The Real Estate Law Review: Italy

Introduction to the legal framework

i Ownership of real estate

Ownership is a right in rem that grants to the owner the right to enjoy (i.e., to decide whether, how and when to use) and to dispose of things fully and exclusively, within the limits and in compliance with the obligations laid down by the legal system.

Ownership has the following features:

  1. it is perpetual (i.e., it is not subject to time limits);
  2. it is immediate (i.e., it does not need third parties' cooperation to be enforced);
  3. it is full (i.e., it grants general powers to enjoy and dispose); and
  4. it is exclusive (i.e., it grants the owner the right to exclude any third party in the relationship with the thing).

Nevertheless, ownership right is not unlimited: in exercising ownership right, the owner shall comply with the limits and observe the duties set by the legal system to safeguard both public and private interests (e.g., not damaging other properties or people, avoiding emissions and building within minimum distances).

According to the applicable laws, two sets of assets must necessarily belong to the state or to other public bodies (except under special circumstances):

  1. state property (beni demaniali) (such as beaches, ports, roads and waterways); and
  2. non-disposable property (patrimonio indisponibile) (such as mines, quarries and buildings intended for public service).

Both sets of assets may, if their nature permits, be exploited by non-public entities; for example, with concessions for the use of beaches for bathing establishments.

Ownership right can be split between more persons, who act as co-owners of the same right. Co-ownership can be voluntary (if agreed between the parties), legal (if provided by law) or incidental (e.g., hereditary co-ownership). Each co-owner will have an ideal share of the full ownership right that indicates the quantum of power over the co-owned real estate and its exercise of such right will be limited by the rights of the other co-owners and vice versa.

In general terms, each co-owner has the right to use the common real estate in its entirety – without autonomously altering its use or preventing the other co-owners to make equal use – and to dispose of its co-ownership quota (and not of the entire asset).

A peculiar figure of co-ownership over a real estate is condominium in buildings, which is specifically regulated under the Italian Civil Code. Under a condominium, each single owner is at the same time exclusive owner of its piece of property included in the condominium and co-owner by virtue of a forced co-ownership of all common parts of the building. Specific rules apply to condominiums in buildings, both with respect to the collective rights of the co-owners over the common parts of the buildings and to the individual right of each co-owner of the portions of its exclusive ownership.

Ownership may also be limited by other in rem rights codified under Italian law (e.g., surface right, emphyteusis, usufruct right, use right, housing right, easement rights, pledges, mortgages and privileges) and by pre-emption rights.

ii System of registration

Real estate properties, and most in rem rights associated thereto, shall be registered with the relevant real estate registers and in the real estate tax register (the cadastral register).

The real estate registers provide certain information relating to the properties, such as transfers of ownerships that have occurred in the past and existing encumbrances, thus allowing a potential investor to have knowledge of the rights existing over a real estate asset with a high level of certainty.

Except for a few Italian north-east territories where a specific registration regime applies, registration in the real estate registers is not a condition for the validity of a transfer of real estate. Instead, it ensures preference and disclosure effects, meaning that if there are multiple registrations on the same real estate asset, title of the person who registered first prevails over the others, and the relevant right may be enforced against third parties.

For real estate to be registered, deed of transfer of ownership shall be executed before a public notary who verifies information set forth in the real estate registries and takes care of registration formalities of the deed.

The cadastral register essentially allows the determination of the taxable income of a property and contains other useful information, such as the property plans. It does not attest the title of ownership over real estate.

iii Choice of law

According to Italian law, transactions related to rights in rem on real estate located in the Italian territory are governed by Italian law (lex rei sitae). However, the parties may opt for the application of a different law governing their wider contractual relationship and the overall transaction; it being understood that the deed of transfer executed before the notary public must be subject to laws of Italy.

Overview of real estate activity

Investment volumes in Italy seem to have partially recovered, although they have not yet returned to pre-covid 19 pandemic levels. The number of transactions in the logistic sector increased in 2021, with generalist and specialist investors consolidating on primary markets and looking for new products, residential (with investments mainly focused on developments and redevelopments) and core offices. The retail sector is still uncertain, with an increased demand for discounts and investments mainly deployed on core assets in prime locations.

Distressed opportunities and non-performing loans have been interesting areas, particularly in the segments most exposed to the negative consequences of the pandemic.

A positive environment for new investments is expected following the launch of the National Recovery and Resilience Plan, the Italian articulation of the Recovery Fund 'Next Generation EU', set up in July 2020 by the European Council for a total amount of €750 billion in favour of the countries that are most affected by the pandemic.

Foreign investment

Italian law does not provide for specific restrictions on ownership or investment in real estate located in Italy by overseas investors, except for those imposed by the reciprocity principle and those related to investments in sectors qualified as being strategic for the purposes of national security and defence.

According to the reciprocity principle, foreign investors are allowed to invest in Italian territory, only if and to the extent an Italian investor is similarly allowed to invest in the country of origin of such foreign investors, or if such investments are regulated by an international treaty entered into by Italy and the relevant foreign country. Should the reciprocity principle not be fulfilled, the transaction carried out would be invalid. Note that the reciprocity principle is verified per se (and, therefore, it is not relevant) for EU investors, although it is still relevant for certain non-EU investors, for which it is always advisable to carry out the necessary checks (these include a review of the foreign legislation and applicable case law).

Moreover, foreign investments in sectors, assets, infrastructures and technologies that are qualified as being strategic for the purposes of national security and essential interests of the Italian Republic are subject to a preliminary screening of the Italian government, which may authorise the foreign investments subject to certain conditions and limits (such as governance rules, information disclosure, management of intellectual property rights) or even veto them through the exercise of special powers provided by the law (usually known as 'golden powers'). In the light of the Regulation (EU) 2019/452 and in an effort to protect the Italian financial system and productive chains during the pandemic, the Italian government expanded the scope of such golden powers from energy, transportation and communications networks to other critical infrastructures and technologies, as well as to the supply of primary goods. As a result, any transaction that involves key real estate assets critical or related to the operation of strategic infrastructures (e.g., ports, highways, infrastructures for the storage or transportation of fuel, and energy) is subject to the Italian government's golden powers. However, as of the end of 2021, no exercise of the veto power by the Italian government had been recorded with respect to the real estate sector.

Structuring the investment

i Type of investment

Investment in real estate under Italian law may occur either through an asset deal, where the investor acquires, directly or indirectly, real estate assets located in Italy, or through a share deal, where the investor acquires an interest in an Italian entity that owns real estate assets located in Italy.

The choice between the two types of deals may also be influenced by the specific asset class of the investment (for example, share deals are the most popular choice for shopping centres and hotel acquisitions).

Asset deals are usually more straightforward than share deals, as no seller's liabilities or contracts are attached to the real estate property, except for certain tax liabilities (resulting in a special real estate lien being recorded over the property by operation of law) and specific contract types that are transferred by operation of law together with the property (e.g., lease agreements, condominium rules and agreements with porters).

Share deals require a broader due diligence on the whole target entity, including on accounting and taxes. Moreover, the structuring of the investment may be more complex because it requires carrying out an analysis of the most suitable Italian investment vehicle based on the nature of the foreign investor and to take into consideration, inter alia, the international tax framework.

ii Investment vehicles

Vehicles commonly used in Italy for investment in real estate properties include both non-regulated vehicles and regulated vehicles.

Non-regulated vehicles are usually in corporate form, which may also be listed on the capital markets (i.e., listed real estate investment companies (SIIQs)). Moreover, pursuant to certain amendments to Italian securitisation law (Law No. 130 of 30 April 1999), a special purpose vehicle for the securitisation of proceeds arising from real estate properties (RE SPV) has been introduced in Italy with an advantageous tax regime.

Conversely, regulated vehicles can be either in contractual form, such as real estate investment funds (REIFs), or in corporate form, such as real estate investment companies with fixed capital (SICAFs), introduced by Legislative Decree No. 44 of 4 March 2014, implementing in Italy the EU Alternative Investment Fund Managers Directive (AIFMD).

Non-regulated vehicles

The most common non-regulated investment vehicles are corporate vehicles: real estate joint stock companies or limited liability companies. Non-regulated vehicles allow investors to directly manage their investment. This is because they may take, directly in the shareholders' meeting or through the board of directors, all the decisions concerning the management and operation of the vehicle.

From a tax perspective, real estate companies are subject to corporate income tax (IRES) at a rate of 24 per cent, on a tax base equal to the net income, resulting from the profit-and-loss account duly adjusted according to the tax rules, and to regional tax on business activities (IRAP) at a rate of 3.9 per cent levied annually on the net value of company production derived from the activity carried out in the territory of each Italian region.

Apart from ordinary companies, a special civil and tax regime applies to Italian SIIQs, which are joint-stock companies, resident for tax purposes in Italy, whose main activity is the rental of real estate properties and whose shares are listed on the Italian stock exchange or on regulated markets of EU or EEA Member States that allow an adequate exchange of information for tax purposes with Italy. In particular, from a tax perspective, SIIQs may benefit from IRES and IRAP exemption on profits deriving from lease activity, if certain requirements are met (that mostly concern shareholding and business activity). Moreover, SIIQs may benefit from certain tax allowances in relation to transfer taxes (i.e., registration tax, mortgage and cadastral taxes) to be paid on the contribution or sale of real estate properties to a SIIQ.

Finally, the Italian legislator recently introduced RE SPVs, which are unregulated securitisation vehicles, with a corporate purpose limited to the securitisation of real estate assets (i.e., the purchase of properties funded through the issuance of notes to investors), whose profits are used to pay out proceeds under the notes issued. From a tax perspective, RE SPVs are exempt from IRES and IRAP on profits deriving from the real estate securitisation. The purchase and sale of real estate assets by RE SPVs are subject to the ordinary value added tax (VAT) and transfer taxes regime.

Regulated vehicles

Regulated real estate investment vehicles can be either in contractual form (REIFs) or in corporate form (SICAFs). REIFs must be managed by an external asset management company (Italian or based in an EU country, pursuant to the AIFMD management passport). SICAFs can be both externally managed by an asset management company (such as a REIF) or internally managed, generally having a governance structure that reflects the presence of business shareholders (which participate by providing the SICAF with its management and organisational structure and with the financial resources to carry out the business and meet the regulatory capital requirement) and investor shareholders.

Both REIFs and SICAFs are undertakings for collective investment regulated by Legislative Decree No. 58 of 24 February 1998 (the Consolidated Law on Finance) and by the implementing provisions issued by the Ministry of Economics and Finance, the Bank of Italy and Consob. Furthermore, both REIFs and SICAFs qualify as alternative investment funds within the meaning of the AIFMD.

From a tax perspective, REIFs are taxable persons for IRES and IRAP purposes, but they are exempt from IRES and IRAP if, and to the extent that, they meet the regulatory requirements to qualify as undertakings for collective investment provided by the Consolidated Law of Finance (such as, inter alia, plurality of investors and independence of the fund manager). In any case, REIFs are exempt from IRES and IRAP if participation in them is exclusively by institutional investors (inter alia, foreign undertakings for collective investments that meet certain requirements). The tax treatment of SICAFs for IRES purposes is the same as for REIFs. Conversely, unlike REIFs, SICAFs in principle may be subject to IRAP (at 4.65 per cent), except for private placement and reserved SICAFs whose taxable basis for IRAP purposes would be equal to zero.

From a VAT standpoint, the management company of the REIFs is the VAT taxable person (with a single VAT number for itself and all the REIFs managed). In particular, the sale of goods and the supply of services carried out by the REIFs represent separate accounts of the management company for VAT purposes. However, the management company makes a single liquidation of VAT and files a single VAT return for itself and all the REIFs managed. Conversely, SICAFs (managed internally or externally) are taxable persons for VAT purposes in Italy and have their own VAT position, distinct from that of the management company.

Real estate ownership

i Planning

Both the Italian state and the regions have legislative authority over town planning issues under the Constitution.2 As a result, both planning control and construction operations are governed by legislation enacted at the national and at the regional level.

Municipalities have the authority to approve urban planning instruments and issue planning permits through the adoption of the General Plan Regulation and the relevant implementation plans.3 Furthermore, changes of use are possible only if permitted by the local regulation and specifically authorised.

Town planning regulates the possible uses and development of the territory balancing the private expectations of the exploitation of property with the need to preserve the territory from economic initiatives incompatible with the protection of environment, landscape and cultural heritage. Most of these interests may require additional authorisations or may themselves be the subject of a specific planning act, which often prevail over the municipality planning.4

ii Environment

The Italian legislative framework on contaminated land is laid down in Legislative Decree No. 152/2006 (hereinafter the Environmental Code).5 Such regulation implements the European principles of 'the polluter pays' and of precaution and prevention.

Under the the polluter pays principle, the liability for the remediation procedure is borne by the party who caused the contamination. Nevertheless, even if the property owner is not the polluter, he or she must report to the competent authority any contamination as soon as it is discovered and must implement precautionary measures as imposed by applicable laws and regulations or by the authorities. Note that if the polluter cannot be identified, the competent authorities may adopt precautionary measures and clean up the property at the owner's costs.6

In relation to buildings, Italian law provides for a census of the buildings in which asbestos-containing materials are present. Italian laws and regulations set out obligations to manage or remove asbestos-containing materials within buildings, which also depend on the features and status of the material or on the use of the building, or both.

iii Tax

The indirect taxes regime applicable to the purchase of real estate properties located in Italy depends on the characteristics of the seller, of the property (i.e., commercial or residential) and on the renovation works executed by the seller.

For VAT purposes, assuming that the seller is an Italian VAT-taxable person and the transaction involves a commercial property, the purchase would be:

  1. compulsorily subject to VAT (22 per cent or 10 per cent) (without the reverse charge procedure) if the seller has built or has executed certain renovation works (specifically listed by the Italian Building Code) in the five years prior to the purchase or if the latter occurs prior to the ultimation of such works; or
  2. otherwise exempt from VAT or subject to VAT (10 per cent) (with the reverse charge procedure) by option of the seller. The application of the exemption may give rise to certain limitations with respect to the deduction of input VAT.

The purchase of commercial properties is subject to a fixed registration tax (equal to €200) and to proportional mortgage and cadastral taxes (respectively 3 and 1 per cent). Such taxes are reduced to one-half (respectively 1.5 and 0.5 per cent) if part of the transaction is an Italian REIF or a SICAF or if the purchase is made by a SIIQ. However, on the basis of recent EU case law, such reduction may not apply for an investment fund established under the laws of a foreign jurisdiction.7

iv Finance and security

Real estate transactions are usually financed by banks or other providers of debt financing authorised for lending activities in Italy.

In addition to the main security interest consisting in a first ranking mortgage to be granted over the financed property, lending banks usually ask for the following:

  1. an assignment by way of security of the receivables arising under the main contracts executed in relation to the property or in the context of the relevant development project, such as the relevant acquisition agreements (if any), the lease agreements, the insurance policies, the asset management agreement and the property management agreement and the main building contracts (if any);
  2. a pledge over the bank accounts of the borrower aimed at granting a pre-emption right of the lenders over the cash flows generated by the asset, including those arising under the receivables assigned by way of security in favour of the lenders;
  3. a loss payee clause over the insurance policies relating to the property (other than any insurance policy covering against third-party liabilities); and
  4. an assignment by way of security of the receivables arising under any hedging agreement executed by the borrower in connection with the captioned financing transaction.

Notably, real estate transactions implemented through share deal are usually structured as a merger leveraged buyout, pursuant to Article 2501 bis of the Italian Civil Code. Accordingly, a loan is granted to an SPV incorporated for the purposes of the acquisition of the target and, indirectly, the real estate. Pursuant to the Italian law provisions on financial assistance preventing a company from (directly or indirectly) granting loans or guarantees for the purchase or subscription of its shares, at closing, lenders cannot benefit from any security interests over the target's real estate and its cashflows. The financing transaction is thus structured in two stages:

  1. the first stage starts at closing, during which an acquisition loan is granted to the SPV and is only secured by an assignment by way of security of the receivables arising out of the transaction documents, including any shareholder loan granted by the investors to the SPV in order to finance the equity portion of the purchase price, and a pledge over the shares of the SPV (First Stage Security Package); and
  2. the second stage starts upon completion of the merger leveraged buyout between the SPV and target to be performed within a limited period after closing (usually less than six months).

During the second stage, in addition to the confirmation and extension of the First Stage Security Package, the security package provides for all the security interests described above, including a first ranking mortgage over the real estate, a pledge over the bank accounts on which cashflows are credited and an assignment by way of security of the receivables that arise out of any lease agreement relating to the property and insurance policy covering the same.

Leases of business premises

i Statutory law

Commercial leases are regulated by the provisions of the Italian Civil Code and by Law No. 392 of 1978 (the Tenancy Law), which are summarised below.

The Tenancy Law has been considered historically as pro-lessee legislation. According to Article 79 of the Tenancy Law, any clause aimed at limiting the legal duration of the lease agreement or at granting the lessor any advantage contrary to the provisions of the Tenancy Law is null and void, except in commercial leases of properties (which are not classified as historic heritage by administrative order) with a yearly rent exceeding €250,000 (major leases), where the parties are free to agree a different set of rules. Note that any departure from specific provisions of the Tenancy Law in major leases must be explicit.

Provisions of the Tenancy Law do not apply to lease agreements of going concern or business units that are widely used in the retail sector.

ii Duration

Commercial lease agreements must have a minimum term of six years, extended to nine years in case of hotel or theatre use, which are automatically renewed for a further six years (or nine years). Minimum duration requirements above do not apply to commercial lease agreements responding to temporary needs of the lessee, which are admitted pursuant to the Tenancy Law under certain conditions.

Upon the first expiry of the lease, the lessor is entitled to terminate the lease agreement (thus avoiding the first automatic renewal) only under certain limited circumstances; that is, if it intends:

  1. to use the premises as his or her domicile;
  2. to use the premises for the carrying out of its own business;
  3. to demolish and rebuild the property; or
  4. to refurbish the property in order to comply with certain regulations.

After first automatic renewal, no restrictions apply to the lessor's right to refuse to terminate the lease upon expiration (provided that the lessor gives adequate prior notice).

Pursuant to the Italian Civil Code, the duration of a lease agreement shall not exceed 30 years and it is automatically reduced to 30 years in the event the parties provide for a longer term.

iii Rent review and rent indexation

The Tenancy Law imposes certain limits to rent increase during tenure of the lease.

In particular, the increase in rent may not exceed 75 per cent of the variations in the consumer price index for blue- and white-collar households published by the Italian national institute for statistics (ISTAT), except for leases whose duration exceeds the minimum required by law where the cap can be increased to 100 per cent.

On the basis of Italian case law, step-up rents are considered legitimate. In any case, rent increase mechanisms shall be carefully reviewed and their compliance with the Tenancy Law verified on a case-by-case basis.

iv Termination of the lease agreement

According to the Tenancy Law, the lessee is entitled to unilaterally terminate the lease agreement early at any time, subject to a six-month prior notice, in the case of 'serious grounds' (gravi motivi).

Neither the Tenancy Law nor the Italian Civil Code defines the term 'serious grounds', the existence of which shall be evaluated on a case-by-case basis. As a general principle, Italian case law has established that serious reasons for termination occur when all the following conditions are met:

  1. the relevant event is beyond the lessee's control, and is not a result of the lessee's actions, decisions or will (i.e., objective reasons);
  2. the relevant event occurred after execution of the lease agreement and was neither predictable nor foreseeable at the time of execution of the lease; and
  3. the relevant event would render it extremely burdensome for the lessee to perform the lease agreement.

Furthermore, according to a recent Italian case law, a lessee that is a public entity (in the case at stake, the Italian tax agency) may be entitled to exercise early termination from the lease agreement for 'serious grounds' if, during the tenure of the lease, new laws that materially reduce the budget of the public lessee are enacted, provided that the other parameters of the 'serious ground' are fulfilled.

v Assignment and sublease

The lessee cannot assign the lease agreement or sublease the leased premises without the lessor's prior consent. However, the lessee may freely assign the lease agreement or sub-lease the leased premises, upon prior notice only to the lessor, if the assignment or the sub-lease is made to the buyer of the lessee's going concern. In this case, the lessor can oppose the assignment or sublease on 'serious grounds', by notifying the exception to the lessee within 30 days of receipt of the mentioned notice.

vi Pre-emption right and compensation for loss of goodwill

The lessee of a commercial lease, to the extent the activity carried out in leased premises involves direct contact with the public, is granted with the following rights:

  1. a pre-emption right in the event of sale of the leased premises by the lessor to a third party (in this respect, however, the Italian Court of Cassation stated in several judgments that the lessee shall not be granted such pre-emption right in the case of bulk sale (vendita in blocco)8); and
  2. a right to ask for compensation for loss of goodwill in the case of termination of the lease agreement by the lessor (for any reason other than a breach of contract by the lessee, the exercise by the latter of its right of early termination, bankruptcy, or other administrative procedures under Italian Bankruptcy Law, and order of the authority). The amount of compensation due to the lessee is set forth by the Tenancy Law and it is ordinarily equal to 18 times the monthly rent; however, the amount of compensation rises to 36 times the monthly rent if within one year of termination of the lease the same premises are used for an activity similar or comparable to that carried out by the previous tenant.

vii Transfer of the lease agreements

By operation of law, for the transfer of a real estate that is subject to a prior lease agreement, such lease agreement will remain effective and enforceable against the new owner of the real estate asset, thus preserving the stability of the lease.

Automatic transfer of certain provisions included in the lease agreement that do not strictly relate to the lease may be questionable (such as voluntary pre-emption rights or arbitration clauses). However, uncertainties can be mitigated by requiring the new owner of the asset to explicitly agree upon the lease and undertake to comply with its terms.

viii Lease registration

Lease agreements that have a duration of more than 30 days shall be registered with the competent revenue agency within 30 days of execution. Lease agreements having an initial duration of more than nine years must also be registered with the real estate registries. If a lease agreement longer than nine years has not been registered, it will be enforceable in respect of the future owner only for the duration of nine years.

ix Litigation

Pursuant to the Italian Code of Civil Procedure, litigation relating to leases shall be mandatorily submitted to the judge of the place where the leased premises are located, to be identified in accordance with the rules on competence and jurisdiction laid down by the same Italian Code of Civil Procedure.

Developments in practice

i National Recovery and Resilience Plan

In 2021, Italy launched the National Recovery and Resilience Plan (PNRR), namely, the Italian articulation of the Recovery Fund 'Next Generation EU', set up in July 2020 by the European Council, which will be able to involve and generate an overall positive impact for the Italian real estate market. On the basis of the PNRR's missions, the following areas of real estate investment, among others, deserve attention:

  1. regeneration projects – transformation of vulnerable areas characterised by marginalisation and decay into smart, sustainable areas (projects such as those currently under implementation in Milan);
  2. ecological transition – energy efficiency and refurbishment of buildings, also concerning social infrastructure, which could see the involvement of social infrastructure REIFs;
  3. tourism and culture – modernisation of infrastructure, regeneration of tourist facilities (to balance tourist flows) and redevelopment of accommodation facilities and historic parks and gardens;
  4. research and education – refurbishment and construction of school buildings (also to enhance connected learning environments), student accommodation (as the aim is to triple the number of places for non-local students by encouraging private investment or public-private partnerships);
  5. infrastructures for sustainable mobility – completion of the main high-speed rail routes and integration with the regional railways, modernisation of the logistics system; and
  6. senior living – integration of the current offer of nursing homes (RSAs) and retirement homes for the elderly with groups of independent flats with the necessary equipment and services (senior living).

Measures to implement the PNRR are currently under analysis and discussion by the Italian lawmaker in order to be adopted in the coming months.

ii Tax credit for works on hotels

On 6 November 2021, Law Decree No. 152/2021, providing urgent provisions to implement the PNRR,9 was published in the Official Gazette No. 265. Article 1 of Law Decree No. 152/2021 provides a tax credit for work on hotels to improve energy efficiency equal to 80 per cent of certain expenses incurred before 31 December 2024. The aim of this credit is to improve the quality of accommodation complying with the objectives set out in the PNRR.

iii Digitalisation of notarial services

Public notaries play a central role in Italian real estate transactions: they are independent public officials who assist the parties towards the execution of the final deed of transfer, by performing checks in the real estate registries and verifying conformity of the transfer deed with mandatory provisions of applicable law. However, their involvement also entails a certain degree of formality that slows down transactions; for example, to enter into a notarial deed of transfer, the parties (or their duly authorised representatives) shall be physically present before the notary public.

During the past few years, also taking into account the overall growing internationalisation of the Italian market, the need to simplify and facilitate notarial procedures has become more and more a priority.

In this context, the Italian public notaries, together with Italian lawmakers, have already taken important steps towards the digitalisation of notarial services and will likely take further steps in this direction. Benefits of the digitalisation of notarial services would include the possibility to operate with greater speed and ease (without sacrificing the legal certainty of the notarial deeds), as well as a more efficient document management and storage procedure (to avoid wasting significant amounts of paper).

In particular, in 2021, the Italian Parliament implemented the Directive (EU) 2019/1151, which provides for the possibility of limited liability companies' online incorporation, ensuring the control of the public notary at every stage and the stipulation of the deed in the form of the notarial public deed, but with the participation of the parties by videoconference.

For the time being, the possibility to enter into a notarial deed remotely, by using dedicated online software and with the involvement of the notary public, is limited to the incorporation of limited liability companies. However, the expectation of the economic undertakings is that this possibility will also be gradually extended by Italian lawmakers to other kind of deeds and, hopefully, to real estate transactions.

iv Tokenisation

The process of tokenisation, whereby assets belonging to the real world (whether financial or native to the blockchain) can be represented by tokens managed on distributed ledger technology or blockchain and regulated by smart contracts, may bring numerous benefits to the actors involved in the operation, such as customising the tool thanks to the flexibility of the token, expanding the customer base or accessing a new market through an innovative and more transparent product.

This tool is also receiving increasing attention from economic operators in the real estate sector, as an instrument to make this market, which is traditionally illiquid, more liquid and flexible.

Nevertheless, direct tokenisation of real estate assets is not yet feasible due to the obstacles posed by the current regulatory framework to the full and effective functioning of such a tool. In fact, on the one hand, transfer of ownership rights over real estate requires, under the existing legal framework, a set of formalities to make such transfer effective and enforceable against third parties and, on the other hand, regulatory limitations apply with respect to the creation of a secondary market for tokens and transfers carried out in this market.

v Relevant aspects related to leases and the covid-19 pandemic

The covid-19 pandemic (and the consequent restrictions adopted for containment purposes) had a severe impact on the Italian real estate market, in particular with respect to commercial lease agreements and payments of rent.

The following measures, among others, were implemented by the Italian government in the past year to mitigate the consequences of the pandemic on leases:

  1. Law 23 July 2021 No. 106 provides for, inter alia, a joint path for the renegotiation of commercial leases, according to which, in the event that the lessee has not been entitled to access, from 8 March 2020, to any of the economic support measures, or has not benefited from other support measures of an economic and financial nature agreed upon with the lessor, the lessee and the lessor are required to cooperate to temporarily renegotiate the rent for a maximum period of five months during 2021. The renegotiation of the lease agreement applies exclusively to lessees engaged in economic activities who have:
    • recorded losses in turnover between the periods of 1 March 2019 to 30 June 2020 and 1 March 2020 to 30 June 2021 of at least 50 per cent, calculated on the average monthly value; and
    • been subject to a mandatory closure for at least 200 days, even if non-consecutive days, from 8 March 2020; and
  2. Law 21 May 2021 No. 69 provides for, inter alia, the suspension of the enforcement of orders for the release of real property, including real property for non-residential use, due to non-payment of rent on the due dates, until 31 December 2021, for orders adopted from 1 October 2020 to 30 June 2021.

Even in the presence of the general intervention of Italian lawmakers to cope with the economic crisis caused by the covid-19 pandemic, the Italian courts have ruled on several occasions (albeit in the form of preliminary judgments), in the attempt to rebalance the contractual relations in the leases, by granting the lessee reductions in rent or by inhibiting the enforcement of bank guarantees or the collection of checks by the lessor, depending on the case.

Italian case law gradually consolidated on the merits, constructing the contract pursuant to the good faith tenet, finds that the renegotiation of the agreement, in the face of contingencies that alter the contractual relationship, becomes a mandatory step to be undertaken by the parties to preserve the original contractual synallagma. The Court of Cassation embraced such principle in its thematic report of 8 July 2020, leading to the further consequence that the party shirking its obligation to renegotiate commits a serious breach of contractual regulations.

Outlook and conclusions

The shock caused by the covid-19 pandemic has certainly led to important changes in real estate, but in most cases it has only accelerated transformation processes that were already underway. It has represented a sort of catalyst that has strengthened the growth trend of residential and logistics that continue to be the champions of the Italian real estate market. While an intensified uncertainty linked to the retail sector is perceivable as sales shift increasingly to e-commerce, hotels appear to be destined to recover, also thanks to the recent tax measures introduced by the Italian government during 2020–2021. The office market has been consistently affected, raising unresolved questions about configuration, sizing and quality of spaces, but this asset class remains one of the most important in the Italian real estate market.

The promising outlook for the Italian real estate market is also fostered by the EU Recovery Plan and its domestic implementation PNRR,10 with measures to be adopted in the next months towards urban regeneration, ecological transition and digital implementation.


1 Patrizia Liguti is a partner at Chiomenti.

2 Following the Constitutional reform of Title V in 2001.

3 P. Urbani e S. Civitravese Matteucci, Diritto Urbanistico. Organizzazione e rapporti, Lavis (TN), G. Giappichelli Editore, 2017, pp. 76 e ss.

4 For example, pursuant to Article 12, c. 7 of Law No. 394/1991 (Legge quadro sulle aree protette), the park plan expresses interests of a general nature and, for the interventions in the areas covered by the plan itself, it replaces all other planning instruments.

5 From Article 239 to Article 253 of the Environmental Code.

6 The real estate property would be encumbered by an in rem burden (onere reale), pursuant to Article 253 of the Environmental Code.

7 Joined cases C-478/19 and C-479/19 (UBS Real Estate KmbH).

8 According to the Italian Court of Cassation, a sale of several assets is considered as a 'bulk sale' 'when the sale concerns a plurality of buildings, including the leased one, which, on the basis of objective elements, are structurally and functionally connected, so as to constitute a patrimonial entity different from the single buildings composing it' (Corte di Cassazione, Section III, 19 March 2009, No. 6652) or 'as a unitary complex, constituting a quid different from the mere sum of the individual property units' (Corte di Cassazione, Section II, 12 January 2017, No. 655).

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