Condition precedent on the mortgage
If the purchase depends on the loan, the preliminary contract must provide that it takes effect only if the loan is granted, with the deposit returned if it is refused.
Property · Before the deed of sale
The preliminary sale contract
This is the moment when you really commit yourself, and the one where the most expensive mistakes are made. A deposit and an advance payment are not the same thing, the mortgage condition cannot be taken for granted, and transcription protects you from risks you only discover when they happen.
01 · The commitment
What the preliminary sale contract commits you to
The preliminary contract (commonly called the compromesso) is the contract by which the parties undertake to sign the final contract at a later date. It does not transfer ownership, but it binds both of them.
- It must be in writing, or it is void.
- It must state precisely the property, the price, the deadlines and the payment arrangements.
- It obliges both parties to sign the final contract by the agreed date.
- If one party fails to perform, the other can ask for specific performance, obtaining a court judgment that takes the place of the contract.
- It must be registered within the set time limit.
- It can be transcribed in the property registers, with significant protective effects.
Specific performance is the strongest protection: if the seller refuses to sign, the buyer can obtain a court judgment that has the same effects as the final contract. That is why a well-written preliminary contract is worth far more than a verbal promise.
02 · The difference
Caparra confirmatoria and advance payment
They are two different things and must be described expressly: the word used in the contract determines what happens if the deal falls through.
- The description must be written expressly: if it is missing, the payment is presumed to be an advance.
- The caparra penitenziale (withdrawal deposit) is something different: it is the price of the right to withdraw.
- Whoever receives the deposit can choose between keeping it and asking for the contract to be performed.
- The amount must be proportionate: disproportionate deposits can be reduced by the court.
- The payment must be traceable: bank transfer or cheque, never cash.
| Caparra confirmatoria (confirmatory deposit) | Advance payment | |
|---|---|---|
| If the payer withdraws | They lose it | It must be returned |
| If the recipient withdraws | They return double the amount | It must be returned |
| If the deal goes through | It counts towards the price | It counts towards the price |
| Purpose | Security and advance settlement of damages | A simple advance on the price |
| Alternative | You can always seek performance or full damages | You can still claim damages you can prove |
The wording that changes everything
Two different phrases, opposite outcomes.
- "As a confirmatory deposit": full protection
- "As an advance on the price": a simple advance payment
- With no description, it is presumed to be an advance
- It must be a conscious decision, not copied from a template
03 · Registration
Registration and taxes
The preliminary contract must be registered, and what you pay at that stage is not lost: it is deducted from the tax due on the rogito (the notarial deed of sale).
- If the seller is VAT-registered, advances are invoiced with VAT and the proportional registration tax does not apply to them.
- The parties are jointly liable for registration: if it does not happen, both are answerable.
- Late registration leads to penalties, which can be reduced through ravvedimento operoso (voluntary correction).
- If the final contract is not signed, the tax paid can be reclaimed, within the time limits.
The time limit
Registration must take place within the set period from the date of the contract.
The fixed tax
A fixed-amount registration tax is due on the contract itself.
On deposits and advances
A proportional tax applies, with different rates for the confirmatory deposit and for advances, depending on whether they are subject to VAT.
The deduction
What you paid at the preliminary stage is deducted from the tax due on the final contract.
04 · The strong protection
Why it is worth transcribing
Transcribing the preliminary contract in the property registers is optional, requires a notarial deed and protects you from real risks.
- It makes the preliminary contract enforceable against third parties: a later sale to someone else does not prejudice the prospective buyer.
- It protects against mortgages registered after the transcription.
- It protects against the seller's creditors seizing the property.
- If the seller goes bankrupt, it gives specific protection.
- The effect is limited in time: if the final contract is not signed within the set period, the transcription loses its effect.
- It requires a notary, with the related cost.
Transcription makes most sense when a long time passes between the preliminary contract and the deed of sale, when the property is under construction, or when the seller's financial position is not clear. For a compromesso that closes in two months with a sound seller, the cost may not be justified.
05 · What to include
The clauses that matter
A well-drafted preliminary contract anticipates problems instead of putting them off until the deed of sale.
Planning and cadastral compliance
The seller warrants that the property complies with the permits and with the floor plan: this is the defect that holds up more deeds of sale than any other.
No mortgages or encumbrances
With an undertaking to have them cancelled before the deed of sale, and how this is to be secured.
Handover and condition of the property
Handover date, the condition the property must be in, who pays for any work.
Condominium charges
Who pays arrears and the instalments for extraordinary works already approved.
Deadline for the deed of sale
The date and the consequences of missing it, with a clause making the deadline essential if needed.
06 · Before signing
What to check before the preliminary sale contract
These are checks to make before you commit yourself, not between the preliminary contract and the deed of sale.
- Land registry and mortgage searches: who the owner is, which encumbrances and mortgages weigh on the property. See land registry searches.
- Planning compliance: building permits, any irregularities, retrospective approvals.
- Cadastral compliance: the floor plan must match the actual state of the property.
- Origin: if the property came from a gift, the question of whether it can be sold safely has to be addressed.
- Condominium situation: arrears, approved works, disputes.
- First home requirements: check that you will be able to declare them at the deed of sale. See first home tax benefits.
- Total costs: the bill beyond the price. See what buying a home costs.
A cadastral mismatch is the problem that comes up most often, and at the worst moment: the notary cannot complete the deed of sale until the floor plan matches the actual state, and putting it right takes a surveyor and weeks. Checking it before the preliminary contract keeps you from being bound to a completion date you cannot meet.
Frequently asked
The questions that keep coming up
If I don't get the mortgage, do I lose the deposit?
It depends on what the preliminary contract says. Without a condition precedent linked to the loan being granted, failing to get the mortgage does not release you: you are in breach and you lose the deposit.
The clause must be included before you sign, expressly providing for the return of what you paid if the loan is refused and the refusal is documented. It is the most important protection for anyone buying with a mortgage.
Deposit or advance: what difference does it make?
A great deal. With a caparra confirmatoria, if the person who paid it withdraws, they lose it; if the person who received it withdraws, they must return double. An advance, on the other hand, is simply returned in every case.
The description must be written expressly in the contract: if it is missing, the payment is presumed to be an advance, and its function as security is lost.
Do I have to register the preliminary contract?
Yes, within the set period from the date of the contract. It is an obligation, and late registration leads to penalties that can be reduced through voluntary correction.
The proportional tax paid on deposits and advances is not lost: it is deducted from the tax due on the final contract.
Is it worth having it transcribed by a notary?
It is worth it when a long time passes between the preliminary contract and the deed of sale, when the property is under construction or when the seller's financial soundness is uncertain.
Transcription makes your right enforceable against third parties: it protects you from later sales, mortgages and seizures registered afterwards. It has a cost, which has to be weighed against the actual risk in your situation.
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The mortgage clause is the one that saves your deposit
Without it, a buyer who does not get the loan loses what they paid, even though they are not at fault. It has to be put in beforehand, not argued about afterwards.