POOR INVESTIGATION DURING THE PURCHASE OF A NON-COMPLIANT PROPERTY: WHAT ARE THE NOTARY’S RESPONSIBILITIES?

The request for compensation against notaries who fail to fulfill their due diligence in real estate transactions is gaining momentum. The analyzed case highlights the outcome of a compensation request made by a buyer who discovered that the recently purchased property was non-compliant with the administrative authorization granted to the previous owner. This useful story, upon closer inspection, concerns many buyers. From the outset, a question arises spontaneously:

Is it legitimate to blame the notary who did not clarify the non-compliant property being sold?

The answer is yes! But let’s proceed step by step.

What happened that led to the notary being held responsible?

After the deed was signed, the buyer realized that the attic of the purchased property was not qualified as habitable due to its height being lower than the minimum authorized by the administrative permit. The buyer then sought legal advice to obtain compensation for the damages resulting from this discrepancy, which not only affected the value of the property but also limited its use.

The legal process was intense and ultimately the buyer prevailed.

What activities must the notary carry out to avoid liability when drawing up a contract?

As previously stated, the case went through all three levels of judgement. Legal principles were affirmed in all three levels that favored the buyer. In fact, the Territorial Court of Naples clarified that the

“essential content of the notary’s professional service” is the “duty of advice” on technical matters that those without specific expertise do not perceive, and also admits that the notary must carry out the activities necessary to achieve the desired outcome for the parties and especially to “accurately identify the property”.

What did the Court of Cassation consider to establish the notary’s liability in the signing of a real estate contract?

In the case in question, the buyer essentially based the notary’s liability on the failure to verify the truthfulness of the seller’s statements, namely on the actual evaluation of the conformity of the works “to the volumetric, typological, etc. provisions of the subdivision approved by the City Council.”

However, the notary who drew up the deeds in this case was very “superficial” in his works. In fact, no verification was made regarding the urban planning rules and the subdivision plan, and the notary “accepted the information presented in the plan attached to the public deed” based on the seller’s statements.

So, was everything regular?

Upon closer examination, some argue that the verifications are “activities not included in the professional obligations.” Therefore, the notary – as the Court of Appeals continues – described the property based on cadastral units and not on habitable units. But is it always like this? In such cases, who is liable for damages?

The buyer had advanced the compensation request, which was also directed not only at the notary but also at the seller. The object of the compensation request, therefore, concerned the INADEQUATE INVESTIGATION DURING THE PURCHASE OF A NON-STANDARD PROPERTY, and the judgment was useful in order to highlight THE NOTARY’S FAULTS.

The Court of Cassation found it illogical to circumscribe the notary’s obligation to verify and control in a formalistic and, therefore, erroneously restrictive way, especially considering the usefulness for the buyer of having clear information on the characteristics of the property at stake.

The legal principle in case of a non-compliant property sold.

In essence, without further extending the arguments, in order to meet the reader’s needs, the principle has been established according to which:

the notary appointed for the drafting and authentication of a real estate sales contract cannot limit himself to ascertaining the parties’ will and supervising the drafting of the deed,

And furthermore

“… must carry out the necessary activity to ensure seriousness and certainty of the legal effects and the practical result pursued and specified by the parties”, since the “essential content of his professional service is the obligation of information and advice”;

in particular

he must “carry out a technical and essentially legal verification”;

This judgment was based on a very recent ruling by the Italian Court of Cassation, section 3, February 15th, 2022, n. 4911, which reaffirms that

the notary appointed for a contract concerning real estate rights cannot limit himself to ascertaining the parties’ will and supervising the drafting of the deed, but must “carry out the necessary activity and ensure the seriousness and certainty of the typical legal effects and the practical result pursued and specified by the parties”, since the “essential content of his professional service is the obligation of information and advice”.

Source: Giuffrè Editore – Legal jurisprudence

(download the Order 33439 of November 14th, 2022, of the Court of Cassation)