WRITTEN QUESTION E-1369/03

by Antonio Di Pietro (ELDR) to the Commission

(11 April 2003)

Subject: Protection of the rights of property buyers

The Italian bankruptcy law, which was drawn up in 1942, fails to protect the rights of consumers who purchase apartments under construction in cases where the construction company goes bankrupt.

While in most European countries legislators have passed substantial measures safeguarding purchasers of property under construction, not least in view of the fact that such purchasers are generally small savers who invest all their assets in the purchase of a dwelling, the legislation in force in Italy is an outright breach of Article 1 of the First Protocol of the European Convention on Human Rights. More specifically, Article 72 of the bankruptcy law allows the receiver to annul the preliminary contract for the sale of property under construction and also in some cases the final deed, even if the buyer has already paid (in whole or in substantial part) for the construction of the property, and even if this is already complete and the buyer has entered into possession of and is occupying the premises.

Many property buyers are therefore forced to purchase for a second time a dwelling that they have already almost paid for in full so as to prevent its sale by auction, or to look for an alternative dwelling and forfeit not only the one they have already purchased but also all the funds they have invested in it. Unfortunately, in spite of the huge losses which thousands of Italian families (200 000 according to ISTAT data) have suffered as a result of this legislation, the continual failure of the Italian authorities to address this problem has been conducive to judicial sales by auction, at the rate of 82 a day, which wipe out the savings of Italian families who thought they had already purchased their property.

Will the Commission call on the Italian Government to pass urgent legislation in line with that in the other Member States which is more attentive to the needs of its own consumers, thereby curtailing the entrepreneurial risk carried by unsuspecting Italian families?

Does it not consider that, in a single market, all European citizens should benefit from equal protection in the form of harmonised rules that govern the housing market with greater effectiveness and transparency and fully protect the rights of European consumers?

Answer given by Mr Byrne on behalf of the Commission

(27 May 2003)

The Commission recognises that the situation described by the Honourable Member may give rise to problems for purchasers in Italy. However, the acquisition and financing of immovable property is still a matter for national law and largely unaffected by Community legislation. In view of the nature of such property the functioning of the internal market is less affected by national legislation in this area

than in the case of movable property. There is at present no evidence that the problems for buyers caused by the bankruptcy of construction companies have a material impact on the internal market. Protecting private purchasers in case of the bankruptcy of a construction company, as the Honourable Member suggests, is therefore not covered by European law.

As a consequence, exceptions in the area of immovable property have expressly been provided for EC legislation related to consumer protection. Article 3(2)(a) of the Doorstep Selling Directive 85/577/EEC, Article 2(1)(a) of the Consumer Credit Directive 87/102/EEC as amended, recital 4 of the Timeshare Directive 94/47/EC, and Article 3(1)(4th indent) of the Distance Selling Directive 97/7/EC state essentially that contracts related to property rights in land or existing or projected building are not covered by their respective field of application.

Moreover, the European Commission is precluded from obliging any particular Member State to modify its national law. Should it however be established that the acquisition and financing of immovable property poses problems for the internal market, harmonisation measures for the whole of the Community could be envisaged as far as the Treaty permits the Community to act. But it is, under the present circumstances, the task of national governments to ensure an adequate level of protection in their respective housing markets.