Transfer of ownership of a property: everything you’ve got to know

Original article written by Alessandro Gallucci (condominioweb)

Legally speaking, when does the transfer of ownership of a property actually happen? Is it in the moment that both the buyer and the seller consent to the exchange, or when the preliminary contract is signed, or when the house and keys are handed over?

This question has serious ramifications for the rights of both parties and what they can claim, and also for the counterparties in the transaction, with the risks and responsibilities related to owning a property.

We start with a simple fact: in relation to property purchases in the Italian legal system, the so-called ‘consensual principal’ in article 1376 of the Civil Code or rubricato Contratto con effetti reali, states that:

“In the contracts which have as their object the transfer of property of an individual, the implementation or transfer of a right in rem or the transfer of another right, the property or right is transferred and bought as a result of the consent of the parties legitimately manifested.”

This basically means that in Italian law it’s enough to formalise, in the way specifically stipulated, the consent of the parties to the contract so that the property or the rights to a property can be said to have been transferred from seller to buyer. This consent must be expressed in legally prescribed ways.

For example, in the case of properties, the Civic Code establishes that it is necessary for the purchase to finalise the contract in writing privately or by public deed, or else the transfer may be null and void. This means that if someone intends to sell their property to someone else, they should do so with a written contract containing all the basic elements of the agreement (consent, subject matter or object, and cause).

Once the agreement is closed, that is, when the contract has been signed, the sale should be considered completed and the property then passes to the buyer.

There are two more considerations to bear in mind:

a) For the transfer of a property, the trascrizione (a record of the property in the public register) is not strictly necessary as the only purpose of this is to make it public, making the transfer available to third-parties. However, it is highly recommended to do it anyway.

b) The handing over of the property by the seller represents an obligation related to the contract and has no relevance in relation to the property transfer.

In this context, the preliminary contract has no value in terms of the property transfer. In a preliminary contract, the parties simply commit themselves to creating and signing a contract for the sale of the property at a later date.

As such, a number of points are established in the preliminary contract which fix and determine the terms and conditions to be used in the final contract. This contract may be subject to judicial enforcement according to article 2932 of the Civic Code in order to ensure the sale, but it is not valid for the transfer of the property.

One important reason for allocating ownership of the property in the moment that consent is exchanged has to do with the risks related to the disappearance or destruction of the property before it is handed over. The first part of article 1476 of the Civic Code brings it home to just us how decisive this consent is. The law states:

“In contracts which transfer the title of a certain property or rights in rem, the disappearance of the property for reasons not attributable to the transferring party does not release the buyer from their obligation to provide compensation, even when the property has not been handed over.”