Before concluding the final contract of sale, the parties generally sign a preliminary contract, also known as a "compromise".
With the preliminary contract, the parties undertake to conclude a future contract for the transfer of ownership or other rights in rem over real estate, predetermining its content.
The real effect (the transfer of the right) is inherent in the deed of sale; the preliminary contract, on the other hand, produces only mandatory effects, since it merely binds the parties to the signing of a future transfer agreement.
The form of the contract has already been dealt with in a previous article.
Here we would like to explain the differences between a registered preliminary contract and a preliminary contract transcribed in the public land registers.
WHY DRAW UP A PRELIMINARY CONTRACT OF SALE?
A preliminary agreement is not compulsory; however, it is advisable to draw it up for the following reasons:
a) the preliminary agreement outlines the set of interests that will later be specified in the final deed of sale, predetermining the rights and obligations arising from the contract;
b) it has the purpose of blocking the deal, achieving a "reservation” effect;
c) in the event that the final contract is not concluded, the preliminary agreement may be used to obtain a judgment from the court producing the effects of the unfinished contract (Art. 2932 of the Civil Code).
REGISTRATION OF THE PRELIMINARY AGREEMENT
Registration is qualified as a fiscal obligation: every act of a patrimonial nature is subject to the taxing power of the State.
Failure to register the preliminary agreement results in minor tax evasion but does not mean that the agreement is non-existent, since it has full legal significance.
Pursuant to art. 10 of the Consolidated Law on Registration Tax (Presidential Decree 131/1986), the persons obliged to request registration are different according to the type of deed to be registered:
a) non-authenticated private deeds (deeds between private individuals)
* the contracting parties;
* real estate brokers in mediation for non-authenticated private deeds of a negotiated nature concluded as a result of their activity for the conclusion of business.
Registration confers a certain date on the non-authenticated private contract.
The contracting parties (and real estate brokers, in the case of contracts concluded as a result of their activity) are always jointly and severally liable to the tax authorities.
An agreement aimed at excluding the liability of the real estate broker for failure to register or pay tax is void.
(b) Authenticated private agreements and public deeds
In this case, the obligation to register lies with the notary.
The payment of the tax releases the co-obligors, except for the right to request the relevant provision before registration.
FORMALITIES IN THE REGISTRATION
The preliminary contract of sale must be registered within 20 days of its signature.
The term is 30 days if the deed is drawn up in front of a notary.
The registration procedure is carried out by submitting (electronically or in person) the title (i.e. the contract) to any office of the Revenue Agency, upon payment of the tax by means of the F24 form.
The Agency stamps the contract with the date and protocol number.
Here are the taxes to be paid (except for special tax regimes) at the time of registration:
* 16.00 euro revenue stamp for every 100 lines or 4 pages;
* fixed registration tax of € 200.00;
* proportional taxes on the sums received by the seller at the time of the stipulation of the preliminary contract:
a) 3% on the sums paid by way of down payment of the price;
b) 0.5% on the sums paid by way of deposit.
When the sale is subject to registration tax, this may be deducted from the tax due at the time of the deed.
The forms to be used for payment are mod. F24 and mod. 69 (in case of delegation to the mediator for registration).
THE PRELIMINARY CONTRACT’S TRANSCRIPTION
The transcription of the preliminary contract is an option and not an obligation of the parties, who may choose to draw up the preliminary contract also by means of a simple private deed.
Instead, it represents an obligation for the notary, who is required to draw up the deed in the form of an authenticated private deed or public deed.
This principle is derived from the combined provisions of articles 2643 and 2645-bis of the Civil Code (respectively, Deeds subject to transcription and Transcription of preliminary contracts).
THE EFFECTS OF THE PRELIMINARY CONTRACT’S TRANSCRIPTION
The transcription protects the parties in the presence of several purchasers of the same property or in the event that the preliminary contract is not executed.
For example, if the seller has made several acts of disposition of the same property or is subject to a revocation action by his creditors.
Transcriptions and inscriptions made against the promisor after the registration of the preliminary contract have no effect against the buyer.
In other words, if the transcriptions against the promisor are prior to the transcription of the final deed of sale but subsequent to the transcription of the preliminary contract, the purchaser is fully protected against the promisor's creditors.
In the event of non-performance of the preliminary contract, the purchaser enjoys a special security interest, known as a "special lien", in the real estate that is the subject of the preliminary contract, provided that in the meantime the effects of transcription have not ceased.
Moreover, with the transcription of the preliminary contract, it is possible to obtain, through the judge's sentence, the specific execution of the final contract (art. 2932 Civil Code) if it is not concluded.
The effects of the transcription are limited in time: they cease, and are considered as never produced, if within one year from the date agreed by the parties for the conclusion of the final contract, and in any case within three years from the transcription of the preliminary contract, the parties do not transcribe the final deed of sale.
The transcription of the preliminary contract implies, of course, an additional fee to be paid to the Notary (about 1000/1200 euros only for the transcription formality).
Although this is an additional expense, we always advise the parties to proceed with the transcription for the greater legal protection afforded to the transaction.
THE MEDIATOR AS A TRUSTED ADVISOR
The distinction between a registered and a transcribed preliminary agreement is one of the many details that need to be taken into account in the buying and selling process.
That is why, even if the sale takes place without intermediation, the parties should rely on a trusted mediator to guide them through all the stages of the transaction.
The signing of the preliminary agreement is not a necessary stage of the sale, as the parties can proceed directly to the deed.
If one chooses to sign a preliminary contract, it is advisable to conclude it in front of a notary in order to request its transcription for the reasons indicated above.