Sale with retention of title and condominium fees: a practical guide

A sale with retention of title is a contract under which the seller delivers the property to the buyer, who begins to enjoy it and pays the price in instalments, but becomes the full owner only upon payment of the final instalment. This arrangement, provided for by the Italian Civil Code, raises a frequent practical question: during the payment period, who is responsible for the condominium fees?

How a sale with retention of title works

In a contract of sale with retention of title (also known as a reservation of ownership agreement) the transfer of ownership is suspended until the price has been paid in full. The buyer takes possession of the property and uses it as if they were already the owner, but the seller retains formal ownership as security for the outstanding debt. If the buyer stops paying, the seller may terminate the contract and, as a general rule, keep the instalments already received as compensation, unless the parties have agreed otherwise in writing.

From a practical standpoint, the contract must be drawn up in writing and, to be enforceable against third parties, registered and recorded in the land registers. Recording is a step that should never be overlooked: it protects both the buyer — whose right is pending completion — and the seller, who retains the security interest in the property.

Who pays the condominium fees

Here the rules distinguish between two aspects: the internal relationship between seller and buyer, and the external one with the condominium.

On the internal level, the contract may freely provide that the buyer — as the party who uses and enjoys the property — bears the ordinary condominium fees throughout the instalment payment period. This clause is very common and reflects a logic of fairness: whoever lives in the apartment bears the day-to-day running costs.

On the external level, towards the condominium, the matter is more delicate. As a rule, the condominium looks to the registered owner, who until final settlement remains the seller. This means that, if the buyer falls into arrears, the condominium administrator can claim against the seller. For this reason it is essential that the contract regulates the payment obligations precisely and, where appropriate, provides for guarantees or security deposits.

Ordinary and extraordinary expenses: a useful distinction

Even within condominium fees, it is worth distinguishing:

• Ordinary expenses (cleaning, central heating, routine maintenance): these are normally assigned by contract to whoever occupies the property, and therefore to the buyer.
• Extraordinary expenses (façade renovation, lift replacement, structural works): their allocation depends on the contractual arrangements; in the absence of specific clauses, it is advisable to regulate it explicitly before signing.
• Condominium arrears existing at the time of the contract: these remain the seller's responsibility, unless otherwise agreed in writing; the buyer should always request an up-to-date condominium account statement before finalising the agreement.

What to check before signing

Before signing a contract with retention of title on a property in a condominium, it is useful to gather some information:

• Condominium account statement: check that there are no outstanding arrears attached to the unit.
• Minutes of recent meetings: these reveal whether extraordinary works have been approved but not yet carried out, whose costs could fall within the contract period.
• Condominium regulations: some provisions restrict the use of the property or require the condominium's approval for certain activities.
• Clear contractual clauses on who pays for what: avoid generic wording; a detailed list within the body of the contract is preferable.

Tax aspects: a general overview

From a tax perspective, in a sale with retention of title the transfer for the purposes of indirect taxes (registration, mortgage and cadastral taxes) is generally considered to take place at the time the contract is signed, not upon payment of the final instalment. The applicable rates and any tax reliefs — first home, properties in mountain municipalities, and so on — depend on the specific situation of the parties and on the cadastral category of the property. On this point it is always advisable to consult a notary or an accountant, as the rules may vary and the regulatory framework is updated over time.

If you are considering buying or selling with retention of title in the area of Todi and Umbria — an arrangement that can prove useful in local markets where negotiations are more direct and access to credit can take longer — the staff of Todi Immobiliare is available for a no-obligation consultation. Fully understanding the specifics of the contract before signing is the simplest way to avoid problems along the way.