Real Estate Litigation 2025

Last Updated March 12, 2025

Italy

Law and Practice

Authors

Francesco Sanna
Stefano Bardella
Alessia Rocchi

K&L Gates is one of the largest law firms in the world. Spanning five continents, it has more than 45 offices located in key capital cities and world commercial and financial centres. The firm offers clients local market knowledge and access to both national and international capabilities. The full-service team in Milan advises public and private companies, shareholders and directors on a broad spectrum of issues. The real estate litigation team, made up of more than ten professionals, is equipped to resolve any kind of real estate-related dispute across a vast global platform. The team’s extensive experience covers arbitration and administrative proceedings, and its lawyers represent landlords and tenants in connection with disputes and related litigation on procurement and construction.

Other than as expressly provided in the lease, when a landlord requires access to an apartment or office for repairs and the tenant refuses to grant it, Italian jurisdiction provides different types of remedies, as follows:

  • warning letter: out of court, a formal notice should be sent to the tenant to outline the consequences that could result if they persist in their unjustified refusal to allow access, including damages; and
  • court action: if the denial of access is unlawful, the tenant is in breach of its obligation to allow the landlord to carry out urgently required extraordinary maintenance, and the landlord may bring legal action to request the termination of the contract with a contextual request for damages. In addition, the landlord will not be liable for lack of maintenance while access is impeded. The Italian regulators can have an impact in assisting a landlord to gain access to a unit for repairs, particularly when the repairs are related to health, safety or habitability matters. A regulatory order, for example, can support and reinforce the landlord’s legal right of access.

When repairs are urgent and there is no time to wait for the outcome of a normal trial, the landlord may act through a court order pursuant to Article 700 of the Italian Civil Procedure Code to gain immediate access to the unit – through public force if necessary. In real emergency cases, endangering health and safety, the public authorities can still gain access. 

Right of access is thus protected by emergency measures in consideration of the imminent and irreparable damage that the landlord could suffer if forced to wait for the outcome of a long, normal trial.

If a tenant’s failure to provide access jeopardises other tenants’ use of their units, causing harm or damage, the failing tenant is liable for damages.

Pursuant to Article 1575 of the Italian Civil Code, the landlord has an obligation to ensure the tenant’s peaceful enjoyment of the property. Any breach of this obligation is grounds for terminating the contract for landlord fault.

Moreover, any unjustified harassment or intrusion into the peaceful enjoyment of the property may constitute atti emulativi (actions aimed at harming others) under Article 833 of the Italian Civil Code. This may result in the tenant seeking damages and requesting the intervention of the authorities to put a stop to the behaviour. In certain circumstances, landlord conduct to frustrate or hamper the tenancy can result in criminal charges. Article 612-bis of the Italian Penal Code addresses harassment, intimidation and persecutory acts, and applies when an individual engages in repeated and intrusive behaviours that cause severe anxiety or fear in the victim, affects their daily habits and/or causes serious damage to their personal dignity or quality of life.

There is no specific impact from the legal status of a residential rental unit on a tenant’s remedies against a landlord impeding their use.

There are no agencies or regulatory entities with general powers to determine sanctions in the event of harassment except for the courts in a litigation between a landlord and a tenant for specific circumstances. In such cases, recovery of damages is the generally available remedy.

Italy recognises the following types of controlled tenancy arrangements as far as residential leases are concerned:

  • unregulated, freely negotiated lease agreements: the most common residential leases are contracts with an open-ended rent (canone libero) regulated by Law No. 431 of 1998, also known as “4+4 contracts”, so-called because the parties are essentially free to decide autonomously the amount of rent that the tenant will pay to the owner, although the law imposes restrictions on duration, ie, 4+4 years; and
  • rent-controlled leases: a lease with agreed rent (canone concordato) provides for a rent determined according to specific tables agreed at territorial level between landlords’ and the tenants’ associations. The standard duration of these lease is three years, with automatic renewal for a further two years.

In addition to the above, leases falling within the scope of social housing or semi-public student housing must respect pre-determined capped rents to be pre-agreed between the owner/developer and the local authorities.

Pursuant to Article 1597 of the Italian Civil Code and specific legislation regarding residential or commercial leases, statutory tenancies are generally automatically renewed for up to a maximum of 30 years. However, exceptions exist allowing the landlord to refuse renewal under specific conditions.

Exceptions to Renewal for Residential Leases

According to Article 3 of Law No 431 of 1998, the landlord can exercise the right to refuse to renew the lease, giving the tenant at least six months’ notice, for the following reasons:

  • the landlord or their relatives intend to use the property as their primary residence;
  • the landlord intends to use the property for the exercise of public, social, mutualistic, cooperative welfare, cultural or religious purposes;
  • the tenant has full availability of a vacant and suitable accommodation in the same municipality;
  • the property is part of a building that is severely damaged and needs to be rebuilt;
  • the property is located in a building that is scheduled for complete renovation works;
  • the tenant does not occupy the property continuously, without a justified reason; or
  • the landlord intends to sell the property to a third party.

At the second renewal term, the landlord does not need to provide justification, and can simply refuse renewal by giving six months’ notice.

Exceptions to Renewal for Commercial Leases

For commercial leases, the landlord can refuse renewal only for specific reasons, listed in Article 29 of Law No 392 of 1978:

  • the landlord or their relatives intend to use the property for their own business;
  • the property is expropriated for public projects or urban development;
  • the property is part of a building that has to be demolished and rebuilt, or completely renovated in such a way that it makes the tenant’s continued use impossible; or
  • the landlord wishes to change the building’s use (eg, to convert it for residential use).

At the second renewal term, the landlord can deny renewal without justification, but must provide written notice 12 months (18 for hotels) before the lease expires.

Residential tenancies are subject to rent control and tenant protection under Italian legislation. A legal mechanism to convert rent-controlled tenancies into a free-market unit is provided by Law 431 of 1998, allowing landlords and tenants to agree on the rental price outside standard levels provided that a minimum duration of 4+4 years is ensured.

Statutory tenancies are regulated by various government agencies and local authorities. These agencies oversee rent control, tenant protections and lease compliance.

  • The Italian Revenue Agency (Agenzia delle Entrate): this regulates lease registration and tax compliance, monitoring rent levels for tax benefits and preventing unlawful rentals. It requires mandatory lease registration of the contract within 30 days of signature, and monitors tax compliance to ensure landlords report rental income correctly.
  • Local municipalities (comuni): The municipality in which territory the leased property is located is responsible for the control and verification functions on the habitability and the application of administrative sanctions through the local police (polizia locale) authorities.

If a commercial tenant receives notice to cure a default but the required remediation takes longer than the provided cure period, the tenant has different legal remedies available under Italian Civil Code and Law No. 391 of 1978.

According to Italian law, where not differently provided in the lease contract, the usual cure period shall not be less than 15 days from receipt of the default notice. If the tenant has objections or grounds for justifying a default, they could object to the landlord’s notice to suspend the claim under Article 1454 of the Italian Civil Code.

Negotiating an Extension with the Landlord

The most practical option is to negotiate an extension of the cure period and, usually, if the default is not intentional or in bad faith, the landlord may concede additional time in exchange for partial compliance.

With respect to a possible negotiation process, the tenant or both parties jointly may even request an ADR (alternative dispute resolution) procedure to facilitate a possible settlement agreement where a cure is arranged within a reasonable timeframe. ADR procedures can vary (eg, mediation proceedings before an official mediation body, or simplified ADR procedures conducted by the lawyers of both parties with the support of a mediator), but any settlement agreement reached through ADR is an enforceable title so that, in the event of a subsequent breach by of one of the parties of the specific terms agreed, the other party may proceed with enforcement.

Judicial Protection for an Extended Cure Period

If negotiations fail, the tenant can file a legal action to request an extension of the cure period on the basis of objective impossibility to comply within the set deadline. In this case, the tenant may file a petition with the court to suspend the landlord’s termination action under Article 1453 of the Italian Civil Code, arguing that the default is remediable but needs more time, and that it is acting in good faith.

Force Majeure or Objective Impossibility

If the delay in curing the default is due to external factors beyond the tenant’s control, the tenant can argue that performance is temporarily impossible due to force majeure or objective impossibility pursuant to Article 1256 of the Italian Civil Code, thus suspending obligations.

Injunctive Relief

A commercial tenant may seek injunctive relief (tutela cautelare) pursuant to Article 700 of the Italian Civil Procedure Code, which provides for urgent judicial protection, in order to prevent eviction or unfair termination.

To obtain an injunction, the tenant must prove the presence of two essential elements:

  • Fumus boni iuris: this is the likelihood that a legal right is being violated or unfairly threatened and can include, but it is not limited to, an unreasonable cure period that does not allow for proper remediation; the landlord’s failure to act in good faith; or force majeure or regulatory delays making compliance impossible within the given time.
  • Periculum in mora: this concerns the risk of irreparable harm (eg, loss of business operations; reputational harm; eviction or lease termination causing severe disruption) that would occur if the injunction is not granted.

If a commercial tenant fails to obtain an injunction within the cure period, the consequences on their tenancy depends on the landlord’s response and the severity of the default.

Typically, in a commercial lease, the landlord has the right to terminate the lease and retake possession of the property in the case of the tenant’s failure to cure the default within the agreed deadline.

An option for the tenant is to negotiate with the landlord to reach a settlement. If eviction proceedings have already begun, the tenant might be able to challenge the landlord’s actions in court or ask at least for a prorogation of the term to return the property.

One of the fundamental principles of Italian jurisdiction related to contracts – set down in Article 1375 of the Italian Civil Code – states that the parties must adhere to the contract in good faith. Therefore, if a landlord repeatedly serves default notices or notices to cure in bad faith, the tenant has the right to challenge the notices in court on the basis of bad faith and abusive behaviour (abuso del diritto), and claim the relevant damages from the landlord.

Italian legislation provides guarantees for both residential and non-residential leases, as follows:

  • a security deposit: the most common form of guarantee is the security deposit (deposito cauzionale), and this cannot exceed three months’ rent for commercial leases. This deposit is aimed to guarantee the return of the premises at the end of the lease in good conditions.
  • a bank or insurance guarantee: these are generally used to guarantee the payment obligations of the tenant in commercial leases. The market standard for this type of guarantee generally ranges from six to 12 months’ rent.

Italian legislation provides that guarantors cannot unilaterally revoke their guarantees once it they been legally executed for the entire period for which they have been issued.

Creditors have several expedited legal means to recover amounts owed under guarantees, as follows.

  • Direct enforcement against the guarantor: the quickest option is direct enforcement against the guarantor, which applies to bank and insurance guarantees. In this case, if the lease is supported by a first-demand bank or insurance guarantee, the creditor – ie, the landlord – can demand immediate payment from the bank or insurer without needing to first prove tenant default in court.
  • Judicial order of payment: if the guarantor does not pay up upon the request of the creditor, the latter may apply for to the court for a judicial order of payment (decreto ingiuntivo) with an injunction to pay the relevant amount within 40 days under penalty of enforcement of the guarantor’s assets.
  • Precautionary seizure of guarantor’s assets: if there is a risk that the guarantor will dispose of assets, the creditor can request a precautionary asset seizure (sequestro conservativo) pursuant to Article 671 of the Italian Civil Procedure Code. Through this procedural mechanism, the judge can freeze bank accounts, real estate or other assets until the judicial ruling.

The process for recovering real property after a borrower default on a loan secured by that property is primarily judicial in nature: Italian law requires court intervention to enforce a secured property. The lender must initiate foreclosure proceedings (esecuzione immobiliare) in court to recover the property, which will be sold at auction, thus satisfying the outstanding debt.

An exception to the judicial route is the patto marciano pursuant to Article 48-bis of the Consolidated Banking Act (Testo Unico Bancario) which, if mortgage loans and debtors default, allows the related creditors to take ownership of secured real estate assets upon payment of the difference between the amount of their credit and the encumbered property. This legal scheme can be autonomously agreed upon by the parties who appoint an independent expert to market the assets in case of default.

Italian legislation recognises pledges over the equity (pegno sulle quote) or over the stocks (pegno sulle azioni) of a property owner, or, depending on the nature of the limited liability company involved. The pledge is released as security by the shareholder of the property owner (generally an SPV).

The process is in its nature judicial, meaning that the creditor must apply to the court to enforce the pledge and start the foreclosure sale process under the directions of the judicial authority.

Nonetheless, special rules apply to banks under certain conditions governing the parties that can foreclose directly on the asset or enter into a patto marciano scheme and market the property. The proceeds of the sale are used to reimburse the creditor, and the deficiency delta remains with the borrower.

If the contract between the parties includes a patto marciano, as defined above, the timing is strictly dependent on the agreement of the parties. In general, the procedure takes about three months to be completed, to which negotiation time with the third-party purchaser should be added.

Depending on the type of enforcement procedure, the debtor may eliminate the foreclosure process by repaying the creditor, provided that certain legal conditions and requirements are met, and until the moment the property is put on public sale auction.

A lender can pursue foreclosure of different types of security (eg, foreclosure on both the equity pledge and mortgage simultaneously) until its credit is repaid in full. This does not jeopardise the right of redemption of the debtor or the right of the lender to pursue other claims against the borrower or affiliated entities at the same time as foreclosure claim.

For judicial foreclosure procedures, an average of between 1.5 to two years are required, depending on the complexity of the case and procedural delays. In non-judicial foreclosure procedures, the estimated duration is between six and 12 months, making it significantly faster than the judicial timeline.

If there is a deficiency following a foreclosure auction, the borrower remains personally liable, and the lender still has a legal claim for the deficiency amount (eg, by seizing the borrower’s bank accounts, vehicles or other valuable assets).

Joint venture structures can be either contractual or corporate in nature. The former do not involve incorporation of a corporate special purpose vehicle, while the latter always entail the incorporation of a limited liability company – generally either a società a responsabilità limitata or a società per azioni (joint stock company), depending on the level of supervisory regulation applied thereto. Projects carried out involving real estate funds also fall under this category.

There is no obligation for partners to operate a specific type of joint venture (contractual or corporate) unless using a specific public project finance scheme where the incorporation of a limited liability company is required. Cooperation in a joint venture is, in the vast majority of cases, vested with a limited liability company or with a real estate fund.

The statutory duties of persons participating in a joint venture do not differ from those applicable to contractual parties or shareholders in limited liability companies or real estate funds in general. These duties can be negotiated at liberty by the parties in the contractual documents (joint venture agreement) or by those partnering into the capital of the special purpose vehicle (shareholder agreement and by-laws). Similarly, the remedies are those generally available under Italian legislation for contractual parties or partners in a limited liability company or in a real estate fund.

If disputes arise, where governing documents are silent, vague, or allow for a decision-making stalemate, recourse is made to the Italian Civil Code with deferral either to arbitration proceedings (if so agreed between the parties) or to the court.

As a general remark, according to Italian law, judgments rendered by the courts (at any level) are automatically enforceable; however, such judgements are not final and can be further appealed. The debtor is nonetheless entitled to request that the court suspend enforceability under certain criteria, such as fumus boni iuris (likelihood of success on the merit of the case) or periculum in mora (danger in delay). If the judgement is final and no longer appealable, meaning the debtor has not appealed the decision within the relevant term or the decision is rendered by the Supreme Court as the last-instance proceeding, then there is no further opportunity for the debtor to suspend enforceability.

Also, injunctions issued by the courts as a result of interim or precautionary proceedings (such as the injunction of payments, the order of release of premises, etc) can be granted with “provisional enforceability” under certain circumstances (eg, there is a written proof of the debt and an acknowledgement of the debtor’s position). The debtor may then still have the opportunity to request a suspension by the court.

There are no special considerations for winding down contractual joint ventures. The general rules for termination of contracts apply, together with the relevant termination regime agreed between the parties or set out in Italian legislation.

However, for corporate joint ventures, liquidation of the company is required, with a third party supervising the procedure (liquidatore) and all the company’s debts being dealt with before the liquidation procedure can be completed and without the partners maintaining liability for the relevant debts.

Two types of guarantees apply in real estate practice: personal guarantees (parent company guarantees and/or bank or insurance guarantees) and securities over the assets (pledge over shares or mortgage on the real estate asset).

“Bad boy” clauses or carveouts generally operate as an exception to the limitation of liability in the event of damages, and are applicable in cases of gross negligence or wilful misconduct (dolo o colpa grave). These are not borrower-specific but are applicable to any party charged with an obligation.

Liability under Italian law extends to actual damages and loss of profit to the extent that they are a direct and immediate consequence of an unlawful action or omission. They are limited to damages that can be predicted at the time of the action or omission that cause the damage unless in case of wilful misconduct.

Limitation of liability is allowed under Italian law unless gross negligence or wilful misconduct have occurred.

The solidity of guarantees – and particularly first demand guarantees, which are unconditional or absolute guarantees – depends on how well they are drafted. Italian system recognises absolute first-demand guarantees. It is particularly important, however, to respect time constraints which limit the enforceability of the guarantees.

Note that, in order to be considered a first-demand guarantee according to Italian jurisdiction, certain specific waivers must be provided within the text of the guarantee on the possibility of raising certain exceptions connected to the merits of the underlying guarantee relationship. 

Unconditional or absolute guarantees generally do not suffer any limitation that is not expressly covered in the guarantee itself. The only general limitation applied by the courts upon request of the guarantor is the so-called exceptio doli defence that occurs when the creditor enforcing the guarantee has already received payment, or enjoyed fulfilment of the obligation, or is openly enforcing the guarantee in bad faith.

For practical reasons, Italian jurisdiction allows the debtor to commence urgency interim proceedings to ask the court to release an order of suspension of the obligation provided within the guarantee. Such requests are assessed by the court on a case-by-case basis, and some legal and factual requirements must be met. The debtor will be required to prove the above-mentioned bad faith of the guarantor in enforcing the guarantee.

Enforcement of a guarantee does not require any specific judicial procedure, but written notice can be served. The defendant, however, has recourse to expedited judicial procedures to stop enforcement of the guarantee under Article 700 of Italian Civil Procedure Code.

Lenders are entitled to enforce all the securities available to them in the event of a breach of borrower’s obligations of payment or other contractual breaches. However, the lender cannot recover under different securities or guarantees more than the amount due by the borrower. Therefore, once the amount has been recovered, enforcement on the other guarantees is stopped.

In the last few years, significant reforms in the bankruptcy field have led to the introduction of various insolvency procedures within the Italian jurisdiction. The specific procedure applicable in each case primarily depends on the severity of the insolvency, the size and structure of the insolvent company, and the feasibility of restructuring and continuing the business. Certain procedures require direct involvement by the court, which appoints receiver(s) from an official list (Lista del Tribunale Fallimentare) to manage proceedings. Conversely, other procedures may be initiated voluntarily by the insolvent company, allowing it to retain management control but subject to supervision of the court and/or an independent expert selected from a designated registry (Registro delle Imprese).

A common scenario in which a receivership is likely to be appointed arises when a debtor company is unable to repay its creditors and the creditors, having an enforceable title at their disposal – eg, the right to enforce a pledge, another secured guarantee, an injunction order, or a judicial ruling – attempt enforcement but remain unsatisfied. In this case, the creditor may petition the court to declare the debtor insolvent, thereby triggering a decision by the court to place the debtor in receivership.

There are no specific requirements or special limitations on the bankruptcy of single-asset entities in Italy.

Mortgage lenders are not substantially affected by bankruptcy filings since their credit benefits from the seniority granted by the mortgage.

Enforcing a third-party guarantee is not generally affected by the bankruptcy of the debtor to the extent that the guarantee has been provided as part of a good faith scheme and is not part of a scheme to carve liquid assets out of the bankrupt company to the detriment of the other creditors.

Arbitration clauses are not uniformly applied across all real estate transactions in Italy. Their prevalence largely depends on the type of contract, the value of the property and the parties involved. While arbitration is generally seen as a faster, more affordable and less complicated alternative to traditional litigation, its use is more common in commercial real estate and large-scale property transactions than in standard residential leases.

When disputes arise in real estate transactions, the parties involved decide whether to resolve them through arbitration or litigation. Each approach has distinct advantages and disadvantages related to cost, speed, confidentiality and enforceability, as follows.

  • Speed and efficiency: one of the most interesting benefits of arbitration is that this procedure avoids the lengthy delays of traditional litigation, allowing the parties to set their own procedural timelines, ensuring a faster resolution of the dispute.
  • Confidentiality and privacy: real estate disputes often involve sensitive information such as financial details, business strategies and contractual terms. On this basis, arbitration would be the preferred solution since it offers strict confidentiality, keeping business negotiations and internal documents out of the public realm, in contrast with court proceedings, which are public.
  • Specialist arbitrators: unlike litigation, where cases are assigned to generalist judges, arbitration allows the parties to select arbitrators with industry-specific knowledge. Therefore, complex issues, such as those regarding real estate, are decided by experts who understand the nuances of real estate law, leading to more informed and commercially sensitive outcomes.
  • Flexibility: arbitration offers greater flexibility in setting procedures, selecting hearing dates and even choosing the governing law. This is particularly useful in international real estate transactions, where parties from different jurisdictions can agree on arbitration rules instead of navigating multiple legal systems.

On the other hand, compared to the advantages laid out, arbitration is certainly more expensive, and it is recommended for real estate disputes over a significant threshold.

Mediation has become an increasingly significant tool in real estate transactions and disputes in Italy. While, traditionally, disputes concerning real estate issues have been resolved through the court system, legislative reforms have made mediation a more common – and sometimes even mandatory – step in conflict resolution.

To address urgent matters, the Italian legislator provides provisional remedies (misure cautelari) to secure the legal position of one of the parties with urgency. These remedies assume particular importance when there is a risk that a property could be sold, encumbered or altered, potentially frustrating the enforcement of a future judgment.

One of the most powerful provisional remedies in real estate disputes is seizure (sequestro) which comes in two forms: a judicial seizure (sequestro giudiziario) under Article 670 of the Italian Civil Procedure Code, and a conservative seizure (sequestro conservativo) under Article 671 of the Italian Civil Procedure Code. Both types allow a creditor or an interested party to prevent the sale or modification of the property until the court resolves the dispute.

Other essential tools include the registration of a pending lawsuit in the land registry (Trascrizione della domanda giudiziale) pursuant to Article 2652 of the Italian Civil Code, which acts as a public warning to third parties that the property is subject to an ongoing dispute.

Provisional remedies are granted by the Italian civil courts upon request by a party that demonstrates an urgent need for protection while a proceeding is pending. A court order is always required, and the requesting party must meet specific legal criteria to obtain such relief. Each type of provisional remedy has its own requirements, although, in general, the petitioner must establish two pivotal elements:fumus boni iuris (the likelihood of success of the legal claim) and periculum in mora (the risk of irreparable harm that waiting for the final judgment would cause).

Improper use of provisional remedies in real estate disputes can expose plaintiffs to financial liability, court sanctions, and reputational harm. If a remedy is required regarding gross negligence or malice, the plaintiff may have to compensate the defendant for damages under Article 96 of the Italian Civil Procedure Code or post a security deposit as set in Article 669-undecies of the Italian Civil Procedure Code.

The Italian courts are generally willing to grant temporary or preliminary injunctions in real estate transactions, but only when the strict legal criteria mentioned above are met. These injunctions serve as provisional remedies to protect a party’s interest while a real estate dispute is pending. However, the courts carefully evaluate whether the urgency justifies immediate intervention, and whether the request meets the necessary legal standards.

To obtain a preliminary injunction or another provisional remedy, the party requesting it must demonstrate, inter alia, irreparable harm (periculum in mora). In the context of a real estate dispute, this element can be satisfied in various ways, depending on the circumstances. The common element, however, is that the delay in releasing a remedy may harm the property in a way that cannot be fixed afterwards, reducing its value or usability in a durable manner.

In Italy, contractors, suppliers, and similar vendors who have performed work or supplied materials for construction or renovation cannot automatically place a lien (such as a Mechanics’ lien) on a property without first obtaining a court order, unless it has been previously agreed between the parties. In certain circumstances, the law provides for a legal lien to be placed on a certain assets such as the legal mortgage of the vendor on the sold asset for the payment of the purchased price or a general or special privilege (privilegio speciale o generale) in favour of the tax authorities for the payment of certain taxes applicable to the real estate asset itself and/or to certain type of credits requiring enhanced protection under the law, as set out in the Italian Civil Code.

It is fairly common for private equity funds or similar companies/entities to invest in large real estate complexes via a Società a Gestione del Risparmio, or asset management company, set up specifically for this purpose. Such entities are subject to Italian Companies and Exchange Commission and the Bank of Italy regulations and specific rules requiring that certain criteria are met (eg, a higher level of minimum share capital and specific honourability requirements for directors, listed in the Bank of Italy’s registers). In litigation procedures before the court, a specific level of intervention by the Bank of Italy (eg, pertaining to a claim for declaration of insolvency and liquidation for the entities) is also required.

Public interest plays a pivotal role in all developments at the intersection of real estate and infrastructure. This is particularly true in large residential developments in populated areas, social housing and/or student housing. In such cases, the involvement of the public authorities (in particular, the municipalities and/or regional authorities) is fundamental, and communication with them on pricing and development features is necessary.

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Trends and Developments


Authors

Francesco Sanna
Andrea Campana
Rita Petrassi
Angelo Meglio

K&L Gates is one of the largest law firms in the world. Spanning five continents, it has more than 45 offices located in key capital cities and world commercial and financial centres. The firm offers clients local market knowledge and access to both national and international capabilities. The full-service team in Milan advises public and private companies, shareholders and directors on a broad spectrum of issues. The real estate litigation team, made up of more than ten professionals, is equipped to resolve any kind of real estate-related dispute across a vast global platform. The team’s extensive experience covers arbitration and administrative proceedings, and its lawyers represent landlords and tenants in connection with disputes and related litigation on procurement and construction.

Real estate litigation in Italy is a complex area of the legal framework that has a significant impact on the overall legal environment. This complexity stems from the detailed property laws that define the legal system, the expanding property market and the frequent disputes that arise between individuals, developers and local authorities. In recent years, the landscape of property litigation in Italy has changed significantly, driven by economic factors, legislative changes and shifts in property ownership and development practices. This article examines the prevailing trends in Italian real estate litigation, the underlying factors contributing to these changes, and recent developments affecting the sector in Italy, including changes in legislation, judicial procedures, the integration of technology and socio-economic influences.

Overview of Real Estate Litigation in Italy

Before examining the trends and developments that define real estate and construction litigation within the Italian legal framework, it is essential to provide a comprehensive overview of real estate litigation in Italy.

The Italian real estate sector has historically been faced with certain inefficiencies within its legal system. The lengthy nature of legal proceedings and bureaucratic obstacles have often hampered property transactions and the resolution of property-related disputes. Such challenges have traditionally deterred investment, particularly from international buyers who may be concerned about Italy’s reputation for sluggish legal processes. Since 2005, however, the Italian legal system has undergone a series of reforms that have had a significant impact on civil procedure. In particular, the recent Cartabia Reform (Legislative Decree No 150 of 10 October 2022) aims to transform the Italian civil justice system by prioritising objectives such as the simplification of civil procedures to expedite proceedings, the digitisation of the justice system and the promotion of alternative dispute resolution (ADR) methods, thereby affecting real estate litigation.

Trends

Increase in the use of the tool of the “Accertamento Tecnico Preventivo” (ATP)

In recent years, Italy has seen a significant increase in the use of the “Accertamento Tecnico Preventivo” (ATP) in property disputes.

This mechanism, regulated by Articles 696-bis et seq. of the Italian Code of Civil Procedure, allows disputing parties to appoint a court-appointed expert to carry out a technical assessment of a specific matter at issue. The main goal of the ATP is to significantly reduce the number of disputes by offering an initial examination of the facts in order to determine whether there are grounds for litigation or whether the parties can resolve the matter amicably without resorting to lengthy and costly court proceedings. This approach offers the parties the opportunity to engage in a dialogue based on an impartial assessment by an independent technician, known as a “consulente tecnico d’ufficio” (CTU), before proceeding to court. The ATP also allows the parties to document the condition of the site at a particular point in time, which can be particularly useful in identifying any defects or deficiencies.

Reasons for the increased use of ATP in real estate disputes

Recently, Alternative Dispute Resolution (ADR) has emerged as an important and widely used method of resolving disputes relating to technical matters in the property sector for a number of reasons, as follows.

  • Property disputes often involve technical challenges, including construction defects, boundary disputes or structural issues. ADR facilitates the resolution of these matters by involving technical experts and providing proactive guidance to resolve technical uncertainties quickly, thereby avoiding protracted litigation.
  • Involvement in property litigation can be costly and time-consuming. ADR allows for the early gathering of technical evidence, which can help to resolve disputes quickly and avoid protracted litigation. In addition, it can act as a mediation tool, as the technical assessment may encourage the parties to reach an amicable solution.
  • Finally, ADR provides a more expedient and straightforward process than traditional litigation, which is particularly beneficial in urgent situations such as water damage or structural concerns. It allows for timely resolutions, thereby reducing the delays commonly associated with standard court proceedings.

The increasing use of ATP in property disputes indicates a potential shift within the Italian legal system towards the use of ADR methods in the future. Developments in this area, including the use of advanced technology for technical assessments – such as design software or simulations – may improve the speed and efficiency of legal proceedings in the property sector.

Increased use of alternative dispute resolution (ADR) methods: in particular, the Fast Track Mediation

Over the past decade, Italy has seen an increase in the use of alternative dispute resolution techniques in property disputes. The prevailing legal and social environment has encouraged the adoption of more expedient, cost-effective and adaptable approaches as opposed to the traditional judicial process, which is often lengthy and costly.

The main ADRs used in real estate litigation

In the field of property disputes, two main methods of ADR are used: mediation and arbitration. Over time, other ADR techniques have emerged, and are becoming more widespread, as follows.

  • Mediation, as defined in Legislative Decree No 28 of 4 March 2010, is an ADR approach in which an impartial mediator assists the parties involved to reach a mutually agreeable solution. This decree mandates mediation in certain cases, including real estate disputes, before resorting to the courts, particularly for less complex disputes of low value.

In addition, in order to increase procedural efficiency, there has been a recent trend towards specialisation of various institutions, including arbitration chambers, which now offer a wider range of dispute resolution procedures. In particular, the concept of “Fast track mediation” has gained recognition; this expedited form of mediation aims to resolve disputes quickly, particularly between international parties, by condensing the process into a series of quicker and more efficient stages compared to traditional mediation. This ADR method facilitates a consensual resolution with the assistance of a qualified mediator, typically within a period of no more than 60 days. Such mediation is particularly beneficial for disputes that require rapid resolution, a common scenario in the property sector where the economic stakes and contractual complexities are often significant.

  • Arbitration differs from mediation in that it involves an arbitrator or a panel of arbitrators who make a decision that is binding on the parties. This method is often favoured for complex and technical disputes, particularly those relating to construction contracts or property issues that require expert valuation. Because of its more structured nature, arbitration is seen as a viable alternative to litigation, offering greater certainty as to the final outcome.

Reasons for the increasing use of ADR in real estate disputes

The increasing use of ADR in real estate disputes in Italy has many advantages for both the parties involved and the broader legal framework. These include the following.

  • Time and cost efficiency: ADR facilitates the resolution of disputes in a significantly shorter period than traditional methods, leading to a reduction in legal and administrative costs.
  • Increased control for the parties: ADR provides participants with greater flexibility and authority over both process and resolution. In mediation, for example, the parties themselves determine the solutions, allowing them to choose the options that best suit their interests.
  • Improved confidentiality: ADR mechanisms, such as mediation, are usually confidential, ensuring that the details of the dispute remain private. This is particularly important in property disputes, which may involve sensitive issues such as personal privacy or the commercial value of property.

The recent return of real estate disputes to the ordinary courts

In recent years, Italy has witnessed a significant shift dealing with real estate disputes, with an increasing number of cases being brought before the ordinary courts rather than resorting to arbitration, which has historically been the preferred method for such matters. This trend can be attributed to a number of factors, including the increasing complexity of disputes, the technical nature of the issues involved, the desire for legal certainty and the financial implications associated with arbitration.

A closer look at this trend reveals certain reasons for the shift away from arbitration, which include the following.

  • Real estate disputes often involve significant legal and technical intricacies, requiring a comprehensive understanding of urban planning, construction and land registry laws, as well as assessments of construction quality, structural integrity and compliance with building standards. While arbitration may appear to offer a quick and efficient resolution, many of these cases require specialised technical knowledge that ordinary courts are better placed to provide, particularly through the use of court-appointed experts (CTUs). Courts have access to professionals with expertise in the construction sector who can provide an unbiased and objective assessment of the circumstances, thereby increasing the accuracy of dispute resolution. Conversely, while arbitration is a more adaptable process, it typically has a streamlined structure that may not allow for the same level of detailed technical scrutiny.
  • One factor influencing parties to favour the ordinary courts is the financial impact of litigation. The costs associated with arbitration, including fees for arbitrators and case management, can be significant. In complex property disputes, these costs can exceed those of traditional litigation. Although there are some costs associated with ordinary courts, they are generally considered to be less expensive.
  • In addition, arbitration was initially favoured because of its speed of resolution. However, in complex cases, arbitration can be lengthy due to various procedural requirements, while ordinary courts are becoming more efficient, particularly through digital advances, resulting in faster outcomes.

In conclusion, the growing trend away from arbitration in favour of ordinary courts in Italian real estate disputes can be attributed to the courts’ increased technical expertise, legal certainty, reduced costs and increased efficiency. Despite the theoretical advantages of arbitration, the preference for courts reflects the parties’ inclination to resolve disputes in a more organised and cost-effective manner, ensuring a higher degree of legal consistency.

Developments

Growing importance of environmental and sustainability issues

Property litigation in Italy is increasingly focused on sustainable development issues, reflecting a growing awareness of environmental concerns. Disputes in the real estate sector mainly concern environmentally sustainable construction practices, energy retrofitting of existing buildings, management of natural resources and landscape conservation.

Breaches of environmental and town planning regulations are a significant source of conflict. The implementation of stricter regulations regarding the energy efficiency of buildings, such as energy certification, the reduction of carbon dioxide emissions and the use of sustainable materials, has led to many companies and individuals being legally challenged for non-compliance. The evolving nature of Italian and European legislation, particularly in relation to renewable energy, environmental damage and ecological impact, can lead to complex legal disputes.

In addition, real estate initiatives focused on sustainability and green building may conflict with planning permissions or landscape conservation efforts, particularly when building on land with environmental or landscape restrictions. Local communities, environmental organisations and individual citizens may take legal action to stop projects that they perceive to be harmful to the environment, highlighting the tension between economic development and environmental protection.

In this context, sustainable development disputes may also include issues such as the management of construction waste, compliance with fire safety regulations, urban renewal efforts, and improvements to accessibility and the quality of life in residential neighbourhoods.

The introduction of more responsible construction methods and the incorporation of sustainability principles into urban planning are transforming real estate litigation in Italy. This evolution is creating new legal challenges and encouraging the development of a more prominent and influential environmental jurisprudence.

The impact of digitalisation on real estate litigation

A notable trend in real estate litigation is the ongoing digital transformation of the judicial system, particularly in light of the recent Cartabia Reform. The increasing reliance on digital platforms for document filing, case management and remote hearings will improve the efficiency of real estate litigation. This development is crucial given that real estate cases typically involve extensive documentation and lengthy procedural requirements. The ability to file documents electronically, monitor case progress and participate in hearings remotely will significantly reduce delays in the system and improve access to justice for all parties.

The introduction of online court filings, digital hearings and electronic access to legal documents will streamline the property market, resulting in a more efficient, expeditious and transparent process. The Reform has facilitated the digitalisation of land registers and cadasters, further reducing red tape.

In practical terms, this means faster completion of property transactions, including sales, leases and transfers. Buyers and sellers can now complete certain legal procedures online, minimising the need for face-to-face meetings and enabling disputes to be resolved more quickly. This digital shift also reduces the risk of errors in property documentation, as digital systems offer greater accuracy and consistency than traditional paper-based methods.

For example, Law No 120 of 2020, enacted through Decree-Law No 18 of 2020, introduced significant reforms to the judicial auction system in Italy with the aim of digitising and simplifying the process. This legislation mandated that real estate auctions be conducted exclusively through telematic platforms, which has had a significant impact by promoting a more transparent, accessible and efficient management of judicial sales.

According to the 2020 legislation, digital auction management platforms must be operated by authorised entities, ensuring reliability, security and accessibility for all users, including creditors, debtors and auction participants. In particular, the introduction of telematic platforms has reduced the incidence of human error, lowered the costs associated with paper and physical management of procedures, and facilitated wider participation by citizens and businesses, even from remote locations.

The advent of these platforms has accelerated the sale of foreclosed properties, increased the speed of transactions and improved transparency. Users can now access property information, place bids and monitor the progress of auctions online, eliminating the need for physical presence in courtrooms. In addition, digitalisation has made the process more equitable by removing geographical barriers and extending access to auctions to a wider audience.

The problem of forced execution for release in lease contracts. The new aspects introduced by Cartabia Reform

The Cartabia Reform introduced various changes to the enforcement process in Italy, in particular with regard to the regulation of enforcement in relation to the release of leasehold properties. The main objective of this Reform was to streamline and expedite the enforcement process, including the procedure for the release of leasehold properties following enforcement actions, thereby improving the overall efficiency and fairness of the system for all parties involved.

Prior to the Cartabia Reform, Article 560 of the Italian Code of Civil Procedure provided for a complicated procedure for the release of foreclosed or leasehold properties. The release was carried out by the bailiff at the request of the successful bidder or assignee, following a series of formalities set out in the Code.

In particular, the pre-reform version of Article 560 allowed the bailiff to authorise the release of leasehold properties after they had been sold at auction. However, this procedure required a formal request from the successful bidder or assignee, which entailed additional bureaucratic steps that hindered the efficiency of the procedure.

Changes made by the Cartabia Reform

The Cartabia Reform introduced significant changes aimed at streamlining the process of releasing leasehold property. It has introduced specific amendments to Article 560 of the Italian Code of Civil Procedure (cod. proc.civ.), which governs the release of property. In the past, the inefficiency of the executive procedure has made the forced release of a property a particularly costly endeavour, both in terms of time and financial resources.

The amendments to Article 560 of the Italian Code of Civil Procedure, which deals with the custody and release of attached property, aim to simplify the release process and reduce bureaucratic hurdles. The main changes include the elimination of certain prior formalities and the introduction of new procedures that focus on the role of the court-appointed custodian.

According to the revised Article 560 cod. proc. civ, the order to vacate a property - whether it is a tenancy or a property subject to a forced sale - will be executed by the bailiff appointed by the court. This is done without the formalities of articles 605 et seq. (relating to specific execution) and without the involvement of the bailiff, unless the successful bidder expressly waives this.

Consequently, the depositary assumes a leading role in the execution of the release of the property, allowing a more direct and faster procedure without the intervention of the bailiff, which was necessary in the previous procedure.

The article points out that in the case of leasehold property, the successful bidder is not obliged to formally request the bailiff’s assistance in releasing the property. Normally, the bailiff will carry out the release under the supervision of the enforcement judge.

In addition, the Reform allows for the early release of the property in certain circumstances, such as the debtor’s failure to fulfil its obligations, including denying access to prospective buyers, or if the property is not properly protected and maintained. Early release may also be granted if the property is unoccupied by the debtor or occupied by a person without a valid claim against the proceedings.

Under the new Article 560(9) cod. proc. civ., early release may be authorised by the judge during the enforcement procedure if certain criteria are met, including the debtor’s antagonistic behaviour or failure to comply with the rules on custody and maintenance.

Simplifications introduced by the Cartabia Reform

The revised Article 560 cod. proc. civ. introduces a significant simplification in the management of release formalities. The Reform has eliminated the need for an explicit request by the successful bidder or the assignee to initiate the sequestration process, thereby streamlining the procedure and reducing the time involved.

The sequestrator is now empowered to act independently and directly without waiting for a specific request. In addition, it is stipulated that if the property includes movable goods, the sequestrator may order the person responsible for their release to remove them, allowing a minimum of 30 days for compliance.

New guarantees and protection for the tenant

The Cartabia Reform introduced several protections for tenants, requiring that landlords be properly informed of the conditions of release of the property when it is rented. In addition, the Reform clarifies that tenants cannot be evicted without due legal process and the protection of their rights as set out in the Civil Code and relevant legislation.

In summary, the Cartabia Reform has speeded up the process of releasing rented property and reduced the formalities involved. By giving the judicial administrator a leading role in the enforcement process, the procedure has been streamlined, eliminating several previous formalities and facilitating more efficient management of enforcement procedures. In addition, the possibility of early release of the property has increased the flexibility of the procedure, allowing for quicker execution in situations where the debtor is uncooperative, or the property is inadequately maintained.

Conclusions

Real estate litigation in Italy is currently undergoing a remarkable transformation, influenced by numerous factors, including the increasing complexity of real estate transactions, the emergence of digital technologies and the advancement of environmental regulations. The increase in disputes relating to construction defects, property rights and land use highlights the challenges faced by a burgeoning real estate sector. Nonetheless, reforms to charter regulations and the ongoing digital evolution within the judiciary are expected to improve the efficiency and accessibility of real estate litigation.

Looking ahead, the trajectory of real estate litigation in Italy will be determined by a mix of technological innovation, the growing importance of sustainability in development, and legal reforms aimed at reducing court congestion. As Italy continues to modernise its legal framework, it is expected that property disputes will be resolved more quickly and fairly, with a greater focus on alternative dispute resolution methods and technological solutions to optimise legal processes.

K&L Gates

Via San Protaso 5
20121, Milano
Italy

+39.02.3030.291

alessj.dileonardo@klgates.com www.klgates.com
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Law and Practice

Authors

Francesco Sanna
Stefano Bardella
Alessia Rocchi

K&L Gates is one of the largest law firms in the world. Spanning five continents, it has more than 45 offices located in key capital cities and world commercial and financial centres. The firm offers clients local market knowledge and access to both national and international capabilities. The full-service team in Milan advises public and private companies, shareholders and directors on a broad spectrum of issues. The real estate litigation team, made up of more than ten professionals, is equipped to resolve any kind of real estate-related dispute across a vast global platform. The team’s extensive experience covers arbitration and administrative proceedings, and its lawyers represent landlords and tenants in connection with disputes and related litigation on procurement and construction.

Trends and Developments

Authors

Francesco Sanna
Andrea Campana
Rita Petrassi
Angelo Meglio

K&L Gates is one of the largest law firms in the world. Spanning five continents, it has more than 45 offices located in key capital cities and world commercial and financial centres. The firm offers clients local market knowledge and access to both national and international capabilities. The full-service team in Milan advises public and private companies, shareholders and directors on a broad spectrum of issues. The real estate litigation team, made up of more than ten professionals, is equipped to resolve any kind of real estate-related dispute across a vast global platform. The team’s extensive experience covers arbitration and administrative proceedings, and its lawyers represent landlords and tenants in connection with disputes and related litigation on procurement and construction.

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