New Guidance from the Italian Supreme Court on Preliminary Sale Agreements and Seller Obligations
The Italian Supreme Court clarifies key principles in real estate preliminary contracts: sellers bear the burden of proving the property’s defect-free condition, and damages must be calculated based on the market value at the time of final non-performance. A landmark decision reinforcing good faith and contractual balance in Italian property law.
Alessandro De Maria
10/14/20254 min read


With judgment No. 8905 of 3 April 2025 (Reporting Justice: Trapuzzano), the Italian Supreme Court refined key issues of real-estate preliminary agreements. The Court re-delineates the allocation of the burden of proof where defects are alleged, clarifies the content of contractual duties of good faith, and sets out the dogmatic basis for calculating damages where a preliminary agreement is not performed.
Originating from litigation dating back to the 1990s, the decision stands out for its careful reconstruction of the facts and for the systematic anchoring of the applicable principles of contract law.
Facts: preliminary agreement, partial third-party ownership and notice to perform
The case began with a 1992 preliminary agreement for the sale of a property later found to have been partly built on third-party land. The buyer then refused to execute the notarial deed, alleged breach by the sellers and sought repayment of double the deposit. The sellers, for their part, attempted to cure the issue by acquiring the missing portion and urged the buyer to complete. Upon continued refusal, they served a notice to perform with rescission warning (diffida ad adempiere) under Art. 1454 Civil Code, which ultimately led to statutory termination (risoluzione di diritto) of the preliminary agreement.
After more than three decades and multiple instances, the Supreme Court revisited the matter to clarify three core questions:
Who bears the burden of proof regarding the absence of defects or the property’s legal status?
Under what conditions is the buyer’s refusal to complete justified?
By what criteria is damage measured upon non-performance of a preliminary agreement?
Seller’s good faith and partial third-party ownership
The Court confirms that the seller’s good-faith ignorance of partial third-party ownership is presumed (Art. 1147(3) Civil Code), absent proof to the contrary. In the case at hand, third-party ownership came to light only after the preliminary agreement; the sellers then acquired the missing share to enable transfer of title. Consequently, the buyer may not refuse to complete before the agreed deadline so long as the seller is objectively able to perform by procuring title.
This rule—already consolidated in prior case law (see Cass. 4164/2015; 28856/2021)—safeguards the synallagmatic balance during the interim phase between preliminary agreement and final conveyance.
Notice to perform: validity even without a fixed notarial appointment
Of practical import, the Court holds the diffida ad adempiere is valid even if it does not specify a precise date or a specific notary, provided it fixes a definite period for performance. Under Art. 1454 Civil Code, it suffices that the creditor sets a clear time window within which the debtor must perform; a fixed day and hour are not required. The purpose of the rule is to settle the parties’ positions, not to enforce formalistic details. Accordingly, a notice to perform is effective even without time and place of the notarial appointment, so long as a reasonable period for performance is afforded (see Cass. 1898/2011; 8910/1998).
Burden of proof: strengthening the buyer’s position
Though not the immediate subject of dispute, the judgment reiterates a now-settled principle:
If the buyer alleges defects arising between preliminary agreement and final deed which frustrate the agreed use, the seller bears the burden to prove either that
the alleged defects do not exist, or
the obligation to deliver a defect-free, fit-for-purpose property has been duly performed.
This approach is grounded in Art. 1218 Civil Code and the principle of good faith in performance.
It compels sellers to carefully document the property’s condition (e.g., expert reports, photographs, inspection minutes) and preserve evidence.
For buyers, the ruling provides significant procedural relief: they need not fully prove every detail of the defect, but must plausibly substantiate its presence.
Damages for non-performance: the core holding
The Supreme Court partially set aside the appellate decision because the seller’s damages had been miscalculated.. The lower court measured the loss as the difference between auction price and the contract price agreed in the preliminary—an approach rejected by the Court.
The Court formulates the following principle of law:
“In preliminary real-estate sale agreements, the seller’s loss of profit (lucro cessante) must be assessed as the difference between the price agreed in the preliminary and the market value of the property at the moment of definitive non-performance; further circumstances may be considered only if specifically pleaded, proven and reasonably foreseeable.”
Hence, what matters is not historical purchase or auction figures, but the actual market value at termination. An automatic ‘compensatio lucri cum damno’ (offsetting benefits against losses) does not apply: damages aim to restore the true patrimonial loss, not to create a windfall.
Good faith and foreseeability of damage
Expressly invoking Arts. 1223 and 1225 Civil Code, the Court reiterates that only immediate, causally attributable and foreseeable losses are recoverable. On remand, the appellate court must determine the market value at the time termination took effect (i.e., upon expiry of the notice period) and compare it with the contract price. Only this differential yields the seller’s actual loss of profit.
Practical implications
For sellers:
comprehensively document condition and characteristics before completion;
archive all correspondence and expert reports;
act proactively to evidence good faith and contractual loyalty.
For buyers:
notify any defects promptly and with substantiation;
assess whether conditions for withholding performance (Art. 1460 Civil Code) are met;
avoid unjustified refusals to complete to prevent debtor’s default.
Conclusion
Cass. civ. No. 8905/2025 strengthens the principles of mutual contractual loyalty and material fairness in Italian real-estate law. It places on the seller the duty to prove defect-free condition, while requiring a realistic, time-specific approach to damages at termination.
For notarial and legal practice, the decision is significant: it confirms that transparency, meticulous documentation and adherence to good faith are not merely ethical imperatives but effective instruments of legal risk prevention.
Rechtsanwalt & Avvocato Alessandro De Maria
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