This summer, I had the privilege of visiting some of Europe’s finest cities. My chalet in Zermatt, Switzerland, had magnificent views of the Matterhorn. My villa in Florence was captivating, with its 17th-century frescoes and manicured gardens with fruit-laden lemon trees and bubbling fountains. In each city, I could not help but daydream: “Wouldn’t it be great to own a place like this?”
But buying that chalet or villa is not just about coming up with cash. Both countries throw up all sorts of barriers to homeownership.
In Switzerland, the government limits the number of homes that can be owned by non-Swiss residents to 1,440, said Mario Fuchs, a real estate broker with Re/Max Real Estate in Zermatt. To sell a home to a nonresident, a village must petition the state government for a permit for that home, and the state must then petition the federal government, Fuchs said. The country also restricts the places where nonresidents can own a home.
Zermatt, where foreigners can own property, has not asked for a new permit in 30 years, Fuchs said. The only homes that have exchanged hands during that time are the ones that already have permits for nonresident owners.
“In Zermatt, perhaps one home per year comes onto the market that is available for purchase by a non-Swiss,” Fuchs said.
Even then, the rules are strict if you’re a foreigner. A homeowner who is a nonresident can’t sell his home to another nonresident unless he has owned that home for at least 10 years.
To bypass these headaches, you could apply for permanent residency in Switzerland, a process that can take years. If you succeed, you may buy and sell land in the same manner as any other Swiss resident. But there’s a catch for those who are politically inclined: You still wouldn’t be able to vote in any elections or run for office.
Resident or not, brace yourself for sticker shock.
A nice two-bedroom, two-bath home in a desirable section with top amenities will run approximately $3 million, Fuchs said.
Italy, on the other hand, does not have laws designed to restrict foreign homeownership. About all you have to do is obtain an Italian tax identification number (for free) from any Italian government finance office or Italian consulate or embassy. Just fill out a simple form and present your passport.
But the challenge — for foreigners and Italians alike — is the process itself. It takes many months, involves many parties and is fraught with pitfalls.
If you’re serious about buying there, start assembling your “dream team” of real estate experts: a real estate agent, an American real estate attorney, a local (ideally bilingual) real estate attorney, a registered interpreter, a notary and a geometra — a professional who can act as architect, land surveyor, appraiser and and home inspector all in one.
The process begins by signing a preliminary purchase agreement, typically drafted by your real estate agent, that establishes the purchase price and other basic terms. It should also identify contingencies, easements, rights of way and anything else you feel is relevant.
But beware that Italian real estate law, customs and practices are replete with pitfalls for the unprepared home buyer. For example, the law contains a concept similar to the U.S. concept of a right of first refusal. In Italy, however, all adjoining landowners, all tenants, and anyone conducting a business from the property are granted this right. Consequently, before completing the purchase of any land in Italy, you must make sure that all parties that are granted this right have been provided a copy of your purchase agreement.
If you skip any of the relevant steps, any one of those parties can squash the deal.
Harvey S. Jacobs is a real estate lawyer in the Rockville office of Joseph, Greenwald & Laake. He is an active real estate investor, developer, landlord and lender. This column is not legal advice and should not be acted upon without obtaining your own legal counsel.