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Donation of real estate

Donation of real estate

Third-party buyers no longer have to return it to the heirs. On November 26, the reform on the transfer of real estate from donations was finally passed (simplification bill, Art. 44). The new law guarantees that the buyer of a property that the seller has received as a gift will no longer be able to lose it to the legal heirs in the future.

Considering that over 200,000 property gifts are registered in Italy every year, as shown by notaries' statistical data, one can imagine the impact this reform will have on the purchase and sale of real estate. Article 563 of the Italian Civil Code in its previous version allowed heirs who had been deprived of their compulsory portion to bring an action for recovery not only against the donee, but also against third parties who had subsequently acquired the property from the donee. This action could be brought until the expiry of a particularly long limitation period: twenty years after the registration of the gift. According to Article 561 of the Italian Civil Code, the assets that are the subject of a successful action for recovery are free of any encumbrances or mortgages registered with the consent of the donee or their successors in title. Although this legal provision was advantageous for those entitled to a compulsory portion, it has been criticized several times over the years because of its impact on the real estate market and thus on real estate transactions. In fact, the purchaser of a gifted property is exposed to a claim for restitution until the statute of limitations expires, which affects the value of the property itself. In addition, banks have also been reluctant to grant financing for the purchase of gifted real estate before the expiry of the above-mentioned periods. The changes introduced by Article 15 of the draft law on simplification aim to restore the rights of third-party purchasers of gifted property by abolishing the right to return the real estate or pay its equivalent value in cash. Under the new rules, the third party who acquired the property is no longer obliged to return it, while, in order to protect any heirs who may have been harmed, the donee is obliged to compensate the disinherited beneficiaries in cash. The effects of the reform can thus be summarized as follows: - greater legal certainty for buyers of real estate from gifts; - better access to credit, as banks can easily accept these properties as mortgage collateral; - advantages for families, young couples, and entrepreneurs who need financing.