The so called marcian pact ‒already known in common practice‒ has been officially regulated in Italy through the last law decree issued by the Italian Government (Law Decree 3 May 2016 no. 59).
Now, through a simple notice, banks will become the owners of immovable properties provided as guarantee by the debtor.
Let us see how it works. In Italy the marcian pact has always been known in practice and considered licit, even though not often used in relationships between creditor and debtor due to the lack of a specific regulation governing all the related legal aspects. Such gap has been filled by the recent intervention of the government.
According to Law Decree 59/2016 the bank and the borrowing business can enter into an agreement ‒i.e. the marcian pact‒ which provides the transfer of ownership of the property given as a guarantee, if the debtor does not fulfil the undertaken commitments. Up to here nothing changes compared to past practice.
The real news is the official regulation of the agreement, which is now an easier instrument which the banks may use instead of the old and well established ipoteca immobiliare (i.e. hypothecation of immovable property). By entering the agreement, the bank will now be able ‒instead of recording the hypothecation and selling the property through the judicial execution procedure provided by the law‒ to acquire ownership of the property through a simple notice to the debtor and, after having become owner, to sell the property without having to wait the lengthy procedures linked to the forced execution.
Therefore, once the marcian pact is entered into, if the debtor is in default, the bank will have to serve him a notice informing him it intends to avail itself of the pact, and after 60 days it will be able to ask the Court for the appointment of an expert for the sworn estimate of the property. The bank will have to inform the interested parties of the estimate and from that moment it will become the owner of the property, if the value of the building is lower than the debt. If the value is higher, the transfer of ownership will become final when the bank pays the debtor the difference between its claim and the value of the property.
Therefore, the marcian pact continues to be set against the so called pactum commissorium, which is forbidden in Italy pursuant to art. 2744 of the Italian civil code, since ‒unlike the former‒ it does not provide any economic consideration to the debtor, if the property whose ownership has been transferred to the claimant is higher than the amount of the claim.
In any case, there are further changes brought by Law decree 59/2016 with regard to the marcian pact, with particular reference to the contents and limits of the pact, and we remain waiting for the developments to see if the new rules introduced through the Law Decree will be confirmed and converted into law.
In the meantime ‒since the law decree is operational‒ it is advisable to pay great attention to the future agreements with banks and request the advice of a professional beforehand.
(Bologna Office – Elisabetta Sgattoni – 0039(0)51 2750020)
