ITALY Law and Practice Contributed by: Guido Alberto Inzaghi, Ivana Magistrelli, Silvia Gnocco and Gabriele Paladini, SI – Studio Inzaghi
from the date the purchaser takes possession of the property. These provisions may lead to the termination of the purchase agreement and to a full refund of the purchase price. According to current market practice, the parties usually negotiate and include additional repre - sentations and warranties and agree to express - ly depart from the set of rules included in the Italian Civil Code in relation to warranty defects. Additional representations and warranties are usually included in sale and purchase agree - ments, eg, certain representations and war - ranties relevant to the tax regime covering the transaction. Parties usually include contractual remedies or special indemnities to cure any breach of the representations and warranties preventing the termination of a sale and purchase agreement once the transfer of title has been executed. The representations and warranties generally last for a certain amount of time following the execu - tion of the sale and purchase agreement and the purchaser will not be able to cover claims that arise following the end of the applicable survival period (which usually ranges from six months to two years, although representations and warran - ties covering the seller’s title to the property and tax matters usually remain valid until the statu - tory terms provided by law have elapsed). Warranty and indemnity insurance policies pro - viding cover for losses arising from breaches of the representations and warranties are being used with increasing frequency, particularly when one of the parties (often a real estate investment fund) is to be liquidated upon com - pletion of the relevant transaction. The policy is usually underwritten by the purchaser and
payment of the insurance premium is divided between the parties. 2.6 Important Areas of Law for Investors Investors should evaluate all of the tax aspects of the investment carefully. Other areas to be taken into account will vary depending on the type of investment being carried out. In relation to core investments, a detailed evaluation of leases in place will be required. In relation to value add investments (where the goal is to increase/create value), planning and zoning aspects should be evaluated in detail. The analysis of tax aspects, as well as planning and zoning aspects, should also be adopted if the acquisition involves devel - opment projects. 2.7 Soil Pollution or Environmental Contamination Italy applies the “polluter pays” principle, ie, an owner is only obliged to carry out the relevant remediation works if they are responsible for the pollution or contamination. If the owner does not carry out remediation works, they will not be enti - tled to carry out construction works and, in the worst-case scenario, the public authorities may carry out the remediation works at the owner’s expense. In this case, upon the sale of the area, the public authorities should return the excess price obtained through the sale compared to the costs borne by the public authorities to carry out the remediation works to the owner. 2.8 Permitted Uses of Real Estate Under Zoning or Planning Law The permitted use of an asset is set out in the general town planning scheme of the city. How - ever, in the case of existing buildings, the con - struction history of each asset should also be taken into account as it could affect the estab - lishment of a specific use.
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