Selling a flat in a cohabitation: entitlements of unregistered partners, hazards, and legal conflicts

The transaction involving a residence where an unregistered couple resides (commonly referred to as a civil union or convivenza di fatto) is governed by property entitlements. Under Italian legislation (Legge Cirinnà no. 76/2016), the legal provisions applicable to formal marriages are not automatically extended to such relationships.

Acquisition of Real Estate and Ownership Status

In the case of purchasing a property by an unmarried couple, the ownership shares are determined through the contract: the property can be registered equally (50/50) or based on the financial contributions made.

Distinguishing between ownership rights and mortgage responsibilities is crucial. Making mortgage payments does not inherently confer ownership or increase one's share without formal registration. To safeguard their rights, partners can establish a Cohabitation Agreement (Contratto di convivenza) through a notary or legal counsel.

Peculiar risks:

• Succession: Absent an official will, an unmarried partner does not inherit by law.
• Inter-partner sales: The transfer of property between unmarried partners necessitates obligatory notarization. A sale at a reduced price or without actual monetary exchange is considered an indirect gift (donazione indiretta). This situation can pose challenges for future mortgage applications by buyers and grants the seller's heirs the right to contest the transaction later on.

Entitlements of the non-owner partner

In cases where the property is solely owned by one partner:

• Upon the owner's demise: The surviving partner obtains the temporary residency right (diritto di abitazione) for 2 years (or up to 5 years, depending on the relationship's duration). If there are minor or incapacitated children, this period extends to at least 3 years. This entitlement ceases upon remarriage or the establishment of a new family.
• In the event of separation: The non-owner partner is obligated to vacate the premises within a reasonable timeframe. Nonetheless, if there are dependent children within the household, the court may secure the right of abode in the property for the parent who retains custody of the children.
• Tenancy: If the official tenant of the property passes away, the surviving partner has the right to assume the lease.

Procedure for the joint sale by co-owners (property under joint ownership)

When the property is registered in both partners' names, the standard joint ownership rules (comunione ordinaria) are applicable. Selling the property to third parties mandates unanimous consent.

During a joint sale, the proceeds are distributed according to the specified shares outlined in the original deed of purchase (rogito). Prior to disbursing the funds, deductions are made from the total amount as follows:

1. The outstanding mortgage balance;
2. Incidental expenses (e.g., agency fees, technical assessments);
3. Capital gains tax (plusvalenza), applicable if the property is sold within 5 years post-acquisition and was not the primary residence.

What to do if one partner opposes the sale?

While no one can compel the owner to sign an agreement with third parties, the law does not permit an individual to be coerced into shared ownership against their will. Resolving the issue involves three steps:

1. Buyout of a share (Riscatto della quota): One partner acquires the other's share at market value, subsequently transferring the remaining mortgage to their name (subject to the bank's approval).
2. Civil mediation (Mediazione civile): A mandatory preliminary phase for resolving disputes involving legal representation.
3. Judicial partition (Divisione giudiziale): If an agreement remains elusive, the matter is adjudicated by the court (Article 1111 of the Italian Civil Code). The judge may opt to divide the property into two separate units (if feasible), assign the property to one partner with compensation owed to the other, or subject the property to a public auction with proceeds division.

Settlement of Mortgage Debt and Repair Expenses

Given that a mortgage represents a joint obligation, the notary settles the loan balance automatically from the buyer's payment upon sale. In a 50/50 mortgage agreement, the bank retains half of the debt from each partner, irrespective of the actual payment contributions. Automatic offsets are not conducted by the notary.

Previous renovations do not alter the formal ownership shares. Nevertheless, a partner who funded significant enhancements boosting the property's value holds the lawful entitlement to seek reimbursement for half of the documented costs as per Article 2041 of the Italian Civil Code (regarding unjust enrichment).

To ensure a fair resolution during the sale process, the parties can craft an agreement with a notary on the asymmetrical distribution of sale proceeds or execute a private agreement (scrittura privata) concerning mutual settlements in advance.