The only house in Italy is not foreclosable: the Supreme Court reaffirms the principle

Introduction

Is the only house in Italy always foreclosable? When can the only house be foreclosed?

The Italian Supreme Court, in its Order No 32759 of 16 December 2024, reaffirms the principle that only houses are not foreclosable.

Moreover, the ruling confirms the improcedibility of the execution already started.

The ratio (the purpose) of the rule is to protect the owner’s right of habitation, even if there are creditors who intend to bring an action to recover the debt.

For a real estate to be considered non-foreclosable, certain requirements must be met.

Impossibility of the Italian only house to be foreclosed

The principle that the only house is not foreclosable is not a novelty in the Italian legal system; it was introduced by Decree-Law No. 69/2013, which amended Article 76 of Presidential Decree No. 602/1973, according to which the collection agent may not proceed with the expropriation of the property if it is the only one owned by the debtor, indeed.

Therefore, according to the Decree, if the debtor is the owner of only one piece of real estate, this cannot be subject to enforcement.

Notion of “only house”

For the purposes of non- foreclosability, the rule refers, literally, to the only house owned by the debtor.

Before proceeding it is appropriate to make a brief clarification since the term ‘only house’ may be confused with the term “first home”.

First home

The notion of “first home” (also callede “main residence”), to which, in Italy, we are most accustomed when speaking of real estate, is particularly relevant when buying and selling it.

The first home requirement allows the purchaser to take advantage of concessions and benefits, especially with regard to the reduction of taxes that must be paid at the time of purchase, indeed (VAT, registration, mortgage and cadastral taxes; https://antonellolawfirm.com/2024/11/21/buying-a-property-in-italy-with-main-residence-excemption/).

Only house

For the purposes of non- foreclosability, Article 76 of Presidential Decree No. 602/1973 provides among the requirements the uniqueness of the property.

In other words, in order for the real estate to be non-foreclosable, it is necessary that the debtor is not the owner of other real estate units.

If, on the contrary, the debtor is the owner of ownership rights over two or more real estate units, this favourable regime cannot be applied.

Since the purpose of the rule of law is the protection of the right of residence, its purpose would be undermined if the debtor had another property in which to live, in addition to the attached property; in this respect, the creditor’s interest in proceeding in order to have his claim satisfied would be emphasised.

The requirements for the real estate to be non-foreclosable

The requirement of the only house is necessary but not the only one relevant for the application of the favourable regime.

Article 76 also requires the presence of further requirements for the purposes of the application of the favourable regime:

the property must be intended for residential use;

the owner-debtor must have established residence in the property;

the real estate must not be a luxury property, and therefore stacked in the cadastral categories A/8 (villas) and A/9 (castles), or in any case true luxury features considered by the regulations in force.

The Supreme Court’s pronouncement

The case arose out of a condomino’s opposition against a real estate foreclosure promoted against him by the condominium and in which Euqitalia s.p.a. intervened.

It should be noted that Equitalia s.p.a. has been succeeded by the Agenzia delle Entrate riscossione, which is a public economic entity that performs the functions relating to national collection.

The Court of first instance declared the lack of jurisdiction and the condomino resumed the proceedings before the Tax Court.

In this case the condomino complained that the foreclose act, which concerned his only property, was to be considered unlawful.

The condomino then appealed to the Supreme Court, his objections having been rejected by both the Provincial and Regional Tax Commissions.

The Supreme Court, accepting in part the grounds of the appeal, pointed out that, pursuant to Article 76 of Presidential Decree No. 602/1973, the debtor’s principal residence cannot be subject to forced expropriation if all the following requirements are met:

it is not a luxury property;

it is used as the owner’s residence;

it is the only property owned by the debtor.

Since all the prerequisites were met, the Court also ruled that the already commenced foreclosure proceedings could not be continued.

Other limitations

In any case, it should be pointed out that even in the event that the debtor is the owner of two or more real estates, pursuant to the same Article 76, it is not possible for the collection agent to proceed with the foreclosure of the real estates if the total amount of the claim for which enforcement is being carried out does not exceed EUR 120,000.

Buying a property in Italy with main residence excemption https://antonellolawfirm.com/2024/11/21/buying-a-property-in-italy-with-main-residence-excemption/

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