Limitations to Foreigners

1. Are there in your national system any limitations to foreigner citizens or foreign companies/companies controlled by foreign citizens regarding the acquisition of immovable properties? If yes:

1.1. Which legal regulations regulate in your country the prohibitions or limitations for foreigners’ acquisitions in case of transfer of property? Please specify the legal regulation and/or the range of the regulation that contains the prohibition.

In Italy the legal status of the foreigner and the limitations for foreigners’ acquisition in case of transfer of property is mainly regulated by the so-called “reciprocity condition”: art. 10 of the Italian Constitution and in particular art. 16 of the Provisions on the law in general (pre-laws).

Based on this principle, a foreign citizen not legally residing can carry out an act in Italy only if the Italian is admitted to carry out such act in the country from which the foreigner comes; foreigners are therefore recognized as having legal capacity (and therefore the possibility of validly concluding the purchase contract), with the only limit of reciprocity.

Furthermore, for foreigners residing in Italy who want to purchase a property, a residence permit (or equivalent qualifications) is required and the same also applies to family members of foreigners residing in Italy and stateless persons for less than three years: these residence permits are indicated to the art. 1 of Presidential Decree 394/99 (implementation regulation of the Consolidated Law on Immigration): this is the residence permit for long-term EC residents referred to in Article 9 of the same Consolidated Law, residence permit for employed work reasons or self-employment, for the operation of an individual business, and for the relative family members in good standing with their residence.

1.2. What do these limitations consist of?

See answer 1.1

1.3. Do these limitations apply to any foreign citizen, regardless their nationality, or only to non-EU Members national citizens?

The Italian Law allows the purchase of real estate by foreigners in the following, different ways:

1) non-regularly staying foreigner: only if there is the condition of reciprocity;
2) foreigner «regularly staying», their family members and stateless persons in Italy for less than three years: with residence permit for specific reasons or residence card;
3) EU and EFTA-EEA ( Iceland, Liechtenstein, Norway) citizens and stateless persons who have been residing in Italy for more than three years: without limit.

A special case in point is the restrictions that apply to Swiss citizens. Switzerland is a member of the European Free Trade Agreement (EFTA), but has not ratified the Agreement on the European Economic Area (EEA). Consequently, its citizens are not assimilated, in Italy, to EU citizens, although they enjoy free movement under the Agreement on the Free Movement of Persons concluded in 1999 between the then European Community and the Swiss Confederation.

The status of ‘foreigner’ is, therefore, verified in the case of the Swiss citizen and, consequently, the latter’s enjoyment of civil rights in Italy is subject to the condition of reciprocity. As the foreigner (i.e. the Italian citizen) in Switzerland is subject to the restrictions provided by the LAFE authorization regime (Swiss law of the Federal Act on the Purchase of Real Estate by Persons Abroad -‘LAFE’ or Lex Koller -which considerably restricts the purchase of real estate in Switzerland by foreigners domiciled abroad) so the Swiss citizen is restricted to the acquisition of funds in the Italian territory. Therefore, as of today the Italian Ministry of Foreign Affairs considers verified the condition of reciprocity with Switzerland as regards real estate purchases, limited to those acts which, according to the LAFE, foreigners may perform in Switzerland without authorization. First of all, since no authorization is required in Switzerland for the purchase of a property by an Italian domiciled in Switzerland (permit C), there are no restrictions for a Swiss legally resident in Italy to purchase a property on Italian territory. With regard, on the other hand, to Swiss nationals not resident in Italy, the condition of reciprocity for non-resident individuals is considered to be fulfilled in Italy limited to the purchase (also by way of exchange) of:

1. secondary residences, holiday homes and apartment-hotel units, with a net living area not exceeding 200 sq. m;
2. land, appurtenant to secondary and holiday homes (individual units: villas, buildings, etc.), the surface area of which does not exceed 1,000 sq. m;
3. buildings for commercial use only.

1.4. Do these limitations have?

• A defensive/protective purpose
• An economic purpose
• Both economic and defensive/protective purposes
• «Other purposes (please specify): The purpose of any limitation is to ensure the application of the condition of reciprocity: any restrictions that may exist in foreign legal systems are relevant to Italy on the basis of Article 16 of the so-called Pre-Laws of the Italian Civil Code (disp. prel. cod. civ.). This provision states:
  A foreigner is allowed to enjoy the civil rights attributed to a citizen on condition of reciprocity and subject to the provisions of special laws. This provision also applies to foreign legal persons. The existence of the condition of reciprocity must be verified by the Italian notary drawing up the deed of the purchase. To this end, the notary may apply to the Italian Ministry of Foreign Affairs, which will communicate the data relating to the verification of the enjoyment of the rights in question by Italian citizens in the countries of origin of the foreigners concerned by the deed.»

2. To which kind of land registry unit do these limitations apply? (Example: only land plots, only rural areas, only foreign borders, dwellings and homes, other buildings?

In case of limitations arising from the condition of reciprocity, they apply to any kind of good (movable and immovable: buildings, land plots, rural areas, etc.) regardless of their location within the national borders.

3. To which kind of transfers or burdens do these limitations apply? (Example: to every transfer, non-free transfers, differently in case of inheritance than in case of purchase, mortgages in favor of foreigners….)

The requirement imposing prior verification of the condition of reciprocity with respect to purchases made by foreign nationals applies – with the above-mentioned limitations -to all types of transfers or property or rights in rem made in favor of such persons, without distinction depending on the type of the relevant purchase (by deed between living persons or mortis causa) or on the nature (gratuitous or onerous) of the underlying title. In all cases, the extent and intensity of the resulting limitation depend on the more or less extensive recognition of the corresponding right or regime of acquisition by the State to which the concerned foreign citizen belongs.

4. Apart from the previous limitation to acquisition of property by foreigners, are there any other measures at your country relevant for this topic? (Example: pre-emption rights in case of purchase un favor of a foreigner, social or residential measures bases on nationality and non in residential permits….)

No other limitation other than those highlighted above (see Answer 1).

5. To what extent the land registrars’ controls in a deed of transfer the prohibitions imposed to foreigners to acquire land and buildings in your country?

5.1. Do you only check if the transfer administrative authorization requirement is met, or do you also confirm that the authorization is valid? For example, do you consider property type, like rural or forestry classification, which might limit foreign transfers? Or do you verify the percentage of foreign land ownership in a specific area, especially if there are restrictions on the number of buyers or land size?

The authority that is first required to check the legal capacity of the parties in the deed of transfer is the public notary, who usually in case of foreign buyer reports the details of the valid residence permit, a document whose possession legitimizes foreigners with non-EU citizenship to purchase.

The land registrar merely verifies that the details of the residence permit are listed in the deed. In the absence of a residence permit, the land registrar verifies that the condition of reciprocity is present by consulting the Ministry of Foreign Affairs website: https://www.esteri.it/it/politica-esteracooperazione-allo-sviluppo/diplomazia-giuridica/condizreciprocita/elenco_paesi/

In cases where the condition of reciprocity imposes restrictions on real estate purchases (e.g. on the extent or type of real estate that can be purchased), the land registrar checks that the property sold falls within the permitted purchases.

Any lack of the condition of reciprocity results in the nullity of the deed under Article 1418 of the Civil Code (as it is contrary to mandatory rule of law, specifically Article 16 of the Prelegislations), and the nullity is always detectable by the Land Registry magistrate.

5.2. What would happen if an authorization were needed, and it does not come with the title submitted for registration?

The entry would be rejected. A new application would have to be submitted and the title must be accompanied by the necessary documentation (residence permit).

5.3. What would happen in case a deed of inheritance in favor of a foreigner transfers property over land or buildings subject to limitations for foreigners’ acquisitions in your country?

Given that the (testamentary) succession is normally governed by the law of the State of the deceased’s nationality (Law No. 218/1995) or by that of the State in which the deceased had his or her habitual residence at the time of death (EU Reg. 650/2012), no specific limitations are envisaged with respect to mortis causa purchases by foreign nationals other than those generally arising from the aforementioned verification of the condition of reciprocity. Where the succession also includes immovable goods located in a territory where the Land Register system applies, the relevant entries in the public registers will, moreover, have to be made on the basis of the judicial titles specifically provided for this purpose (Certificate of Inheritance and Legacies or European Certificate of Succession), so that the verification of the applicant’s legitimacy to purchase will already be carried out as part of said proceedings.

5.4. If the states have preemption right in case of transfer, would you reject the registration if no notification to the state to enhanced it right is done?

There is no preemption right involving the nationality of those who acquire land or buildings: the only preemption right covered by Italian law concerns real estates of artistic or historical interest (the so-called “beni culturali”). In that case, if the registration is requested prior to the notification to the public entity (Province and Municipality) or during the following sixty-day term in which the preemption right might be exercised, the contract will be annotated (annotation is a form of registration with no constitutive effects) as subject to a condition precedent; once the term is expired without any notification from the competent authority, the intavolation (a form of registration with constitutive effects) of the purchased right can be requested by any of the parties.

6. Do you expect any legal modifications on this issue?

For the time being, no reform initiatives (at level of State or local legislation) appear to be planned in the area under consideration.