How to safely buy an apartment with a mortgage and avoid being left broke: risks and advice from a notary

How to Buy Property with a Mortgage: Avoiding Risks and Protecting the Transaction

Planning to Buy Property with an Encumbrance?

Below, we detail the legal steps you can take to protect your deposit, fully repay the debt, and remove the mortgage encumbrance.

The purchase and sale of a property encumbered by a mortgage is completely legal. However, it requires the utmost caution: the mortgage remains with the property even after a change of ownership due to the so-called "right of resale" (diritto di sequela). To safely buy an apartment with a mortgage encumbrance, one of three main ways is usually used:

Early repayment of the debt by the seller before the conclusion of the main contract;
Repayment of the debt directly at the transaction (at the notary), when the buyer transfers the required amount directly to the lender and receives official consent to remove the encumbrance;
Formal transfer of the balance of the current mortgage loan to the buyer (accollo del mutuo).

What is a mortgage, how does it work and what types are there?

A mortgage is a real right of security that gives the creditor (usually a bank) the right to forcibly seize the encumbered property to pay off its loan and receive satisfaction from the proceeds from the sale, preferentially before other creditors.

A mortgage arises and acquires legal force only from the moment the entry is made in the real estate registers (Conservatoria). This formality is of a title-establishing nature: without registration, the mortgage does not legally exist. From the moment of registration, it gives the lender two key privileges:

Right of subsistence (diritto di seguito): the encumbrance remains attached to the property regardless of the change of owners. The property can be sold, but the lender retains the right to repossess it even from the new buyer.
Right of priority (diritto di prelazione): in case of forced collection, the claims of the mortgagee are satisfied from the proceeds before those of unsecured creditors.

In the Italian legal system, there are three forms of mortgage:

Voluntary (ipoteca volontaria): arises on the basis of an agreement or a unilateral declaration. The most common example is the purchase of a home with a mortgage in favor of the bank that issued the mortgage loan.
Judicial (ipoteca giudiziale): it is issued on the basis of a court decision on the payment of a debt, an enforcement order or other judicial acts.
Legal (ipoteca legale): the right to register a mortgage is granted to certain creditors directly by law without the consent of the debtor (for example, in favor of the seller as a guarantee of payment of the full price of the property).

Duration of a mortgage on real estate

According to Article 2847 of the Italian Civil Code, the mortgage record remains in force for 20 years from the date of registration. The subsequent status of the encumbrance depends on the debt management and the actions of the creditor:

Repayment of the debt before 20 years: When the loan is fully repaid, the lien is terminated. For bank mortgages, automatic cancellation (ex Legge Bersani) applies, without the need for a separate notarial deed.
Loan with a term of more than 20 years (e.g. 25 or 30 years): To prevent the mortgage from expiring mid-term, the creditor is obliged to extend (rinnovazione) the mortgage before the end of the 20-year period. This prolongs its validity for another 20 years, while maintaining the original seniority of the mortgage.
No extension: If the 20-year term expires without an extension, the mortgage automatically terminates. The financial debt itself remains valid, but the lender loses the right of real security over the property.

Can I sell an apartment if it is mortgaged?

The law permits the sale of real estate with a mortgage encumbrance. The presence of a lien does not block the transaction and does not require the prior permission of the lender. However, since the mortgage follows the property, three safe scenarios apply in the market:

Debt settlement and cancellation of the encumbrance at the transaction (rogito): part of the purchase price is applied directly to closing the remaining debt of the seller simultaneously with the signing of the contract.
Credit transfer (accollo): the buyer enters into the seller's existing loan agreement and assumes responsibility for paying the remaining payments. The mortgage remains active on the property.
Pre-payment before the transaction: the seller independently closes their debt before signing the main contract, transferring the property completely free of encumbrances.

What happens if I buy an apartment with a mortgage without paying it off?

Purchasing a property without formally and agreed upon removal of the mortgage encumbrance entails direct risks:

Risk of seizure and sale at auction (pignoramento): if the original debtor stops making payments, the creditor has the right to seize the property and put it up for auction, even if the property is already owned by a third party unrelated to the debt.
Refusal to issue a mortgage to the buyer: if you plan to buy an encumbered apartment with the involvement of a new mortgage loan, the bank will refuse financing, if the property has active liens that are not closed during the transaction. The bank requires the first priority of the collateral, free of previous encumbrances.
Mortgage Clearance Procedure (purgazione): The buyer can resort to the judicial clearing procedure (by offering the creditors an agreed price or an appraised value of the property), but this is a complex and expensive process.

The Most Common Mistakes When Buying

Selling and buying an encumbered property requires utmost care. Here are the main mistakes:

Transferring the deposit directly to the seller: transferring money to a seller experiencing financial difficulties creates the risk of losing it in the event of his insolvency.
Lack of protective clauses in the preliminary agreement: signing documents without special conditions leaves the buyer unprotected from the risk of receiving a property with an uncancelled mortgage.
Failure to involve the lending bank: relying on the seller’s verbal promises to repay the debt after receiving the money instead of arranging for a bank representative to be present at the transaction.
Underestimating the nature of the mortgage: when purchasing a property with a court or tax/collection mortgage, you need to take into account that the procedures and terms for their removal are much more complicated than those of standard bank loans.
Ignoring the deadlines for updating registers: not It is taken into account that the formal entry of the cancellation record in the real estate registers requires technical time even after the actual repayment of the debt.

How to protect yourself at the preliminary contract stage (preliminare)

The preliminary contract is the main instrument for creating legal guarantees for the buyer.

Law No. 124/2017 allows for the use of the deposit of funds with a notary mechanism. Instead of transferring a deposit to the seller, the buyer can request the transfer of funds to a special secure account of the notary. The notary retains the amount and transfers it to the seller only after officially verifying the removal of the mortgage or receiving an act of consent to its cancellation.

In complex cases, it is recommended to carry out a transcription (official registration) of the preliminary contract. This creates priority over third parties and prevents a situation where new entries and encumbrances that arise later may interfere with the transaction.

Mandatory clauses and stipulations in the contract

The preliminary contract must contain the following important terms:

Guarantee of freedom from encumbrances: an official statement by the seller with an obligation to transfer the property free from mortgages and arrests at his own expense and by his own efforts.
Repayment clause in the transaction: a clear indication that part of the funds is transferred directly to the lending bank at the time of signing the main contract.
Substantial term (termine essenziale): establishing a strict deadline for the transaction, the fulfillment of which is tied to the simultaneous provision of a certificate of full repayment of the debt and consent to the withdrawal mortgages.

The role of the notary: debt repayment in the transaction

The notary guarantees the legality and security of the transfer of rights to real estate. During the preparation phase, he carries out checks in the registers (visure ipotecarie) to establish the nature of the encumbrances and requests from the bank an accurate calculation of the remaining debt (conteggio estintivo) on the date of the transaction.

During the signing of the main act:

The agreed price of the property is first used to fully close the remaining debt;
The buyer submits a traceable payment document (bank check or transfer) in the name of the creditor bank for the amount of the debt;
The bank representative issues a receipt for the receipt of funds and formal consent to cancel the mortgage;
The remaining amount (if any) is transferred to the seller.

Once the debt is paid off, the formal process of deregistration is launched:

Voluntary mortgage (banks): a simplified electronic procedure is applied. The bank sends a notice of debt repayment to the registry, which automatically cancels the mortgage without additional notary fees.
Judicial or tax mortgage: A public deed of cancellation from a notary or a court decision is required. In this case, the seller is responsible for the costs of registration and taxes.