Deposit of the price with the notary in real estate transactions

Price Deposit and Security in Real Estate Transactions

In real estate transactions, the payment of the price is a delicate phase due to the variables and risks associated with it. Methods such as the instant bank transfer, bank draft and cashier's cheque have different methods and timeframes for verification and collection. While the instant transfer is immediately verifiable, the bank draft and cashier's cheque may entail variable collection times and lack of guarantee on solvency.

To resolve these critical issues and ensure the security of the parties involved, the 2014 Stability Law introduced the model of depositing the sums in the notary's dedicated account, borrowed from the French experience. This system allows the notary to receive the sums in advance and verify the buyer's financial availability, guaranteeing the seller. Payment to the seller is made upon the occurrence of specific conditions, such as the delivery of the keys or the cancellation of prejudicial formalities.

The price deposit guarantees the protection of assets, being separate from the notary's personal and professional cash flows, and is non-bailable. The sum must be officially registered, and the registration receipt must be delivered to the depositing party.

The use of the price deposit is optional and depends on the parties' mutually agreed will, with the Notary acting as legal advisor to balance interests and ensure the exact performance required. This instrument may also be used in other transactions to verify the performance of contracts with consideration.

In summary, the price deposit in the Notary's dedicated account offers greater security in real estate transactions, protecting the parties involved and ensuring compliance with the agreed terms.

 

The National Council of Notaries' Guide on Price Deposit

 

THE SPIRIT OF THE RULE

The legislator has always been concerned to provide effective protection for homebuyers: thus in 1996 it provided for the possibility of transcribing the preliminary; in 2005 the obligation of the builder of 'new or renovated' houses to deliver to the promising buyer a surety guaranteeing the risk of his bankruptcy in the delays between the preliminary and the final. The Competition Law (Law No. 124/2017, Article 1, paragraphs 63 et seq., which came into force on 29 August) has come full circle by providing the buyer with the option of requesting the notary public to deposit the price with the notary public until the purchase contract has been transcribed. The purchaser is exposed to the risk that, between the date of the deed and the date of its transcription in the aforementioned registers, an unexpected encumbrance may be published against the seller: a mortgage, a seizure, a foreclosure, a court order, etc. Scenarios of the type just described have occurred very rarely. Indeed, notaries fulfil the transcription obligation in a very short time, almost eliminating the risks. The traditional 'scene' (at the deed the seller hands over the keys and the buyer pays the price) is therefore destined to change. The new law in fact states (importing to Italy a practice already in force in France for some time) that if 'requested by at least one of the parties', the notary must keep the balance of the price intended for the seller on deposit until the publicity formality by which the certainty that the purchase has been perfected without encumbrances is acquired.

 

EFFECTS OF THE DEPOSIT

The sums that the notary is to receive from the purchaser (and which must necessarily be in the name not of the seller, but rather of the notary himself) will be segregated by him in a dedicated current account that he has specifically opened in a bank with the destination "dedicated account pursuant to Law 147/2013". These sums are absolutely safe: both because they are segregated from the notary's assets (they do not fall into his succession, in the event of his predecease; they do not go into his spouse's legal communion; they are unseizable by his creditors) and because they are also unseizable by the seller's creditors. Not only that. The interest income that the dedicated account produces benefits small and medium-sized enterprises.

 

POSSIBLE FURTHER USES OF THE PRICE DEPOSIT

The price deposit protects against the risk of prejudicial transcriptions or encumbrances in the delays between the stipulation and transcription of the deed. But it may be useful to the parties in the following hypotheses:

1) PRESENCE OF A PENALTY OR MORTGAGE - The house is encumbered by a foreclosure or mortgage. It is agreed in the deed that the price will only be paid once these formalities have been cancelled.

2) HOUSE SUBJECT TO LEGAL PREFERENCE - The property is subject to legal pre-emption. It is agreed in the deed that the price is paid once the possibility of exercising pre-emption has ceased to exist.

3) NON-LEARABLE HOUSE - It is agreed in the deed that the price is paid only once the certified report of habitability has been submitted.

4) HOUSE NOT FREE FROM PEOPLE OR THINGS - The property is still occupied by the seller. It is agreed that the price is paid only upon delivery of the house to the buyer free of persons and things.

5) PRESENCE OF DEBTS OF THE SELLER - The seller has not yet paid all the condominium expenses for which he is responsible (e.g. extraordinary expenses resolved before the deed for works not yet carried out at the time of conclusion). In order to guarantee the buyer (who may be called upon to answer for these expenses pursuant to art. 63 of the Civil Code) the sums necessary to cover these expenses are deposited with the notary, with the notary being instructed to make the payments requested by the condominium administrator.

 

OPTIONALITY OF THE PRICE DEPOSIT

Unlike in France, the protection of the price deposit is optional: at the time of the deed, the buyer, depending on the case, may opt to make use of it or waive it. It would be in accordance with fairness and good faith in negotiations between the parties (and also in dealings with the notary) that such an option be manifested in good time for the seller to make arrangements. Nothing precludes, however, that in the face of serious unforeseeable reasons, the option may also be manifested directly at the time of conclusion.

 

PROTECTION ALSO FOR THE SELLER

The deposit of the price guarantees the correct and safe completion of the transfer of the money from the buyer to the seller, who will collect the sums after a few days but will not run any risk as to the actual collection of the agreed sum.

Broker Immobiliare Exclusive Real Estate, a company specialised in the purchase and sale of luxury properties in Tuscany and Liguria, organises the entire financial transaction for the buyer for the payment of the agreed price, both for Italian and foreign buyers, making use of Notaries and professionals in the sector, and with its own personal set up of a current account dedicated to real estate transactions, in order to protect the purchase and sale of prestige properties, exclusively in total security and transparency.

 

Broker Immobiliare Exclusive Real Estate