A specially constituted Italian Supreme Court has recently issued an important ruling which establishes when a breach of planning regulations invalidates a purported sale of Italian property. This is the most extreme penalty for a breach of planning regulations. A buyer may go through the purchase process, pay the price but fail to acquire title to the property.
This decision is important because under recent legislation no appeals are allowed to the Supreme Court where any lower Italian Courts judgement complies with this ruling. Effectively it will be binding on the Italian Supreme Court, and on the lower courts, which is unusual for Italy, a Civil Law country where there is no doctrine of binding precedent.
Because there had been some uncertainty in the past, with different sections of the Supreme Court coming to different conclusions, it was necessary to establish the legal principle / draw the line.
The dispute arose out of a property purchase registered in the name of the wife and mother-in-law of the real buyer / applicant. A few years later, after substantial building works in breach of planning permission and local regulations had been carried out at the property and the marriage had broken down the purchaser tried to have the acquisition correctly re-registered in his name. However, he found that his former wife and mother in law had already sold the property to third parties.
The applicant needed to find a way to reverse this sale, in order to acquire back title to the property he had paid for and came up with the idea that because the property in question was now, following the works he had carried out, in substantial breach of applicable planning regulations, the purported sale, after he had carried out the offending works was, null and void at law.
Thus, he claimed, because of the breach of planning regulations, his wife / mother-in-law`s property sale was void, and the property should revert to him, as he was the last effective, compliant buyer.
This claim was rejected in the lower courts and the dispute was eventually taken to the Italian Supreme Court (Corte Suprema di Cassazione), where two lines of judgements of different sections
of the same court were opposing on the very same issue.
On the one hand the “substantive” line of judgements which ruled that an Italian property transfer is always void if it relates to a sale of a building which is substantially in breach of applicable planning regulations / planning permission.
On the other hand, the “formal” line of judgements, which in strict compliance with the letter of the law, dating back to 1985 and currently still in force, stated that an Italian property sale is only null and void if the full details of the relevant planning permission are not expressly quoted in the sale deed itself.
The Italian Supreme Court noted that different breaches of Italian planning regulations are sanctioned in different ways, with different, graded penalties. Starting with fines, progressing with demolition or suspension of offending works, and eventually with commandeering by the local authorities of the offending property itself, the Italian Supreme Court ruled that it is important to comply with the letter of the law.
The Law (article 17 of Law No. 47 of 1985, re-enacted by article 46 of Presidential Decree 380 of 2001) says that any sale or transfer of buildings, or parts of buildings erected since the 17th March 1985 is void and cannot be enforced, if the vendor does not state in the Sale Deed the full details of the applicable planning permission, or the relevant planning amnesty order.
The Italian Supreme Court noted that this is a formal legal requirement. It is provided for the protection of a buyer. The details are required to be stated in order to enable a potential buyer to check the actual planning situation of the property, before he actually buys it. Any careful buyer is well advised to acquire a draft of the conveyance before the sale, and actually to check the statements of the vendor.
Thus, the Italian Supreme Court has now come to a definite and final decision. An Italian property transfer will only be null and void if the full details of the planning permission or the relevant planning amnesty order, are not expressly quoted, or if these details have been invented because they do not exist in reality, but not otherwise.
Any other breaches of planning regulations are penalised in different ways by the legislation, which will not result in the avoidance of the property transaction itself.
This ruling has important consequences. Foreign buyers are often confused, sometimes misled on the role of Italian notaries in Italian property transactions.
An Italian notary will normally only be interested that his sale deed is not void at law and title to the property is validly transferred from the vendor to the buyer. So, in normal circumstances, an Italian notary will only check that the planning permission details are correctly quoted in the sale deed.
An Italian notary will not normally inspect the property, nor check that any building being sold is fully compliant, in detail, with current planning regulations. His job is to make sure that the property is correctly transferred, warts and all, from the seller to the buyer.
So, while an Italian property buyer can rest assured that his Italian notary will ensure that the details of the relevant planning permission are correctly quoted in the Title Deed, there is no guarantee that the property fully complies, in detail, with the relevant planning permission / regulations.
The further consequence of this is that, unless the Italian property buyer has carefully checked beforehand, with an independent Italian lawyer and a local surveyor, that the Italian property he wishes to acquire complies in detail with the applicable planning permission / regulations, notwithstanding the assistance of an Italian notary, he will still be at risk.
The “lesser” (which are not really less stringent) planning penalties: fines, demolition and seizure by the authorities of offending buildings could still apply, in the case of “lesser” breaches of planning regulations, even if the Deed of Sale correctly quotes the relevant planning permission details, and is fully valid and enforceable.
“Caveat Emptor” (from Latin: Buyers beware!).
Avv. Claudio Del Giudice – 18.04.2019 Copyrights reserved
P.S. – Postscript
05.09.2019 – The third civil section of the Italian Supreme Court issued today a judgement confirming the earlier decision of the Supreme Court, Joint Sections (Cassazione Sezioni Unite) of 22.03.2019. A contract for the sale of Italian property is not void just because there is a breach of planning regulations. Provided the details of a planning consent / amnesty document are quoted / produced, the contract is valid and the sale can proceed, subject of course to a claim for damages from the buyer. This judgement goes even further. If the seller does not produce the details of such planning consent, the buyer can do so, even after litigation has commenced, up to and until a decision is issued by the Courts on the validity and enforceability the property sale contract.
Avv. Claudio Del Giudice – 05.10.2019 Copyrights reserved.