You may be thinking that you do not have to practice law for fifteen years to reach that conclusion; probably, most foreigners doing business with Italians could understand this after fifteen weeks, or perhaps even after fifteen days!
However, to get more specific about my comment, I would like to make a reference to what happens in almost every cross-border real estate transaction where one party is Italian and the other is foreign. I will use one of my recent cases as an example of how the differing views of a deadline can affect the transaction.
In this particular case, an English couple came to me with the following situation:
The couple had purchased a residential home from an Italian vendor. The two parties had agreed on a deadline of 31 July 2012 to sign the final deed and transfer the property to the couple. The property needed some significant repairs and it had been agreed that the vendor would complete these repairs prior to the 31 July deadline. Both parties agreed to these terms and signed the preliminary contract.
At this point of the story, I could already see the dispute looming based on what I know of each party’s perception of the deadline. For an Italian, this date is seen as a goal or an ideal, more of a mark in the sand to be fixed definitively at a later time. It is assumed that the other party views the deadline in the same manner and will be fine if the work will not be completely done by the 31st. The buyers conversely bring their Northern European perception of the deadline to the deal and imagine the home will be fully repaired by the 30th at the latest, polished and ready to be inhabited. They are already planning their vacation in the new home for August 1st and have invited family down for the week.
Now, the interesting part of the deadline in this case is that the Italian vendor expected the buyers to pay the purchase price and sign the deed on 31 July, even without the work being complete, i.e., without the terms of the contract being met. This is not atypical in Italian transactions. The vendor of course promised on Santa Maria herself that the work would be perfectly completed within a few days (and of course what he meant with this new deadline was a few days, weeks, or perhaps even months.). The buyers refused to transfer the funds and sign the final deed until the vendor fulfilled the repair obligations. This led to the vendor getting offended and the transaction being dragged out through the summer with a lot of time spent on excuses, promises, delay tactics, etc.
By the fall, when the property still hadn’t been repaired and the purchase completed, the English couple contacted me for assistance to pull out of the contract and claim compensation for losses. As a rule, I always try to assist my clients in a way that avoids litigation. The reason for this is very simple: court hearings and trials are very, very time consuming in Italy. This means more time and money lost, as well as stress that no one wants to face, especially when the goal is to purchase a vacation property to relax!
Unfortunately, at this point in the Italian courts, the average time for a civil case to reach the first verdict is seven years. An appeal is then a further four years and two months on average, and then two years and ten months more for the Supreme Court. This means that a litigation case is facing a minimum of seven and a maximum of 14 years, on average, for a case to reach a final decision.
To help my clients get to their goal - purchasing their vacation property - in a timely manner, I worked with the vendor to settle out of court. We were able to come to reasonable terms to complete the repairs as well as credit my clients financially for lost time. However, even though the vendor agreed to the terms and the compensation, in his opinion the buyers had been wrong and had not fulfilled their end of the contract by withholding payment on 31 July. He explained that he had had the best intentions to finish the work and would have gotten it done had the buyers only paid him on the 31st as stated in the contract.
Now, I am by no means saying the vendor in this situation, or any Italians for that matter, are lying when they promise to fulfill contract obligations by a certain deadline. Actually, I would say that things can go wrong in any transaction, Italians involved or not. When something does go wrong it is typically a mix of several factors such as workload underestimation, poor time management, capacity overestimation, etc. Typically there is not any intention to lie and the vendor has all the best intentions to comply with the terms, but sometimes it is just beyond their means. And what also factors into the scheme is the cultural perception that, after all, the deadline is flexible so delay is not a big deal. It will be finished “domani”.
I do not want to get into psychology, sociology or other subjects I am not familiar with - despite the fact I find them all fascinating - but at this point I prefer to go straight to the legal point that addresses the idea that “delay is not a big deal”.
Let’s return to the legally binding contract in which the parties had agreed that the transaction would be completed (closed) by 31 July. As is unfortunately common practice, there were no clauses included in the contract which specified that the deadline of 31 July was essential for the buyer (and/or the vendor), why it was essential, or what penalties occur in case of the other party’s delay. From a legal perspective, this undermines the strength of the deadline in the contract.
According to consistent Italian case law, if the contract does not have the specifications above, it is not possible (or, if possible, extremely challenging) for the buyer to claim the vendor’s breach of contract, contract termination and/or compensation due to the missed deadline by the vendor. In order to successfully pursue any claim the buyer shall first put in place formalities and paperwork to demonstrate that (i) the transaction is no longer worth it financially (or the suffered loss), (ii) that such situation (loss) is due to the missed deadline and (iii) that the missed deadline is the vendor’s fault.
In order to make such a claim, the buyer would need to know Italian legal rules very well and/or hire a lawyer. All this would require money and time which would most likely bridge the vendor to the point where he/she is finally ready to complete with all the repairs finished. Then the parties would complete the transaction under the original conditions (i.e., same price and no delay compensation). The only difference, and it is a key one, is the date, which would be months later.
In conclusion, in an Italian transaction it is always advisable to consider at least the following four rules:
1. Agree on a clear written term, a precise day (day/month/year) as opposed to a period of time, such as a month or a year;
2. Specify that the established term is essential for you as the buyer;
3. Specify why the term is essential for you (e.g., you are booking your holiday and wish to spend August in Italy at your new house);
4. Specify what happens if the transaction is not completed by the established term (e.g., the vendor shall give you a 1,000 euros penalty for each week of delay and/or the contract is terminated).
As a final comment, to be fair to my country, I have to say that many Italians properly and professionally fulfill their contractual obligations. Some might run their business with less stringent management skills, but typically that is compensated by their incredible human approach which comes from deep within their heart. Real estate, however, is a peculiar subject and situations like the one described above are not uncommon. In spite of the typically high financial value of real estate deals, very few seek legal advice, which might easily mislead the parties to incorrect understandings, frustrations and sometimes even major losses. Putting the four specifics listed above into the contract can avoid the pain caused by a “flexible” deadline.
Please check the "Featured Property Stories" section on the ItalyMag website regularly as we often ask Studio Legale Metta for advice on various legal aspects of purchasing and owning Italian property.
Nick Metta is a partner at the Italian law firm Studio Legale Metta where he is head of the firm's international department, addressing matters of Italian law involving international parties in areas such as Italian real estate, property financing and Italian inheritance law. Nick has his Ph.D. in Italian tax law and has been assisting international clients since 1998. The Italian law firm Studio Legale Metta is a boutique firm of Italian attorneys. Established 125 years ago, the firm handles domestic and international casework throughout Italy.
This article does not represent legal advice. Readers are encouraged to seek independent counsel for advice concerning their individual needs for legal assistance.
