Is it viable to convey leased premises for gratis utilization?

Envision: you rent a comfortable flat, you've adorned it to your liking, you've poured your soul into every aspect of the decor. And then, circumstances alter, and you choose to hand it over to a friend or family member for complimentary use. However, is this legally feasible?

What constitutes a gratuitous use contract?

In accordance with Article 1803 of the Italian Civil Code, a gratuitous use agreement (comodato d'uso) is a pact whereby one party (the commodator) transfers movable or immovable property to another party (the commodator) for usage over a specific period or for a particular purpose. Upon expiration, the property must be returned.

Nevertheless, can you treat a leased flat as freely as if you owned it when transferring it for complimentary use?

Can a lessee sublease a property?

In Italy, a lessee (conduttore) can sublet a portion of a flat, but subject to specific conditions. If the lease lacks a direct prohibition on subletting, notifying the property owner (locatore) of the intent and providing the subtenant's details is sufficient.

However, full transfer of occupancy for subletting necessitates the lessor's written consent. This is governed by Article 2 of Law No. 392 of July 27, 1978, which states:

"The lessee cannot entirely sublet the property or assign the lease to third parties without the lessor's consent. Unless otherwise specified, the lessee can sublease a portion of the property after prior notification to the lessor by registered mail, detailing the subtenant's name, agreement duration, and leased premises."

Is it feasible to transfer leased housing for complimentary use?

Since the gratuitous use agreement does not involve payment, can leased housing be transferred under this arrangement?

The same principles apply as with subletting:

• If the lease allows transferring housing for free use, the lessee can do so by informing the property owner.
• If the lease prohibits subletting and free use transfer, the lessor's written approval is mandatory.

Otherwise, transferring the flat to others without the owner's consent is a breach of contract that could lead to termination and eviction.

Can a recipient of real estate for gratis use rent it out?

Suppose the flat owner transfers it to another under a gratuitous use agreement. Can the recipient lease it out?

Article 1804 of the Italian Civil Code clarifies: the recipient must use the property solely as specified in the contract and cannot sublease it without permission.

Unauthorized renting allows the provider to:

• Demand immediate property return.
• Seek damages through legal action.

Who should report rental earnings?

If free-use transferred property is subsequently rented out, the question arises: who is responsible for tax on the rental income?

Per the law, property owners are liable for rental income tax, even if received by another. Hence, if the recipient rents out the flat, the tax duty lies with the property owner (commodant), as the legal proprietor.

This regulation is outlined in Article 1, paragraph 2 of Legislative Decree No. 504/1992, assigning property tax responsibility to the owner, irrespective of the income recipient.

Conclusion

Transferring leased housing for gratis use is feasible but mandates a thorough understanding of the lease terms. If not prohibited, notifying the lessor suffices. If forbidden, the lessor's consent is essential.

The same holds for the recipient: to lease out the received property, the owner's approval is required.

Familiarity with the legal aspects can prevent adverse repercussions, from contract termination to financial penalties.