The rent to buy in the Italian Law

1. Introduction
2. The rent to buy: definition
   1. Who are the parties involvend into the rent to buy contract
3. The price
4. Duration
5. The transcription of the rent to buy contract

Introduction

The rent to buy was introduced into Italian legal system by Decree-Law No 133 of 12 September 2014, converted with amendments by Law No 164 of 11 November 2014, and is a contract that allows one party to immediately enjoy a real estate asset by paying a periodic rent and, subsequently, to proceed to purchase the right of ownership of the same asset.

The rent to buy: definition

A rent to buy is an atypical contract that allows the immediate enjoyment of the real estate, and is aimed at a subsequent purchase of the same.

In other words, with a rent-to-buy the parties enter into a contract by which the real estate is granted for use, and which may become later a purchase, under the conditions established at the time of the conclusion of the rent to buy contract itself.

Who are the parties involvend into the rent to buy contract

The parties to the rent to buy contract are:

• the lessor: the owner of the property;

• the tenant: the person who enjoys the property and has the right to buy.

The price

Due to the two different phases of which the contract is composed, the amount paid by the tenant is also characterised by a dual component:

• the first relating to the payment of periodic rent for the tenant’s enjoyment of the real estate;

• the second concerning the possibility of setting off the rent paid against the purchase price when the real estate is transferred.

Both the periodic rent and the amount of the purchase price must be clearly defined in the rent tu buy contract  and be reflected in it since they are essential elements of it.

Duration

The duration can be freely agreed between the parties when the contract is concluded.

The tenant, within the agreed term, can decide whether to purchase the property by paying the residual amount between the agreed purchase price and the rent already paid.

The parties may therefore freely agree on the term, subject to the ten-year limitation.

This time limitation can be inferred from article 23 paragraph 3 of Law 164/2014, which raises, in the specific case of a rent to buy, the three-year term provided for by paragraph 3 article 2645 of the Italian Civil Code to ten years.

The transcription of the rent to buy contract

Paragraph 1 of the aforementioned article provides for the obligation to transcribe the rent to buy contract regardless of its duration.

Some important points to remember regarding the transcription of the rent to buy contract

• pursuant to art 2643 paragraph 1 number 8) of the Italian Civil Code the transcribed rent to buy contract is enforceable against third parties;

• pursuant to article 2645 bis of the Italian Civil Code, in the event the deed of sale is executed, the effects are retroactive at the time of the transcription of the rent to buy contract, in the event the sale is transcribed within the term of the rent to buy contract established by the parties, and in any case not later than ten years;

• in the event that the sale is not finalised and the rent to buy contract ceases to have effect, care must be taken to cancel the transcription of the contract itself; cancellation may take place following an act confirming the parties’ willingness to do so, or a final judgment.