A guide to building in Europe
I BUILDINGS AND REAL PROPERTY
(1) The Context and The Notion of Real Property
(2) The Acquisition of Real Estate Rights
(3) Criteria for Evaluating Real Property
(4) Tax Obligations
II TOWN PLANNING AND ZONING REGULATIONS
(1) Town Planning and Zoning Notions
(2) The Competent Authorities
(3) Consultants on Real Estate Matters
III THE ARCHITECT
(1) The Architect's Status and Legal Position
(2) The Contract
(5) Liability And Insurance
IV THE TECHNICIANS (THE DESIGN TEAM)
(1) The Engineer
(2) Specialised Technicians And Other Consultants
(3) The Site Superintendent And Construction Yard Chief
(4) The Project Manager
(1) Intermediaries and Real Estate Brokers
(2) The Promoter
(3) The Sale and The Liability Connected thereto
VI THE CONTRACTOR
(1) Description of The Construction Contract
(2) Selecting the Contractor
VII THE CUSTOMER
(1) Rights, Duties and Responsibilities of the Customer
(1) Acceptance and Proof Testing
IX LIABILITY AND INSURANCE
(3) Effective Date and Prescription
The definitions of the concepts of town planning, landscape and environment in Italian law are broken up among various regulatory sources, the notions deriving thus not being unambiguous.
In any event, the environment's interests prevail over those of town planning to the point that the latter's are incorporated in the former's, the principal aim being to guarantee the human habitat and to safeguard health compatibly with the conservation of nature and of the earlier-existing installations.
However, the planning structure of urban installations in force in Italy derives to a good extent from Law 17 August 1942 No. 1150, which facilitated the drawing up of city urban development plans. This Law introduced a general regulatory scheme oriented towards large-scale planning, broken down into general and detail urban development plans, small-scale development plans, non-compulsory and rigidly regulatory, and finally construction zoning regulations.
The 1942 town-planning Law permitted city development plans to indicate, by means of zoning constraints, where and what could be done in their territory, making it possible to indicate industrial areas, residential densities, and office-worker densities. The safeguarding of the landscape then developed: Law 29 June 1939 No. 1497, Law 1968 No. 1187 and Law 8 August 1985 No. 431 (the “Galasso”), which converted Law by decree No. 312 of 27 June 1985 into law, by virtue of which the protection of natural beauty became the safeguarding of the landscape, distinguished into the so-called zones of respect and the categories forming part of the Landscape Development Plans.
In a different way, after the post-war reconstruction the innovations of Law 28 January 1977 No. 10, (the “Bucalossi”) were introduced, whereby on the one hand construction was made contingent on obtaining a city license beforehand, and on the other on the payment of a fee which was to serve the city in providing for the indispensable works of primary urban development.
The same Law also introduced the criteria governing the planning of large urban areas, and those governing the multi-year programs for their carrying out as town-planning instruments. The Law also introduced the confiscation of unlicensed constructions and the differentiation of the sanctions to be applied to them.
By various subsequent decisions, the constitutional court brought out a number of legislative incongruities and introduced new concepts, some of which were implemented in other Laws. It also confirmed the inclusion in town planning of everything concerning the use of the entire territory, for the purposes of locating installations of every kind and their infrastructures, and of determining their types.
Technical standards and codes were then laid down governing the design, construction and proof-testing of buildings (Ministerial Decree 20 November 1987), which delineated the guidelines of the national technical code governing residential building construction (DM 10 January 1988). Modifications were also made to the system for sanctioning, salvaging and legalising unlicensed constructions (13 March 1988). Finally, important requisites were laid down to encourage the overcoming and elimination of architectural barriers (Law 9 January 1989 No. 13, modified by Law 27 February 1989 No. 62), and indications were provided on the use of fireproof building materials on the basis of EEC regulations (DM 5 August 1991).
These regulations are mentioned by way of example, and are not exhaustive, since norms are subject to frequent up-dates.
In addition to the definitions derived from the aforesaid legislative sources, the regulations framework must still be completed by a review of the provisions of the civil code concerning real estate and appurtenances (Sections 812 et seq of the civil code); and concerning ownership, under Section 832, in particular as to purchase procedures (922 et seq of the civil code), supplemented with easements and real rights, the notion of landed property (Sections 840 et seq), and land rights.
The Italian civil code also regulates the safeguarding of private rights to real property as regards condominium (joint ownership) relations and their violations. Other limits concern instead specifically laws (Sections 871, 872, 879 of the Civil Code) regulations (Sections 873, 879, 866, 889, 890, 893 of the Civil Code), and general urban development plans (869), constructions and distances (Section 873), lights and views (Sections 901, 905 and 906), and private waters (Sections 909 and 910).
CHAPTER 1 - BUILDINGS AND REAL PROPERTY
1. The context and the notion of real property
According to Section 812 of the civil code real property consists of “the land, springs, watercourses, trees, buildings and other constructions, even if tied to the land for transitory purposes, and in general every thing that is naturally or artificially anchored to the land, all other property being deemed as personal property.”
Belonging to the state as state property are “the seashore, beaches, anchorages, ports, rivers, creeks, lakes and other waters defined as public by other laws on the subject, works assigned to national defence” and “where they belong to the state, roads, motor ways, railways, airdromes, aqueducts, land and buildings recognised as being of historic, archaeological and artistic interest by the laws on the subject, museum and painting collections, archives, libraries, and, finally, the other property subjected by law to the public domain” (Section 822 of the Civil Code), with graveyards and communal markets (Section 824 of the civil code) to be also added thereto.
The legal status of state property is that of its being inalienable insofar as it cannot constitute rights to third parties except according to the procedures established by the laws concerning them, and under the guardianship of the administrative authorities. At times the state can impose other indefeasible rights (whose notion will be set forth below) on property for motives having to do with the public interest, for example in the case of private roads encumbered by a public use easement. Forming part too of state property, as an inalienable heritage, are forests, mines, quarries, peat bogs, items of historic, archaeological and artistic interest found by whomsoever below the surface of the soil, barracks and similar, public buildings, furnishings and property assigned to public service, and even “vacant real property”, that is property owned by no one (Sections 826 and 827 of the Civil Code). State property is subject to the regulations concerning it, its use assignment not being susceptible of being altered.
The real property of church bodies too, when assigned to the public exercise of the Roman Catholic faith, and even when belonging to private parties, cannot be removed from its assignment, not even by the effect of conveyance, in conformity with the laws concerning it.
2. The acquisition of real estate rights
Landed property is governed by Section 840 of the civil code, which states: “rights to the land extend to the soil below the surface, together with everything that is therein contained, and the owner may perform whatsoever excavations and works that do no damage to his neighbour” In any event, he can block access to his land, unless the exercise of hunting and fishing rights is at issue, while he cannot block the smoke, noise and disturbances coming from his neighbour, provided these do not exceed ordinary tolerability, productive and residential requirements here tempering one another.
Building construction is governed by Section 869 of the civil code, which states: “owners of buildings in towns where urban development plans have been made up must comply with the prescriptions of such plans in making constructions or reconstructions or modifications of existing constructions.” The General Development Plans, even though administrative, are prescriptive in nature, and exceptions to them may not be founded on agreements between parties. Moreover, given their generality and susceptibility of being known, once published they are deemed to be known by all citizens.
In order to understand the system of real property and of the real estate rights that can encumber real property, it will be necessary to sketch out a short picture of legal notions: the owner of a good has the right to exclude others from its enjoyment and from having it at their disposal, and his right thus to do is absolute and indefeasible.
The above distinguishes his right, inasmuch as it can be made to hold good against every one (erga omnes), relative to other, so called relative, rights, since they can be made to hold good only against one or more determinate persons.
Typifying indefeasible rights are real rights, that is, the rights on a thing, and among these are property rights (jus in re propria). There are also divisible real rights (jura in re aliena), which in their turn break down into rights of enjoyment (right of usufruct, of perpetual leasehold, of use, of habitation, of easement, building lease), which attribute to their holder the right to directly enjoy determinate advantages on the property of concern, and rights of lien (pledge and mortgage), which attribute to their holder the power to have assigned to himself, pre-emptively relative to other creditors, the monies accruing from the forced alienation of the item of property, in case of failure to fulfil the obligation guaranteed by the property. Some notion, even a distant one, of what real rights are is in fact important to evaluating the charges and encumbrances that often accompany a building or other piece of real property and its conveyances. They are important too since they are frequently applied and can involve variations in the value of the real property of considerable amount.
Among the characteristics of the acquisition of property there is its occupation - although it is specifically excluded that the real estate of which no one is owner can belong to the finder, since it belongs to the state. Another mode of acquisition is that of personal for real property, which arises from the fact that the owner of the land (usque ad sidera) is also ordinarily the owner of the things lying on it, such as plantations and constructions, unless the building lease has been attributed to others, and this perforce by written instrument. To be mentioned too is usucapio, which is a mode of acquiring property and indefeasible rights of enjoyment that can be accomplished in twenty years of unconditional and non-defective possession of real property (Section 1158 of the Civil Code).
There is also abbreviated usucapio (Section 1159 of the Civil Code) for which good faith, a valid title, and transcription of the title are necessary; it is accomplished in ten years from the date of transcription.
Finally, there is special usucapio (Section 1159 of the Civil Code), concerning small plots of rural property, envisioned for rural landholds in so-called “mountain” communities. It is accomplished in five years, if abbreviated, or 15 years, if ordinary.
Among the modes of acquiring property by derivative title are the contract and succession owing to death.
Legal actions in defence of property are the claim (Section 984 of the Civil Code) granted to he who states himself to be the owner of a thing that is in possession of or held by others; the actio negatorio, which may be filed to have any disturbances or annoyances that have come up around the property made to cease; action for the adjustment of metes and bounds, and legal action for the forced joint setting of boundary marks.
There are other rights of an obligatory nature, such as leasing as pursuant to Section 1571 Civil Code, which is a contract whereby one party undertakes to permit use by another party of a thing for a given time period, in exchange for a determinate payment. Leasing is greatly safeguarded by the Italian legal code, and is in short the mere enjoyment of the real property against a payment (agreement must be in writing under the penalty of nullity). The leasing of real estate is subject to the norms of the civil code (which sets, for instance, a maximum time limit of 30 years as per art. 1573 of civil code).
In particular, the leasing of residential buildings is subject to Law 27 July 1978 No. 392, by which the so-called “equitable rent” provision was introduced, namely a price fixed by law, now being rescinded and replaced by the introduction of the so-called "revocation contracts". The tenant, up to the introduction of the above legislation, enjoyed particular regard as concerns the life of the lease, set by law (at four years, with tacit renewal), the power of rescission for the leaseholder, the prohibition on subleasing, and the setting by law of the lease rental fee, which is thus not freely determined by the parties, with exceptions only where the law absolutely so provides.
The leasing of buildings outfitted for uses other than for dwelling, (but rather) for business purposes, enjoy less favour, but do enjoy legal safeguarding as regards the legal drawing up of the contract, as well business goodwill and commercial position. A different system governs the leasing of productive property (rural landholds, businesses, factories, hotels, quarries, peat bogs and woods).
The above-mentioned "equitable rent" provision was intended as a temporary norm until the reform of the new urban real property register, but in practice it had become a permanent law.
Law 359/1992 introduced, with the revocation contracts replacing the equitable rent regulations, a socio-economic ceiling set with the assistance of trade organisations in bargaining between tenants and owners.
At all events, the derogatory provisions pertaining to the legal determination of the lease rental fee only partially apply to property used for dwelling purposes terminated prior to 11 July, 1992.
In accordance with art. 1571 of the civil code, the lease rental fee is now determined freely by the parties, with the compulsory assistance of trade associations, in substitution of the rental fee established by law for old buildings and with no limits imposed for new constructions (not even for annual ISTAT cost-of-living increases).
The new legislation has had the effect of opening up the leasing market, paralysed until a few years ago by the compulsory application of the set rental fee, which often led to non-compliance with the relative system.
This subject is today still undergoing innovations and revisions, which will facilitate owners of buildings only to the extent of being free to set prices. And it will be more difficult to lease the property for any time periods other than those laid down in the contract.
All this has made, and still makes leasing a problem, and is an explanation for the modest exploitation of real estate assets.
Foreigners: not all foreigners are permitted to acquire real property. Indeed, the Italian civil code demands reciprocity, that is to say that a similar power be granted to Italian citizens in the country of origin of the person wishing to purchase in Italy.
3. Criteria for Evaluation
The assessment of the value of a building and of lands depends on a number of use values; these should be distinguished firstly into two large categories:
buildings, and landed property.
Clearly, the zone in which a building is located can be an advantage and a virtue for business use, while it can be of negative value for residential use. The same thing holds true as regards the floor of the building on which an apartment or office is located, for generally lower floors are preferred for offices, while the reverse holds true for apartments. Generally too residential apartments in the urban belt and in historic city centre are of considerable value, as too are offices there, provided they have hygienic services and are easily accessible.
Other technical factors too must however influence the assessment of a piece of real estate, for its structure, systems, insulation, fittings, quality of finishing, appurtenances, and exposures can be of great importance and thus affect the price.
Account must also be taken of the fact that the encumbrances on an item of real estate, and its intrinsic defects, can exert a strong influence on its value.
- Landed property
If the property in question is land, the factors affecting its price will first of all be its zoning, that is, whether it can be built on or not, whether it is, for instance, agricultural, and further, whether this zoning can be changed, account being taken of the possible variances and concessions that can be requested and reasonably obtained.
Furthermore, the degree of urban development in the neighbourhood can anyway be predicted from the development plans, the zoning laws, and similar, distance from industrial centres and from towns, and utilities hook-ups available as well as other urban development works.
Landed property is today in a state of crisis as far as its exploitation for farming is concerned for the following reasons: (a) the difficulties felt by rural economy, (b) the fall in demand for farm products from industrialised countries having hard currencies, (c) the price regime set by the European Community, and (d) the increasing tax pressure. As a result, it is likely that good investments can be made in areas far from the more important towns, even though there is a general trend by the lawmakers to safeguard the landscape heritage and landed property, and thus to zone for construction, especially for industrial uses, near towns.
Owing to the enormous number of variables involved in estimating real estate value, to the large number of unscrupulous speculators infesting the market, and to the types of defects real property can exhibit, on all of which it is hard for a simple private party to be informed, it is best for him to get advice on the business he intends to take on, whether it be to purchase or to sell, whether it concern a modest apartment, a piece of land, or any other thing involving real estate. Frequently the consultant's fee turns out to be very cheap insurance against the danger of a bad purchase, or against the liabilities incurred in a mistaken sale, or in the purchase or sale of other real estate rights.
THE PRELIMINARY AGREEMENT
The preliminary agreement to sell is the written instrument (and land sale agreements must be in writing, or the sale is null and void) which commits the parties to a succeeding stipulation for the sale-purchase of a piece of real estate, which will be signed before a notary public. It sets forth the names and other identifying characteristics of the stipulating parties, a description of the piece of real estate, the price agreed upon, the form of payment, the terms of consignment of the real estate, any special agreements, the condominium regulations (where relevant), the tax regime and contract costs, and generally speaking the specific guarantees provided by the buyer.
The preliminary agreement to sell commits the buyer by the payment of a down payment, generally 10 percent, which is forfeited should he not go ahead, or will be returned, double, to the buyer in case the seller backs out. In the preliminary agreement to sell, which may also be called the preliminary contract, it is important to exactly formulate the will of the parties and specifications of the good being sold. The preliminary agreement accordingly does not set forth a sale, but rather a promise to sell, so as to avoid the consequence that the sale be made instead at the signing of the preliminary agreement and not in the final contract, with the pertinent tax consequences and consequences to the seller, who is cashing in at the time of the sale only the down payment.
It is thus best that the preliminary agreement between private parties be signed with an expert consultant present, who should be allowed to guide the negotiations. Although often made up in forms, preliminary agreements in fact demand some degree of accuracy in drawing them up, since it is unlikely that the case it is intended to deal with will be found exactly described, and since everything that is written therein is binding, unless in conflict with imperative laws that make it null and void in whole or in part.
After this preliminary agreement is signed, the parties generally proceed with the notary's instrument, in which the actual conveyance of the property or of the real right is made, it being stipulated of course before the notary public designated, usually by the buyer. Before reaching the step of signing the notary's instrument, however, and preferably before the preliminary agreement, it is best to verify that up to the deed of sale no prejudicial transcription has been made in the meantime, this being done at the Land Registry Office. Examples of such transcriptions would be conveyances of real rights or grants of third-party security, and that the seller is entitled to sell the good in his capacity as proxy or owner.
In any event, the notary sees to the conveyance of the property, makes up a deed of sale, bears witness to the payment of the price, and sees to requests, formal controls and law requirements such as the recording and transcription of the deed.
He furthermore checks for the formal absence of defects as regards the item of real estate's legal status, thus diminishing the risks that accompany a mistaken or unsuccessful purchase, providing proof of any tangible guarantees encumbering the real estate bought and sold, as well as of attachments, mortgages and so on.
No check, however, may be made before the notary as to the physical state of the real estate, or as to the correspondence of the reality of the physical facts with the facts as they come out of the documents. Formal inquiries shall be undertaken by the buyer.
Should by their mutual consent the parties elect not to proceed with the notary's instrument, they are free to terminate the contract without any consequences of any kind ensuing. Quite frequently, however, there are delays and second thoughts at the last moment, which generally speaking in those cases where down payments or penalties for rescission are not provided for, will give rise to whatever consequences may ensue.
THE LAND REGISTRY OFFICE
The land registry office is a public institution that serves to provide a topographic-legal representation of the territory, it being useful for tax purposes as well.
Entries in the land register involve the seven phases of: qualification, classification, rates formation, verification, placement, publication, and activation.
The information supplied by the Italian Land Registry Office does not have probatory value; it is of a geometric and plat nature, and concerns areas, configurations and metes and bounds. In the provinces of Trento, Trieste and Bolzano a land register system is in force that is both descriptive and by plots.
The registry office for landed property registers real estate by means of plats bearing map numbers, which depend on the quality and productivity of the lands themselves, the land incomes being determined on the basis of rates derived from the estimate of the products of a number of typical plots. The so-called new land cadaster differs essentially in its introduction of the closed-perimeter map sheets, and by the use of electronic processing. The land registry office has as its purpose to keep the deeds it records updated, both as regards possessors of the land and their legal relationships, and as regards the status and amount of taxable income.
The registry office for buildings (Law 11 August 1939 No. 1249 ) represents an inventory of all the buildings not registered in the register for landed property, its essential purpose to ascertain the ownership of urban real estate and to determine its income.
The New Registry for Urban Buildings has been in force since 1962. It is based on a statement signed by a qualified technical person and by the owners, and is made up by individual real estate units (apartments-offices).
The Registry Office for buildings has as it function to guarantee that the deeds disposing of real rights on real estate (and therefore of property) are kept publicly known. The consultation of the registers makes it possible to establish who a building or apartment belongs to, and what encumbrances and taxes burden it.
4. Tax Obligations
In theory, there are two kinds of charges that must be paid by those purchasing real estate: tax charges and notary's costs.
There are various kinds of tax charges, owing to the various provisions of the complex and constantly-evolving tax system in force. However, a distinction must be made between purchases made by private parties and those made by companies.
a) Purchases made by private parties
The purchase is currently subject to a register tax of 8 percent, as well as of 2 percent for mortgage and cadastral imposts, bringing the total up to 10% of the price paid.
Where a "first house" is being purchased (ownership category prone to expansion and greater protection), and where residency conditions and the requirement that another habitation is not possessed in the same city are met, and where this facilitation has not been made use of previously, the register tax is reduced to 4% plus L 200,000 for a fixed cadastral and mortgage impost. The same benefit is extended to emigrants (Law No. 899 of 1986) and in the rare case of the purchase of a building possessing artistic or historic interest that is encumbered as per the terms of Law No. 1089 of 1939, providing the further obligation that it may not be resold for five years is respected.
By virtue of legislative decree 455 of 24.11.92, major changes have been introduced to the re-sale of a building purchased as per the above cut-rate system; detailed information should be obtained from an expert at the moment of sale.
- where the purchase is of apartments or buildings, for whatsoever use, included within the plans of public or private initiative under agreements with the city as per art. 27 of Law No. 457 of 1978, only the fixed register, mortgage and cadastral taxes are applied, for a total of Lit 300,000, whatever the price paid.
b) Purchases made by companies
The purchase is subject as a general rule to the VAT tax of 19% plus Lit 300,000 for fixed registry, mortgage and cadastral imposts.
However, the reduced VAT tax rate of 4% plus Lit 300,0000 for fixed registry, mortgage and cadastral imposts is applied in the following cases:
- the purchase of newly-built non-luxury houses as well as of rural houses from the firms that have built them;
- the purchase of buildings or portions of buildings assigned for whatsoever use on which salvage operations have been made as per art. 31 of Law No. 457/1978, sold by the firms that have carried out the operations; the assignment as own property of non-luxury houses by co-operative construction contractors;
- the purchase of property assigned to public and private reconstruction having as its purpose to carry out the objectives of Law No. 1457 of 1963;
- finally, the purchase of non-luxury houses for habitation, not built by the selling company, when such are assigned to being the first habitation of the purchaser, where the conditions already described under item a) have been met.
As regards notary's costs, precise indications cannot be given, since these will always depend on the amount mentioned in the deed of sale; but they can anyway be estimated at around 2% of the price.
The registry law presupposes that the parties declare the price actually agreed upon, and punishes by fines those who conceal a part of the price, thus declaring a price lower than the true one. Furthermore it considers as the taxable base the real value of the property, and not that stated by the parties, the competent authorities having the power to ascertain such value within two years from purchase, and where it exceeds that declared, to demand the difference in the impost, plus interest and fines.
It should be noted that a disputed revision of the cadastral parameters is being carried out now, which is bringing real estate values up to near true market values.
TAXES PAYABLE BY THE SELLER
The INVIM is the impost at the charge of seller, the law dictating that it may not be passed on to the buyer by the seller.
It is applied at rates ranging from 5% to 30%, barring up-dates, on the capital gains realised by the value of the real estate between the date of its purchase and the date of its sale, in relation to the time period in which it was in the possession of the owner, who is now its seller.
Should the purchaser acquire as a first house, the seller too has the benefit of a 50% reduction on the INVIM due.
The above tax and notary's information can be relied on only if due account is taken of the unfortunately frequent legislative innovations in tax matters, and more rarely, in notary's fees.
In any event the regime applicable in case buyer or seller are foreigners must take into consideration residences and other criteria involved in private Italian international law, with due regard being given to the so-called treaties and conventions against dual taxation, which at times make it possible to pay taxes but once only, to the state to whom it is determined that the payment is due.
CHAPTER 2 - TOWN-PLANNING REGULATIONS
The civil code in force contains provisions of a private-law nature, that is, that regulate the relations between the individual private owners of the pieces of landed property concerned, there appearing however in general terms interests of a public-law nature as well. They therefore form legal limitations on the property right that consists of the "power to dispose of and enjoy the thing fully and exclusively within the limits and in compliance with the obligations laid down by the law". Where the issue is a piece of land, the private party has the power to carry out those works that he deems necessary to his better exploitation of it, while nonetheless remaining bound by the principle of neminum laedere, without prejudice to his obligation to pay claims for damage caused to outside parties by works carried out not in compliance with the common rules of diligence and prudence.
The property owner may thus dispose of his property, being fully able to demand the elimination of whatsoever disturbance to his property. The limits and prohibitions provided by the civil code apply only to pieces of land that are adjacent or nearby. In this way too are to be interpreted the general limitations on distances between constructions, which, where no other regulations govern, may not be less than three meters apart, on legal heights, and on legal distances from the boundaries.
1. Urban Development Notions
If this body of law is considered from a public-law standpoint, there is a reference in the Civil Code, Sections 869 et seq; while town-planning regulations, understood on the whole, must be considered as coming from the following sources, to which the private party must refer in order to be oriented as regards landed property and constructions on Italian soil.
a) Special and town-planning laws, and building construction codes, (all of) which are prescriptive instruments of an abstract and general nature.
b) Territorial plans and city urban development plans, general and detailed urban development plans, and urban development plans concerning reconstruction, the landscape, economic public housing, and salvage, as well as landscape plans, which are urban development plans having a general concrete nature.
c) Prescriptions, authorisations, concessions and ordinances, which are special concrete administrative provisions. There are then also the administrative sanctions, and in some cases the criminal sanctions, that apply.
2. The Competent Authorities
The town-planning authorities are either central or local.
Art. 1 of Decree of the President of the Republic 15 January 1972 No. 8 and arts. 80 et seq of DPR 24 July 1977 No. 615 have transferred to the Regions all the functions once exercised by the state's central and peripheral offices.
The Regions have legislative competence in town- planning matters, within the sphere of the state law laying down the framework for this legislation. In particular, the areas in which the Regions enjoy jurisdiction are as follows:
a) powers to initiate planning by drawing up lists of cities required to implement given executory planning actions;
b) powers to approve general urban planning instruments (arts. 8 and 10 of the town-planning law: LU) and building construction codes, and any annexed building programs (art. 36 of the LU).
c) powers to approve executory plans, in those cases in which the territorial co-ordination plan and the alternatives within the general instrument have been identified.
d) powers to act substitutively, for the formation of the general town-planning instruments and of the building codes, and finally powers to operate substitutively to repress, such as to suspend jobs or to order demolitions.
Law 8 June 1990 No. 142 has attributed to the Province considerable powers to safeguard and protect the land and the environment, by the adoption of territorial co-ordination plans.
Mountain communities have competences sanctioned by arts. 28 and 29 of the law mentioned hereabove, with functions of taking part in the formation of territorial co-ordination plans under provincial jurisdiction.
The City has the right to make up the general urban development plan, that is, the plan that controls building construction beforehand, and that defines repressive measures and sanctions. In the city, jurisdictions are distributed as follows:
a) The Mayor, according to the provisions of the town- planning law (art. 31, LU), issues construction licenses and concessions, and is vigilant to ensure compliance with town planning laws and regulations, and with the procedures as set forth in the license;
He also orders the suspension of jobs and adopts administrative sanctions;
He issues emergency ordinances in building construction matters and certifies to worthiness to be inhabited.
b) The City Council adopts the general town-planning instruments, the building construction code, all the executory plans and the multi-year executory plan; it approves the executory plans and the multi-year executory program.
Finally, town-planning powers are also exercised by the authorities set up to safeguard public property by the adoption of sanctions, and also by the criminal courts.
3. Consultants on the Subject
As mentioned above, it is desirable to rely on a professional's advice as regards the assessment of real estate and transactions concerning it. However it is also necessary to know the various professional competences in order to have the right assistance at the right time. The technical professional people have competences depending on their education and training (from professional schools to the university) and on their membership in guilds or lists, such as architects, engineers, land surveyors, and real estate brokers, whose ongoing membership enables them to exercise their professions. Competences may often overlap, which often gives rise to disputes. One reason for this is that the regulations governing and outlining competences are generic in their formulation and often rather obsolete technically, legally, and as regards market needs. To this should be added the tendency of the so-called minor technical professionals (land surveyors, construction experts and agricultural experts) to extend their areas of competence, giving a rather freewheeling interpretation to the regulations, interpretations that have not always been accepted by jurisprudence. Reference here can be made to Chapters 3 and 4 below, where the professional roles are defined, this being most useful in choosing a consultant.
CHAPTER 3 - THE ARCHITECT
1. The Architect's Status and Legal Position
The architect's profession is exercised by holders of a university degree in architecture, who have taken a qualifying examination and are members of the professional guild (arts. 4 and 5 of Royal Decree 23 October 1925 No. 2537). If the architect is not a member of the said guild, the contract between him/her and the customer shall be deemed to be null and void as pursuant to the provisions of Sections 1418 and 2229 of the Civil Code).
The architect's membership bears witness to his/her maintaining the moral and professional requisites of his/her profession, this being seen to by the council of the association monitoring the membership.
According to law provisions the architect's technical competences are often confused with the engineer's, and for this reason the governing regulations applies at times to both professions. Art. 51 of RD 23 October 1925 No. 2537 in fact contains the regulations for the two professions, which contemplate the following as among the activities typical of the engineer's, while not being precluded to the architect:
- the design, supervision of construction, estimation and proof testing of works for extracting, converting or utilising the materials directly or indirectly necessary to constructions and industrial firms, of the works relating to ways and means of transport, flow and communication, and to constructions as well as for industrial firms, to works regarding ways and means of communication, constructions of any nature, industrial plants and machinery, as well as, in general, the applications of physics;
- topographic surveys;
- land surveys.
The following assignments also lie with engineers and architects:
- works of civil building construction, as well as the construction surveys and land surveys related thereto;
- designs involving the construction of works in prestressed, reinforced or simple concrete, and involving steel structures (art. 1, para. 1 of RD of November 16th 1939, and art. 2 para. 1 of Law No. 1086 5 November 1971 No. 2229). Lying within the exclusive province of the two professional people are the activities of proof-test inspector for works in simple, reinforced and prestressed concrete, and in structural steel. In order to perform such jobs they are required, inter alia, to hold at least a ten-year membership with the relevant Guild.
On the other hand, falling to the architect's specific competence are civil construction works that carry an important artistic value, and the restoration of buildings as contemplated by Law 1 June 1939 No. 1089, regarding the safeguarding of items of artistic and historic interest, with the exception of the technical part of such works, which may be assigned to an engineer.
The architect's activity is also considered to be important to the public interest, as confirmed by art. 1 of the Architects' professional code of ethics. The professional is bound to comply with the provisions issued by the Council of the Association (art. 6), and to exhibit uprightness and propriety as called for by art. 9 of the architects' code of ethics. The architect is bound to professional secrecy in his relation with his client, must carry out his assignment faithfully, while taking care that it is not in conflict with the public interest nor that he has any interest in contractors or suppliers. He is forbidden to advertise the profession he exercises, and he may exercise his activity either as a free-lance or as the employee of public or private concerns. In this latter case he may also practice as a professional only after having been given permission so to do by his "hierarchical chiefs", as set forth in art. 62 of Royal Decree 23 October 1925 No. 2537.
These incompatibilities are governed by different rules depending on whether he/she is an employee of the state or of a Region, or of a city or Province, or if he/she is a teacher.
Architects belonging to the first category, as per art. 60 of DPR 10 January 1957 No. 3, may not practice as free-lance.
The administration of the public body for which he/she is working has the duty to warn any employee who is found to be in a position of incompatibility. The employee shall be required to cease any such incompatibility forthwith on the pain that, should he/she persist in his/her incompatible pursuit, he/she shall lose his/her job.
The positions of engineers and architects who are employees of cities or of provinces and of their consortiums are identical to the positions of state employees.
Exceptions are contemplated only for certain services, for which specific authorisation must be granted.
The position of teaching personnel is different for they enjoy considerable autonomy and discretion, since the practice of professions that do not prejudice the activities involved in the teaching profession, nor interfere with schedules or tasks, may be permitted on authorisation granted by the headmaster or teaching director (art. 92 of DPR 31 May 1974 No. 417).
2. The Contract
The architect generally does not set before his client a contract in the form of a prepared standard form. The contract, if it is in written form, is rather stipulated for the individual commission, and agreed upon between the parties in compliance with the criteria of law that must be followed in carrying out the assignment, and within the area of the competences at issue, in the absence of any other specific agreement.
The services thus agreed upon are compensated according to the complex architect's fee system, as pursuant to the professional regulations governing the subject. In the event of assignments given by a public body or agency, it must be granted by a council resolution, or by the governing body acting with the powers of the council.
The architect's fees do not come out of an organically-conceived body of regulations governing rates for professional services in some overall manner. In town planning, reference is made to Law 2 March 1948 No. 143 and modifications thereto made in 1969 and 1976, and to the Ministerial Decree 11 June 1987.
Depending on the procedures involved in their determination, fees are classified into four types:
- percentage fees (on the price of the job)
- quantity fees (per measurement units)
- fees determined by the time involved
- fees at discretion (in the professional's judgement)
Comparison tables are provided to determine compensation relative to the kind of service supplied.
Payment of the fee presupposes the professional's right to receive an advance payment from the client, his/her right to full reimbursement for any expenses sustained, and his/her right to payment of the balance within sixty days of invoicing.
Once this deadline is expired the client is held to pay delay interest, which is determined by a special though disputed system, above the ordinary rate to the extent of 10% annually. This has given rise to doubts as to its constitutional legitimacy. In any event the interest charged at the official discount rate, and not at the ordinary rate as for other professionals, still holds good.
Services may be charged for at different rates depending on the complexity of the job. Should more than one professional be employed, account must be taken of the actual contribution made by each one or of any preliminary agreements made with customer.
The sum must be requested by a properly made out invoice that is due and payable from the moment it is presented.
According to Section 2333 of the Civil Code if the compensation is not determined by the parties and cannot be derived according to rates or custom, it will be set by the courts, account being taken of the importance of the job and of the dignity of the profession. The courts must in any event evaluate the work in relation to its usefulness from the customer's standpoint.
The architect may not sign other people's work and take on its authorship for himself. This prohibition is confirmed by the profession's ethics as well as by general principles of civil law concerning copyright, which is a right that is indefeasible and cannot be disposed of.
So much the more reason then that the violation of this right, where the consent of the true author is missing, will make the violator liable to criminal sanctions. Art. 99 of Law 22 April 1941 No. 633 on copyright contemplates the protection not just of the formal expression of the idea but also of its content. Likewise, Section 2578 of the Civil Code deals with the economic and technical realisation of the solutions found. In the field of pure design, the designer is thus entitled to:
- the exclusive right to the project plans and drawings;
- the right to fair compensation should a third party, without his consent, execute his project.
The problem of the case in which the true author has different professional qualifications and licenses is complex, as is the problem of the attribution of defects in the job to the person responsible, but these are problems beyond the scope of this short exposition.
5. Liability and Insurance
The architect is responsible for the work he/she has designed for ten years starting from its completion, should any defects found in it be traceable to negligence for which he/she is responsible. The designer's obligation, especially in terms of onerousness and serious faults, looks as if it will become an obligation that concerns the result than an obligation on diligence, as is the case for others rendering intellectual services, in compliance with the terms of Directive 92/50. This principle has been confirmed by a number of different Italian supreme court decisions (holding good for all is No. 38 of 5 January 1983). The onus of demonstrating technical errors or that the result as built is not according to design lies with the customer. Regarding the statistics, cases in which architects have been called upon to respond for damage caused by their own negligence are rather infrequent.
There are no obligations demanding the taking out of professional insurance policies, but the architect sometimes protects himself/herself and his/her customers through policies taken out with private companies. The insurance forms are generally of the “professional” type or of the third-party civil liability type.
In fact, the risks regarding his/her contribution are moderate, statistically speaking, they concerning for example the possibility of error by negligence in design, error in the choice of suitable materials and error in estimating the suitability of their use.
The customer is free to rescind the contract for serious failures made by the professional, which fall under the general notion of negligence, such as a serious and unjustified delay or non-fulfilment in carrying out the assignment, or more occasionally an ethical lapse, or the breaking of professional secrecy.
Usually in the event of rescission, the compensation already accrued and expenses sustained must be paid to the professional up to the rescission.
Should the customer claim damages he/she can take legal action, the case of compensation for damages being exacted out of the consideration due the professional being a seldom as well as an improper occurrence.
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CHAPTER 4 - THE TECHNICIANS
1. The Engineer
Earlier, reference was made to the engineer's technical competences in a legal sense as being similar to those of the architect. It should be added that the architect is usually called upon to carry out a more creative and artistic task, having to do with the form of the work, while the engineer is more often called upon to make the structural calculations governing the work's statics.
2. Specialised Technicians and other Consultants
THE LAND SURVEYOR (often: jr. civil engineer)
According to art. 16 of Royal Decree 11 February 1929 No. 274 the land surveyor is qualified for:
a) topographical operations of measurement, of secondary triangulation along straight-line sides and traversing, the determination and checking of boundaries, cadastral operations, and the pertinent estimates;
b) route surveys for country roads;
c) the measurement and division of rural landed property;
d) the measurement and division of urban lands and of small-scale civil constructions;
e) the estimate of areas and of landed property, for the purposes as well of mortgage loans and of expropriations;
- The design, management, supervision and cost liquidation of rural constructions and of buildings for the use of farm industries of limited importance, of ordinary structure, including small reinforced-concrete structures that do not demand calculations and cannot involve damage to persons;
- The design, management and supervision of modest civil constructions, and the measurement, job accounting and cost liquidation of same, municipal expert's tasks for cities of up to 10,000 inhabitants.
In brief, the land surveyor is a professional whose degree of education and training is that of the technical high school, and who, according to art. 16 of the professional code as per Royal Decree 1929 No. 274, is not allowed to render his/her services except for the construction of “modest civil constructions”, while engineers and architects have no particular limitations imposed upon them. The evaluation whether the building in question is or is not of “modest size” is the task of the administration issuing the construction license.
In particular, it is the mayor of the town in which it is intended to build the building who assigns competences. The law supplies no precise criterion for evaluating the parameters at issue, which in legal doctrine and jurisprudence have been identified as follows:
a) a technical-qualitative criterion
b) a financial criterion
c) a quantitative criterion.
To give a concrete example, a design for an office or apartment building having three wholly or partly underground floors and a three-storey standing structure having a total height of 20 meters is not deemed to be a modest construction.
Art. 16 of Royal Decree 11 February 1929 No. 274 as regards reinforced-concrete constructions, contemplates the competence of land surveyors only as regards works for farm use, which do not involve danger to persons.
As a result, it may be inferred that land surveyors have no competence as regards civil reinforced-concrete structures, even where modest, which involve danger to persons owing to the complexity of the construction technique in question.
Some believe, however, that land surveyors' competence should be excluded only for concrete works in which this material is used in the static bearing structures.
The use by land surveyors of prefabricated items also runs against the modest-construction limit, with the same clarification, posed by a part of legal doctrine. The limits stated must concern not only final designs but also preliminary designs involving design calculations.
Other specialised technicians
Some of the land surveyor's competent tasks may be exercised also by other professional people, such as doctors of agrarian sciences, in particular for operations on small rural constructions, on the basis of art. 2 of Law 7 January 1976 No. 3.
The competences of agrarian experts are also worth mentioning. They may carry out the design and supervision of construction of works for the conversion and improvement of landed property, provided that no higher competences are required.
Among the so-called minor technical people there are also the construction experts, to whom, as pursuant to Royal Decree 11 February 1929 No. 275, is permitted the design and supervision of construction, as well as job accounting and cost liquidation, for modest civil constructions.
CONSTRUCTION YARD CHIEF
He is an assistant or crew foreman having executive functions who sees to the continuity of the yard work and supervises the skilled and unskilled workmen. In parallel to the supervisory and overseeing duties to be performed by the site superintendent in accordance with a2/57, the yard chief must see to the prevention of on-the-job accidents in compliance with legal regulations, and verify that the jobs underway are in compliance with the provisions of the contract.
The workmen are generally skilled, comprising workmen who have been given vocational training in a trade, whether as practical experience or earned in a vocational school.
Their labour contracts are regulated by trade union collective bargaining contracts on a trade by trade basis. Non-registered workmen are usually under-trained, lowering the standard of work, raising the number of performance faults and on-the-job accidents.
3. The Site Superintendent
The site superintendent is the person appointed either by the customer or the contractor for the purpose of overseeing the proper performance of the job in compliance with the contract and with the laws in force. In the construction contract, according to Section 1662 of the Civil Code, para. 1, the customer has the right to carry out checks to verify that the job commissioned is being properly carried out, by appointing a site superintendent.
The site superintendent has no obligation as to the result achieved, but rather as to behaviour and to means. Among his tasks are: to ascertain the customer's objectives, to check any project jobs done by outside parties, to make sure that the building license is in order, to make surveys, to see that the final design is completed, to identify the most suitable construction technologies, to check that the detailed estimate has been made up, to check the general and special bills of specifications, to examine tenders and offers, and to monitor the resulting work, to issue service orders, to authorise any subcontracts, to see that the job is in compliance with contract provisions, to propose alternatives, at the end of the job to make up the end of job report, to state that the job is in compliance with the contract, to lend assistance to the proof tests, to request the licenses certifying that the construction is habitable, and permitting its occupation, to pay off the accounts presented by subcontractors, and to make up the final statement of accounts.
The site superintendent's responsibilities are not all predefined legally, but are to be considered in actual daily practice, due account being taken of the fact that the limits of his commission do not permit him to invade the contractor's mode of organisation, nor the engineering work, except for the purpose of making checks on the execution procedures. He may not then express opinions as to the means used in carrying out the contract, unless these directly influence the way the work is carried out.
Should the site superintendent come to the conclusion that the contractor is not complying with the contract conditions or is not proceeding in a workmanlike manner, he may lay down a reasonable time period within which the contractor must bring himself back into conformance, without however his having the possibility of imposing the techniques or procedures to be used to eliminate the defects or non-conformities discovered (Section 1662, para. 2).
Supposing the case in which the contractor had in fact too low a margin of freedom in carrying on the job, then the scope of the construction contract would be exceeded, as the consequence of the denial of autonomy. The customer's requirements must in any event be sifted by the contractor as regards safety obligations and as to whether they meet technical criteria. Authoritative legal doctrine, however, holds that the site superintendent must limit himself to making statements in the engineering domain.
In practice, the site superintendent's effective role is usually much more extensive than what has been outlined above as formal functions. Therefore, a more direct interference by the site superintendent in the actual work with the consequent greater responsibility implied - which is anyway very high as regards the procedures for carrying on the job and the regulations involved - is not a rare occurrence indeed.
If the site superintendent is appointed by the customer, he will be contractually responsible on the basis of the principles of contracts for professional services as laid down by Section 2236 of the Civil Code, according to which the person rendering services is not liable for damages except in the case of serious fault or criminal intent. In carrying out his duty he is also entrusted with the overall supervision of the job, conducting as many periodic on-site inspection visits as he, in his exclusive judgement, deems fit.
If on the other hand the designer or the site superintendent are appointed by the contractor they are not involved in any legal relationship with the customer, even in the case of the ruin of buildings as per Section 1669 of the Civil Code, but (are liable only) on the basis of the contract signed with the contractor himself.
Since they are the contractor's employees, the principles governing the rendering of employee services for a company come into play, according to the responsibilities as set forth in Section 2104 of the Civil Code, that is, the obligation of diligence in consideration of the nature of the services to be rendered, pursuant to the instructions given by those responsible within the company.
The professional commissioned (as site superintendent) may be the engineer, architect or land surveyor who was given the task of making up the design, and usually the appointment will be made with the agreement of the contractor as well.
In private contracts the appointment of the site superintendent is ordinarily optional, except for the provisions applying to reinforced-concrete or structural-steel constructions (Law 5 November 1971 No. 1806) and for simple concrete works (Royal Decree 16 November 1939 No. 2229).
In public construction contracts, the appointment of a site superintendent is mandatory. According to the provisions of Royal Decree 25 May 1895 No. 350, for works carried out within the territorial jurisdiction of public civil engineering offices, a site superintendent is appointed together with an assistant, who imparts the instructions needed to guarantee that the work is properly carried on.
In the sphere of public works, new legislation is in the pipeline, imposing insurance coverage for the liabilities of the design engineer and the site superintendent.
The construction yard manager
The manager of the construction yard is instead a person chosen by the contractor who on his account sees to carrying on the work, taking on real management powers, and the responsibility for the organisation of the work, and for compliance with on-the-job accident prevention regulations. In his capacity as a professional rendering services the yard manager is also responsible for any damage caused to outside parties owing to the imprudent or defective execution of the work. He therefore takes on responsibility for the yard means, carrying on his operations by assisting and supervising excavations, transport, the use of scaffoldings, the custody of reinforcings, the preparation of materials, and the preparation of the various guarantees that yard practice suggests as necessary.
Usually, the customer's site superintendent takes no part in these activities, since they do not fall within the purview of his tasks.
The contractor is free to make use of a yard manager, without prejudice to the fact that the customer owes him nothing for this as a separate compensation, since the services rendered are exclusively in the interest of the contractor himself.
As a rule, the yard manager is considered to be the first person responsible for compliance with on-the-job- accident prevention regulations during the job, since he represents the contractor, who has the final obligation. The site superintendent is usually relieved of this serious responsibility, unless he has unduly interfered with the management of the construction yard.
4. The Project Manager
The project manager is a professional whose tasks are not the simple ones of a design director. He is the primary manager responsible for the whole operation, in general a complex one, having responsibilities that often exceed those of the traditional site superintendent.
His then is a profession that belongs to the area of the businessman, and he must then essentially manage, co-ordinate and monitor the job's engineering, administrative and financial aspects.
In some particularly important jobs the project manager may delegate specific tasks to various experts.
CHAPTER 5 - PROMOTERS
1. Intermediaries and Real Estate Agents
The broker must necessarily be registered with the Chamber of Commerce's roll of real estate agents. Should the broker exercise his profession without a license, no commission shall be due him for the conclusion of a deal, as provided for by Law 3 February 1989 No. 39, Section 6, first paragraph.
The broker's right to a commission is due as a result of the conclusion of a deal between persons he has brought together. His right is subject to a short period of validity, it falling by prescription at one year from the date on which the deal was concluded. (Section 2950 of the Civil Code).
However, in case of fraud practised to the damage of the broker, the period of prescription starts running from the date the conclusion of the deal was discovered. The commission is due to the broker even after his commission has expired, and even if the deal was concluded after that expiry; the circumstance forming the right is thus his having brought together the parties who afterwards concluded the transaction.
According to Section 1736 of the Civil Code the broker may stand surety for one of the parties, even if this benefit is seldom applied.
The commission payable to the broker may also be granted on an exclusive basis, with the consequence that no accounting may be required on the means adopted or on the amount of effort given to concluding the transaction, unless such has been expressly agreed to.
In the broker's contract the clause may be inserted to the effect that the commission is to be paid only after the successful outcome of the deal, by this meaning the total payment of the price, or other legitimate means of fulfilment. However, the customer is often not in the position to be able to impose contract conditions different from those adopted, usually by printed forms, by the real estate agencies.
Frequently, the agencies legitimately insert in their commission contracts a payment for early rescission by customer of the assignment granted. To be excluded, however, by the authoritative pronouncement of the civil court of cassation of 14 June 1965 No. 248, is any right to compensation of third parties who are not part of the relationship with the broker commissioned, such as co-workers or colleagues, even though it is legitimate for them to split up among themselves the single commission payable to the broker.
2. The Promoter
Among the businessmen concerned in the construction of a building the promoter is usually the person owing the land as his property or by virtue of other real right. The city public administrations issue construction licenses when new or anyway important constructions are at issue, and they are issued to those so requesting, be they the land owner or the holder of a real right. Construction licenses can however also be made out to the person leasing the land.
The customer is in general the actual promoter of the initiative, and to achieve his purpose he must have the necessary financial resources with which to pay for the building's design, supervision of construction, and construction, usually handled by to an outside party. He must appoint those who will work for him and hire professional men, of whom he generally demands an obligatory result. Regarding the site superintendent, the prevalent assignment is one specifying intellectual services, which means an obligation on the means employed.
The problem becomes more complex when an engineering firm is involved and the assignment is given to a person who is usually called the project manager. With respect to contractors the owner takes on then the function of “contracting agency”, by means of a construction contract governing the way the work is to be carried on.
With suppliers of materials, components and products, the owner takes on the position of customer or purchaser.
It is necessary for the promoter to have the approval of the owner of the land, since, except for cases of the express grant of building lease or of a use right, the construction, being attached to the land, becomes then a property of the land itself.
Of course, the promoter may at times not be the owner, nor the holder of the concession, and yet take on the functions described above.
3. The sale, and the Responsibilities connected thereto
Usually, real estate sale-purchase contracts do not set forth specific guarantees given by the seller as to the qualities of the thing sold.
According to Section 1490 of the Civil Code the seller is required to guarantee that the thing sold is free from any defects that make it unsuited to the use to which it is assigned or that appreciably diminish its value. In turn, Section 1495 of the Civil Code contemplates that the buyer must report a defect within eight days of its discovery, with a short period of prescription for the action to be taken in this regard: within one year of delivery.
The guarantee against hidden defects holds good instead for those defects that could not be found on the delivery of the real estate by a person possessing common notions.
As has already been seen, there is anyway an extracontractual guarantee provided under Section 1669 of the Civil Code, whereby the person who built the building is subject to a the ten-year responsibility for danger of its ruin or of serious defects, and this is once again subject to the action being taken within one year of the discovery of the defect.
Other guarantees are given by Law 1967 No. 765, providing that a sale purchase for residential purposes shall be null and void if the land does not have the proper authorisations for its subdivision, or if the law provides for reimbursement of damages by the contractor for the revocation of tax facilitations, where the revocation is due to the construction failure to abide by law provisions.
In the case of areas sold as zoned for construction that in fact are not, the seller shall be held liable, and shall be requested to see to reimbursement only in the event that this attribute of the land was explicitly guaranteed in the deed of sale.
Other guarantees lie with the purchaser too, they concerning third-party rights, both those that are obligatory and indefeasible rights. Such guarantees are usually placed in the deed of sale by the notary public.
CHAPTER 6 - THE CONTRACTOR
1. Description of the Contract
The construction contract is a contract that has as its object to do something, that is to build a work or render a service, which one party (the contractor) takes on to perform for the other (the customer), with a payment rendered (Section 1655 of the Civil Code).
The lawmaker has not envisioned special forms for the construction contract, as it can be agreed upon orally or in writing. It is a contract whose execution is extended in time, and has obligatory effects concerning the two parties to it.
The contractor provides the necessary means and takes on the management at his own risk: usually, he is a builder in accordance with the notions of the Italian Civil Code. The construction contract thus is different from the sale contract, which is an obligation to provide something, except for the case of the sale of a future thing, where such is manufactured by the seller himself. In this case too it may be distinguished into the cases where the object promised comes out of ordinary production or is built to the customer's specific request. In this latter case it falls within the scheme of the construction contract.
Prevailing within the construction contract is the intuitus personae, that is the special characteristics of the individual private party or body, and therefore the subcontract is not permitted without customer's authorisation (Section 1656 of the Civil Code).
The consideration may be established as a lump sum, for the work as commissioned, or to measure (e.g. in the case of constructions by the cubic meter).
The price is subject to adjustment only for variations greater than one-tenth of the prices of the materials or labour, which circumstance in any event must not have been foreseeable at the time of contract signing, and of which the parties could not have taken any account. It is normal for contracts to call for price adjustments should the contract execution take place over a considerable time period.
The contractor has an obligation of outcome (FINISHED WORK), while the customer has the right to verify, prior to delivery, that the work has been done properly.
The exceptions that customer may make during acceptance and proof-testing have already been illustrated.
The contractor is then required to guarantee against non-conformities and defects in the job (Section 1667 of the Civil Code); however, for the job accepted without reservation the guarantee is limited to those defects not recognisable by customer, or kept secret with criminal intent by the contractor (Section 1667 of the Civil Code).
In this case too should the customer for a building or other fabrication intended to have a long life want to report the ruin of the building or other serious defects in it, he must take legal action within ten years of the construction of the work (delivery) provided that the defect is reported within one year of its discovery (Section 1669 of the Civil Code).
Included among the serious defects are also the clear danger of partial ruin, where this refers to a non-negligible part of the work, and, by the interpretation of the courts, those defects that while not directly damaging the building's statics and structure, nonetheless seriously jeopardise the function for which it was intended and limit the possibilities of its normal enjoyment.
Defects in a construction can thus be related to the use of unsuitable construction materials, or a job not done in a workmanlike manner, and also errors in design and even errors in the customer's prescriptions.
The EEC has issued directives regarding construction contracts, in a number of ways innovating in the first rules issued during the seventies, in which it was provided that calls for bids concerning supplies and public works had to be open to all member countries. Later on, directives 88/295 in the field of public supplies, 89/440 regarding public works and 89/665 regarding appeal filed on the awards of contracts for jobs and supplies were issued.
2. Selection of the Contractor
Contracts with engineering firms also fall within the area of the construction contract. They are more widespread in other countries, and usually take the form of furnishing everything necessary for the creation of an “engineering work”. Their subject is the creation of plans, designs, data, programs, drawings and everything else necessary.
Consulting engineering is distinguished from Commercial engineering, which in Italy take concrete form in the services contract and the job contract.
The engineering firms were the focus of considerable discussion in Italy, owing to presumed violations of art. 2 of Law 23 November 1939 No. 1815, which forbids the exercise of corporate professional activities, whatever be the form taken on by the company, and thus also a company of persons or of associations.
The court of cassation has however been less rigorous in its application of this prohibition in the past few years.
The criteria governing the selection of contractors are very much a matter of opinion, and are closely dependent on the kind of job and on the technologies employed.
Attention should be paid to the job means used:
- the quality, quantity and suitability of the working tools
- the characteristics of the equipment and techniques
- the suitability of the machinery, techniques and workmen seeing to carrying on the job
- the number of machine operators.
As regards safety and compliance with regulations, even if there is no direct reflection on customer's liability, it is indispensable that contractor complies therewith. For this reason it would be apposite to review the on-the-job accident and injury ratios, documentation concerning disputes between the contractor and administrative authorities (work inspectors and local health units), and finally, any notification of investigation for criminal liability and proceedings underway, as well as the earlier history of the contracting firm's top executives and owners.
CHAPTER 7 - THE CUSTOMER
1. The Customer's Rights and Responsibilities, and his Safeguarding
The customer principally has the right to demand the delivery of the finished work according to the procedures, and within the time established, in compliance with the contract signed with the contractor and in compliance with existing laws and codes. Should the contractor go bankrupt or should there be a delay in the delivery exceeding 20% of the time provided for in the contract, the contract shall be considered lawfully terminated.
The customer may also demand compliance with the contracts signed with such persons in authority as the site superintendent, within the area of the assignments, he being able to invoke the obligation of diligence against the professional appointed.
In case of serious non-fulfilment by contractor the customer can demand either fulfilment or the termination of the contract as pursuant to ex Section 1453 of the Civil Code, without prejudice to his right to reimbursement for damages sustained. It will always be useful to send a written challenge to the contractor before terminating the contract, with all the obvious difficulties arising from the replacement of the contractor that this would entail.
One of the customer's obligation is to make a statement that he has free use of the land and of the building involved in the work, and that he disposes of the necessary means for carrying out the commitments arising from this. Another of the customer's obligations, in light of the liability that can arise out of it, is the choice of the contractor, which may be made by using lists of qualified firms.
Usually, the following too are considered as customer's obligations: papers, expenses and fees for the issuance of the construction licenses and so on, the appointments of the designer, of the site superintendent, of the inspectors who monitor the job as it goes ahead and who carry out the proof tests upon completion of same, and of the firms seeing to geognostic testing. The customer must also see to the payment of costs and fees to the various companies supplying such utilities as power, gas, water, telephone and sewer lines, to the procedures for the operation of special systems not included in the general contract, and to the payment of registry and VAT taxes. Some of these items can, by mutual consent, be turned over to the contractor's care and expense.
The contract price is to be paid to the contractor according to the schedules set forth in the contract, within thirty days of presentation of the invoice. Delay interest will be charged at the official discount rate established by the Bank of Italy should there be any delays beyond that term, and, where demanded, the customer will be held to pay damage claims as per the second paragraph of Section 1224 of the Civil Code.
As already brought out, the construction contract as pursuant to Section 1655 of the Civil Code is “the contract by which one party - the contractor - takes on, with the organisation of the necessary means and with management at his own risk, the construction of a work or the rendering of a service against payment of a money consideration”. In the carrying out of the work that he agreed to undertake the contractor is then required to comply with the terms of the contract.
In order to determine criminal liability as regards on-the-job accidents, jurisprudence assigns a decisive role to the procedures followed by customer in awarding a contract to a contractor.
In fact, in some cases the customer can be held liable, on a contributory negligence basis, for having poorly chosen the contracting company, and therefore for culpa in eligendo, or else, for not having properly watched over the execution of the job, that is for culpa in vigilando.
Generally speaking, the customer can be considered to be liable for culpa in eligendo only in the case where he took on commitments for the performance of works or for the rendering of services while also encumbering himself with the task of organising the work involved; therefore the customer who takes advantage of the work of an unsuitable contractor, one not equipped to carry out certain operations, must respond to art. 590 of the criminal code.
Customer liability can also be descried in a failure of vigilance, as per Section 1662 of the Civil Code (concerning verification while the job is underway), which attributes (to the customer) the right “to monitor the work and check its status at his own expense.” Should the performance be defective or anyway not carried out in a workmanlike manner, the customer has the option of setting a reasonable deadline by which the contractor must be in conformance and eliminate any non-conformities found in the work. At its expiry, should the contractor still not have remedied to the said non-performance, the contract is considered to be lawfully rescinded, without prejudice to any rights to make claims for damages. Should the customer abuse this right to monitor, criminal co-responsibility can be descried, arising out of an excess of interference or from the substitution of the roles belonging to the contractor.
In order that a real interference may occur it is necessary that the customer has directly arranged for the execution of work, his mere activity of management and the indication of activities not being sufficient for the purpose. These risks of interference and joint responsibility may be sharply limited by the insertion of special clauses and constraints, such as: suspension of the job should there be serious hazardous situations, a requirement on the presence of the contractor's representative in the job area, or the compilation of a safety plan as an annex to the main contract.
CHAPTER 8 - ACCEPTANCE
1. Acceptance and Proof Testing
The proof test inspector verifies that the construction contract has been exactly and thoroughly fulfilled; that is, he ascertains whether the work was done in a perfectly workmanlike manner and in compliance with contract provisions.
The proof test includes the inspection, the checks and the tests needed to ascertain the technical compliance of the work with design and contract prescriptions, checks on measurements and price applications, the examination of any items bearing reservations also giving an opinion thereof, and, finally, the issuance of the proof test certificate.
The proof test may be carried out in both public and private works, without however confirming any obligation on these latter to have the work proof tested; for private works there is anyway the option of assigning the task to a professional who has taken part in the job.
On the other hand, in public works the proof test is mandatory, unless the job sum is less than L150m, in which case a certificate by the engineer acting as site superintendent attesting to its proper execution will suffice.
In any event, the proof test may not be carried out by the professional who has made up the design or supervised the construction of the job. The judgement on the work is final.
The contractor must be advised of the designation of the proof test inspector and of the date on which the inspection will be made, which information is also sent to the chief of the engineering department and to the officials of the public administration concerned. The reinforced concrete calculations are verified, and the professional draws up a report and submits it to the contractor for any comments. The proof test inspector will also forward any information about the contractor to the contractors' register, as it is thought to be useful for the public administrations that must publish calls for bids.
As regards the private construction contract, which is of more interest here, it may be useful to make a distinction between a verification and the proof test. Sections 1665 and 1666 of the Civil Code call for the verification only, by which term is indicated on the whole the phase of the acceptance or delivery of the work forming the subject of the contract.
The distinction between the two phases thus concerns the difference between the material verification and the statement of proof test. This distinction can be an important item in the disputes that are liable to arise when defects are being contested.
The acceptance of the work without reservation involves, according to Section 1665 para. 4 of the Civil Code, a waiver of the right to verification and proof test, whatever may be the reason for not requesting these.
Furthermore, according to para. 1 of Section 1667 of the Civil Code, by an unqualified acceptance the contractor is relieved of the guarantee against non-conformity or against defects susceptible of being recognised. Tacit acceptance has the same effects as unqualified, and therefore precludes the guarantee against obvious defects. These defects must then be brought out during verification or proof test and acceptance of the job, acceptance being refused or being made with reservation. The contractor will also have the right to payment for the job, according to contract terms, relating to the undisputed part thereof. However, this does not involve as well the acceptance of the bill presented by the contractor, as it entails a definite evaluation of reasonableness. The job could very well be accepted, and the price requested disputed.
The proof test inspector's assessments, even being in principle reliable, are always unilateral and thus do not constitute an irrevocable verification of the contractor's liability before the courts.
The building is a complex system subject to age, to impairment and to obsolescence, which diminish its functional properties.
Maintenance is an operation on the building whose purpose is to restore the functions for which it was built, or to modify it and upgrade it to meet new requirements.
Maintenance operations are carried out systematically, in relation to the expected life of the materials used, and to the expected or actual use conditions.
The operation thus tends to restore the functional unity of the whole, even if the effects of deterioration are not all or not all always, susceptible of being eliminated.
The evaluation of the cost-effectiveness of the operation is always tied to a cost, to be calculated in relation to the value of the building, which is to be estimated with account taken too of the value that it will acquire after restoration.
When the reality of Italian installations is the context in which work is being carried on, it consisting to a good extent of historic city centres many of which have low population densities, and with little restoration activity carried out, the calculation of cost-effectiveness would run the risk of neglecting considerable values that are not intrinsically artistic, but have anyway to do with architectural and environmental values. Account should nonetheless be taken of the fact that the costs for the salvage of certain antiquated buildings will often exceed the costs of demolition and construction ex-novo.
In order to set about maintenance works, the laws in force must be complied with together with the provisions of local governmental bodies as regards building construction and town-planning activities, which today are in continuous flux.
The laws to be taken into consideration are Law 5 August 1978 No. 457, regarding the salvage of existing building construction and urban development, and Law 8 August 1985 No. 431, concerning safeguarding areas of special environmental interest.
Furthermore, there are also the laws on the salvaging and legalisation of works built without licenses, for the cases in which at issue are operations of partial redoing and upgrading to the dictates of law.
CHAPTER 9 - LIABILITY AND INSURANCE
1. Criminal Liability
The professional's criminal liability is first of all concerned with the unlicensed exercise of a profession (art. 348 of the criminal code). Then, depending on the assignment being carried out there can be the case of private interests pursued in official actions, which is also liable to criminal sanctions (art. 324 of the criminal code), and this can take form too in the falsification of expert's appraisal (art. 373 criminal code). It should be pointed out that in criminal law the liability is always personal in nature, and cannot be delegated.
Crimes can be distinguished according to psychological elements (art. 43 criminal code) and these are: malicious, unintentional (i.e. going beyond intention), and culpable, or fault without criminal intent.
In building construction the professional who has carried out his assignment may be called upon to answer for such crimes as culpable homicide and culpable personal lesions (arts. 589, 590 criminal code); and in other cases as the result of the revealing of scientific or industrial professional secrets he can also be liable for criminal prosecution (arts. 622,623 criminal code).
With respect to offences involving less serious infringements of the law, penalties such as arrest and fines may be inflicted upon the offender.
In terms of so-called minor offences, the professional may be liable to answer for failure to put up warning signs or safety guards, or for the dangerous placement or disposal of things, for buildings falling to ruin or other constructions threatening to fall to ruin (arts. 673, 677 of the criminal code), as well as those regarding the social activities of the public administration, and concerning damage to the nation's archaeological, artistic, or historic heritage.
In the case of a crime committed without malice afterthought, the magistrate must investigate as to the actual responsibility of the person involved, the latter not being subject to no-fault liability (i.e. for the mere fact of the collapse of a building) but rather it is his subjective responsibility that must be looked into. Therefore the crime must have its roots in negligence, imprudence, inexpertness, or in the non-compliance with laws, regulations, orders, or codes.
2. Civil Liability
The professional's civil liability is regulated firstly by Section 64 of the code of civil procedure, according to which the engineer, architect, or land surveyor have the obligation to make reimbursement for the damage caused to the other party.
The professional shall be liable for the non-registration in the respective guild or list as art. 2331 of the civil code, for which the performer of the work will not be remunerated, and for the personal non-performance of the commission as per art. 2332 of the civil code, and all forms of non-fulfilment of the commission as described for intellectual professions in art. 229 of the civil code and subsequent articles.
In a civil context, he will not be liable for “slight” culpability, this being so also as pursuant to the provisions of Section 2236 of the Civil Code, to be applied to professional liability for works of especial difficulty. Even in civil law the liability is founded on the existence of fault or culpability relating to the diligence of the professional. In specific cases, the professional entrusted with the superintendency of construction answers for any non-performance and for non-compliance with the diligence described under para. 2 of Section 1176 of the Civil Code. This is the notion of normal diligence evaluated with reference to the nature of the activity exercised, which non-compliance is at times resolved in a slight fault, unless problems of special technical difficulty have been tackled.
In this eventuality, owing to the special nature of the works to be built, diligence is evaluated with less rigor, so that the professional will answer only for serious fault and for criminal intent according to the provisions of Section 2236 of the Civil Code.
The deed may consist in the non-performance or in the inexact performance of contractual obligations or in an illegitimate behaviour that gives rise to an unjust damage, that is, harm done to a subjective right or to an interest that is directly safeguarded by the law.
The contractor is in general the major person responsible for the performance of the work insofar as, given the autonomy of the construction contract and the consequent exclusion of any dependence of contractor on customer or others, joint and several liability of customer with contractor is ruled out, not even when the job has been carried out under the vigilance and monitoring of a site superintendent, unless the latter has exerted undue interference. In general, the responsibility for the work up to delivery and proof testing is distinguished from that for the period afterwards, as specified by the terms of the guarantee.
The former period is the one in which suits regarding liability are in general concentrated, as are insurance coverages.
In the latter case two types of responsibility are outlined: that envisioned by Section 1667 of the Civil Code concerning defects and non-conformities with contract commitments undertaken, as per the procedures of Section 1668 of the Civil Code, on a two-year basis. There are also the liabilities for the three events of ruin of a whole or a part of the building, of obvious danger of ruin, and of serious defects in the building, cases that have provided for them a non-contractual guarantee for a period of ten years. This guarantee can be made to hold good by whoever owns the building or whoever has suffered damage owing to the building's defects.
In accordance with Section 2236 of the Civil Code the site superintendent designated by the customer to monitor construction activities shall answer to the latter for any culpable failure (culpa in vigilando) to detect any contractor's non-fulfilment as a result of neglectful or non-performance of the tasks his function entails. He will then be liable for damage caused only in case of criminal intent or serious culpability.
Should the site superintendent be hired by the contractor, he shall answer only to the latter, on the basis of the professional obligations set forth in the contract between the two. In no case will the site superintendent answer also to the customer, not even for the ruin of a building or for serious defects in it, as provided for by Section 1669 of the Civil Code. The contractor calls the professional to exercise the obligations of diligence as per Section 2104 of the Civil Code, as an employee, while if the superintendent's contract covers the rendering of professional services, he is therefore self-employed, this falls within the provisions of Section 2236 of the Civil Code, and thus within the obligations set forth above.
The customer who commissions a building without a construction license or in non-compliance with the actual license becomes co-liable with the contractor, with the holder of the license, and with the site superintendent, when he consents to the start-up or the continuance of the work in violation of existing law. To be noted here is Law 28 February 1985 No. 47, on the so-called “building construction legalisation.”
It may also be worthwhile noting that criminal liability for the building built without a proper license is to be sought at the door of the person truly responsible, this responsibility being by general principles a personal one. This person will not always coincide with the owner of the lot.
Should an unlicensed construction be purchased, the purchaser's liability for this illegitimate act is to be excluded. In crimes of unlicensed subdivision, jurisprudence descries criminal liability as well for the notary who makes up the deeds of sale or the deeds subdividing the areas. When unlicensed construction is in compliance with existing town-planning and zoning laws, but damages the rights of outside parties, these may file claims for damages before the courts or administrative tribunals.
Jurisprudence also admits civil legal action to be taken by cities, provinces and regions in cases of unlicensed construction.
The public administration too, in the person of the mayor competent for the territory of concern, may be liable before civil, criminal and administrative courts for all acts carried out in violation of the law or that can be considered as crimes.
From a civil viewpoint, the mayor can be liable for damage caused to outside parties, provided that the illegitimate omission or commission have produced violations of the law besides damage to outside parties.
Criminally, the mayor can be liable for the omission or refusal to perform official actions, for abuse of his office or of its functions, for corruption, omission and delay in carrying out his official acts, for the abstract falsification of documents, the divulging of official secrets, and for other crimes having less to do with building construction matters.
Finally, there can be no doubt as to the public administration's liability arising out of unlawful deeds as per Section 2043 of the Civil Code regarding illegitimate expropriation and occupation.
In recent times, constraints of transparency and efficiency have been introduced in the P.A. sector; the non-observance of these norms may lead to civil liabilities towards the injured party.
3. Starting Date and Prescription
The starting date for the period when legal action can be taken is on acceptance of the work, or the date of the proof test, if no disputes have arisen. The period of prescription is one year from that date, where there is no dispute.
Contractual responsibility differs from responsibility outside the contract also in that the onus of proving fault in the latter case falls on the person filing the claim for damages.
Regarding prescription, the terms of prescription for reporting defects in the building bought, built or commissioned have already been set forth, as has the legal action to be taken.
For the case of a civil offence not laid down in the contract, the prescriptive term on the right to reimbursement for damages is five years, as per Section 2947 of the Civil Code. The reimbursement is also extended to non-property damage should the act be deemed to be a crime, any damage in this case not being susceptible of being limited to what is foreseeable (Section 2059 of the Civil Code).
The professional may take out voluntary insurance coverage, and as stated above, it may be of the "professional" type or third-party civil liability coverage.
Neither contract responsibility towards the customer of the contractor, nor of the site superintendent, nor ten-year responsibility are often covered by more specific insurance policies.
The policies usually taken out in this sector are then construction-site policies, covering the contractor's liability to third parties, and also covering his employees, who are already safeguarded by virtue of their labour contract.
The contractor in general covers his own risks with third-party civil liability policies for damage to things or persons in the execution of the work, or else he has insurance coverage for on-the-job accidents, for sums exceeding the indemnities paid off by INAIL and owed by the employer, or for actions of recourse taken by a public authority.
Finally, he at times seeks coverage under a CAR (Contractor's all risks) which covers all the contractor's risks, for whatsoever cause, involving damage done to the job or to the yard, with extension to third-party civil liability. These policies generally extend through the end of the proof test.
For the users of the construction, there is then the Civil Buildings policy, which is taken out to safeguard the building against the various risks of fire, flood, theft, third-party civil liability, and on-the-job accidents to employees who take care of the building maintenance.