10 THE ITALIAN LAW JOURNAL NOS. 1-2 (2024)
Build to Suit Real Estate Transactions Facing Legal Issues in Italy
by Ciro Di Palma The paper examines certain salient legal issues relating to ‘build-to-suit’ real estate transactions, whereby a professional developer purchases a plot of land from a seller and, contextually, agrees to lease the asset to be developed on said plot to one or more tenants. Although the agreements are interrelated per se (BTS transactions squarely fall within the definition of ‘operazione economica’) a set of conditions precedent or subsequent is the most effective contractual tool to ensure that (a) each agreement is finalized and/or terminates (as the case may be) along with the others, and (b) the risk borne by the developer is minimized (namely, prejudicial due diligence findings, failed or delayed issuance of building permits and failure to find a satisfactory lease arrangement). Some conditions, however, must be structured in compliance with specific Italian legal provisions. The approach suggested in this paper also aims to reduce the steps and documents needed to complete the transaction: the purchaser-developer should be able to immediately bind the seller of the plot and, upon signing, proceed with due diligence, the application for building permits and the negotiation of the lease. The final sections illustrate some of the peculiarities of the lease agreements in BTS transactions and suggests contractual arrangements to prevent the developer-lessor from incurring liabilities that are usually borne by contractors. DOI 10.23815/2421-2156.ITALJ ISSN 2421-2156
