purchasing due to a possible building company crisis. For this reason, the Dlgs no. 122 imposes – to the contractor -the double duty of providing:
- In case of a possible building company crisis, a bank guarantee for the refunding of all the costs payed or to be payed by the buyer before the property final transferring;
- A 10 years insurance policy guaranteeing the refunding of the material and direct property damages caused by its total or partial collapsing or by serious building flaws to the buyer. This duty starts with the signing of the property final deed of sale.
Given the limited efficacy of this deposit – evaded by the 70% of the contractors – and considering the about 17.000 building company bankrupting had since 2006 to today, the government decided to modify the regulation of this sector.
By modifying the 122/05 Dlgs, 14/2019 Dlgs, known as the “business crisis code”, integrates and realizes the guarantees introduced for every kind of contract relating to the residential buildings whose enabling titles (PERMESSO DI COSTRUIRE-SCIA-DIA) have been presented or requested to the Municipality as from March, 16th2019. It presents also two great news:
- The preliminary contract stipulation via public at or private signature duty;
- The notary’s duty to verify the bank guarantee and the consequential ten-year insurance policy issue.
Through the notary’s intervention, the new law establishes the duty to stipulate the preliminary contract via public act or authenticated private signature under penalty of absolute invalidity of the contract due to the formality lack. It imposes him/her also to verity and certify the bank guarantee accuracy, which has to be compliant to the ministerial model: without the bank guarantee, the notary will not stipulate the contract.
On the occasion of the property final deed of sale, the bank guarantee has to guarantee the refunding of the costs payed by the future buyer in case of consequential ten-year insurance failure to release too. The bank guarantee will be valid till the releasing insurance or bank will receive an authenticated copy of the property transferring act containing the certificate of the above mentioned insurance policy release.
Until that happens, the amount guaranteed by the bank guarantee can be requested by the future buyer in the following cases:
- Construction company crisis;
- If the future buyer has communicated his/her will to annul the contract;
- The notary has certified to be not able to receive the transferring act because of the consequential ten-year insurance failure to release.
PRELIMINARY CONTRACT CONTENTS
In addition to the bank guarantee releasing and its compliance with the ministerial model certificates, the preliminary contract will have to contain:
- The property to build description, including its borders and annexes;
- The identification of the possible obligations, as well as of the possible liens or adverse registrations existence;
- The agreed terms for the works execution, the price and payment modalities;
- The permission to start building data and the possible subcontractors ones;
- The technical document including the materials characteristics and project papers.
Regarding the final deed of sale, at the moment of its signature, the contractor has to deliver a ten-years insurance policy to the buyer. Its data have to be specified into the final deed of sale. In case of failure of deliver, the notary will not proceed and the buyer, if communicated his/her will to annul the contract, has the right to obtain the amount payed to the contractor by the company or bank which released the bank guarantee.
THE NOTARY’S INTERVENTION ADVANTAGES
It is easy to grasp the benefits coming from the notary’s intervention: first of all, he/she will guarantee the respect of the double duty: the bank guarantee delivery at the moment of the preliminary contract and the ten-years insurance policy one at the final deed of sale stipulation.
Moreover, the notary will also deal with all the verifications concerning the possible existence of liens or other restrictions on the property to build (property title search). He/she will be also obligated to proceed to the preliminary contract transcript into the real estate registers: as long as the sale will be done within three years, this will protect the buyer from the liens or any restrictions risks.
As a result of this law, in case of purchasing by the construction company of a property to be finished, the one that before was just an advice is, to today, a duty: the obligation to entrust yourself to a notary in order to make him/her do, in addition to the liens or restrictions existence verifications, the bank guarantee checking.