Buying and selling in Italy, what are the down payment, the advance and the fiduciary deposit
Deposit, advance and fiduciary deposit for the purchase of a property in Italy: what they are and what they are for.
During the various steps of the buying and selling process of a property for sale in Italy, in most cases it becomes necessary in order to strengthen the contract, in the form of a purchase proposal or preliminary notary of sale, to pay a deposit on the final price.
The amount of the down payment for the purchase of a house is not fixed by a written rule, it consists of a
agreement between the parties, the buyer and the buyer, and is established following a negotiation. Obviously, the higher the amount of the deposit, the more the parties are solidly linked economically.
It must be said that it is possible to make a purchase proposal for a property for sale, even without a deposit. In this case, the agreement would be very weak and both parties could withdraw from their contractual obligations, without the fear of losing a sum of money, without prejudice to any specific legal aspects, which could be attributed to the defaulting party.
These payments can take on different functions: down payment, advance, fiduciary deposit, three institutes provided for by the Italian Civil Code, which apply differently, with different guarantees and obligations.
In concrete terms, these three different institutes, which are often used in common language without distinction, actually differ greatly from each other.
Let's see them together, so as to clear up any confusions and provide the right interpretation for each of the three, specifying at which stage of the buying and selling process they come into play and why they are so important.
Definition and types of deposit
What is the difference between a penitential deposit and a confirmation deposit?
The confirmatory deposit (Article 1385 of the Civil Code) is the most frequent and corresponds to the ancient custom of delivering to the other party a sum of money (or other fungible things) to confirm the obligation assumed. If the party who granted the deposit defaults, the other party can withdraw from the contract and keep the deposit. If the party who received the deposit is in default, the other party can always withdraw and request double the amount paid.
In both cases, this is a faculty granted to the interested party who can still insist on compliance, and request compensation for the further damage suffered.
The penitential deposit (Article 1386 of the Civil Code) has instead a different function that represents the consideration for the right of withdrawal, established conventionally between the individual parties.
Those who decide to withdraw must give the other party what has been agreed as a penitential deposit and the other party cannot ask for anything else, in practice a penalty fixed a priori in the event of withdrawal or breach of the contract.
Given the deposit, the contractors reserve the choice between withdrawal and fulfillment. In the first case, the withdrawing person loses the deposit given (or, if the party who received it withdraws, he must return double the deposit received).
Definition of advance or down payment
The advance or down payment is different from the deposit, although it is often thought that they are the same thing. The advance represents a sum of money established upstream by the two parties involved in the sale and is never returned, being considered a partial payment followed by the balance of the total amount.
The practical implications are varied. For example, if the contract is not fulfilled due to a cause which has not occurred to either of the two parties, the deposit must be returned in full.
The deposit cannot be withheld as compensation for any breach of contract. For this to be possible, a lawsuit must first be initiated. If, on the other hand, there is no sentence to quantify the damages, the advance must be returned in full.
Definition of fiduciary deposit
The fiduciary deposit is, in a certain sense, the "predecessor" of the deposit, since it is always an amount paid to guarantee the commitment made to complete the real estate sale.
Before acceptance of the real estate purchase proposal, the sum paid by the buyer as a guarantee is called a fiduciary deposit, money, free and non-interest bearing, paid by non-transferable bank check or by bank transfer to the agency's dedicated current account. real estate.
This amount will have the value of a confirmatory deposit and will be delivered to the seller in case of acceptance of the proposal or in case of fulfillment of some conditions precedent or resolutive included in the purchase proposal. Otherwise, of non-acceptance of the proposal or non-fulfillment of the suspensive or terminating clauses, the amount in fiduciary deposit will be returned to the buyer.
It should be remembered that a purchase proposal is binding for the buyer but not for the seller, who is free to change his mind and withdraw from the sale until he accepts and countersigns the proposal. However, the purchase proposal has a deadline: when it expires, if it is not countersigned for acceptance by the seller, it loses its validity completely, with the simultaneous return of the amounts received as a fiduciary deposit or deposit to the party proposing the purchase.
Broker Immobiliare Exclusive Real Estate, a company specializing in the sale of luxury properties in Tuscany and Liguria, organizes 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 his own personal establishment of a current account dedicated to real estate transactions, in order to protect the sale of prestigious properties, only and exclusively in total safety and transparency.
