Payment on account (acconto) or deposit (caparra): what changes if the sale falls through
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Payment on account and deposit: two words, two different thingsWhat a payment on account isWhat a confirmatory deposit isAn example with numbersAnd the penitential deposit?Who risks most if the sale falls through?What to check in the preliminary contract before payingIn practiceFrequently asked questionsSourcesIf the sale falls through, the payment on account (acconto) is usually refunded to you, whereas the confirmatory deposit (caparra confirmatoria) may cost you the amount paid or cost you double. To work out which of the two you paid, read the word written in the contract, not just the amount.
Payment on account and deposit: two words, two different things
When you sign a purchase proposal (proposta d'acquisto) or a preliminary contract, you usually pay some money. It may be a simple payment on account, meaning an advance on the price, or a deposit, meaning a sum that serves to guarantee that the contract will be completed.
In everyday language the two words are confused. In law they differ greatly, and the difference matters most when someone fails to honour the commitment. For this reason, it is worth knowing what you have signed before paying any sum.
For the basic definitions, you can read the purchase proposal (proposta d'acquisto): what you sign and what you risk.
What a payment on account is
The payment on account is an advance on the price. It has no special guarantee function: it serves to pay part of what you will have to pay at the end.
If the contract does not go ahead, the payment on account must be returned to the person who paid it. This applies unless the other party must compensate you for a loss you have suffered.
In practice, with a payment on account there is no predefined penalty. If the sale falls through, you can ask for the sum to be returned. If you have suffered a concrete loss, such as documented expenses incurred for the purchase, you can also ask for that, but you will have to prove it.
What a confirmatory deposit is
The confirmatory deposit (caparra confirmatoria) is governed by article 1385 of the Civil Code. Its purpose is to strengthen the contract: whoever gives or receives it knows that, in case of non-performance, there are precise consequences.
The rule is this. If the person who gave the deposit does not honour the contract, the other party may withdraw and keep it. If instead the person who received the deposit does not honour the contract, the other party may withdraw and demand double.
The law also provides another route. The party that has not failed to perform may ask for the contract to be enforced or for it to be terminated with compensation for damages. So the deposit is an option that is added to the others; it is not always the only choice.
The deposit must be written into the contract. If you cannot find the word «caparra» in the preliminary contract or the proposal, do not assume that the sum is one.
An example with numbers
Let us take an invented case. The price of the house is €150,000. When signing the preliminary contract you pay a confirmatory deposit of €10,000.
First case: you are the one who backs out. The seller may keep the €10,000 and the contract is dissolved. You have lost the sum.
Second case: the seller is the one who backs out. The seller must return double, that is €20,000. In practice, they give you back your €10,000 and add another €10,000.
Third case: the deed of sale (rogito) is not completed because of a problem relating to the house, for example a discrepancy that cannot be fixed. Here, what the contract says matters. Check carefully the clauses on the date of the deed of sale and on the documentation to be presented.
And the penitential deposit?
There is another figure, the penitential deposit (caparra penitenziale), governed by article 1386 of the Civil Code. Here the deposit does not serve to guarantee performance, but to set the price of the right to withdraw.
Whoever withdraws from the contract loses the deposit, if they paid it, or returns double, if they received it, and owes nothing further. There is no need to prove a loss or a failure to perform.
If the contract says «caparra penitenziale», you already know how much it costs to withdraw. For a comparison between the two figures, read confirmatory deposit and penitential deposit: the differences.
Who risks most if the sale falls through?
The answer depends on the type of sum paid and on the reason the contract does not go ahead.
If the reason is a personal choice of yours, such as changing your mind, with a confirmatory deposit you risk losing the sum paid. If instead the reason is a problem with the house that did not emerge earlier, the situation may be different. This is why what the preliminary contract says about the conditions of the sale matters a great deal.
If it is the seller who fails to honour the contract without a valid reason, the confirmatory deposit gives you the right to ask for double. The payment on account, instead, gives you the right to recover what you paid, with any damages to be proven.
What to check in the preliminary contract before paying
Before paying any sum, check a few points. No technical expertise is needed, just careful reading.
- The word used for the sum: payment on account, confirmatory deposit or penitential deposit.
- The date by which the deed of sale (rogito) must be signed.
- The conditions on which the contract depends, for example obtaining a mortgage, and what happens if they are not met.
- Who pays the registration costs and what happens if one party does not sign.
- What happens if a problem with the house emerges after signing.
For the typical content of the preliminary contract, read preliminary contract (compromesso): what it is and what it must contain. If the preliminary contract must be registered, find out about times and costs before signing, as explained in registering the preliminary contract (compromesso): costs and times.
In practice
- Read the contract and look for the exact word used for the sum: payment on account, confirmatory deposit or penitential deposit.
- Ask that the date of the deed of sale and the conditions on which the sale depends be written clearly.
- Do not pay significant sums before reading the clauses on the consequences of withdrawal.
- Keep receipts and messages: they are useful evidence if the sale falls through.
- For taxes linked to the deed of sale, consult the tax guides of the Agenzia delle Entrate.
Frequently asked questions
If the contract does not say whether the sum is a payment on account or a deposit, what applies?
The contract should state this clearly. If the text is ambiguous, the matter may end up before a judge, who interprets the clauses. For this reason, it is best to ask that the sum be indicated by its exact name before signing.
Can I get my payment on account back if I change my mind?
It depends on what you signed. If the contract provides for a confirmatory or penitential deposit, withdrawal may cost you the sum. If it is a simple payment on account, you are usually entitled to a refund, unless the other party has suffered a loss that must be proven.
If the bank does not grant the mortgage, do I lose the deposit?
It depends on the contract. If the preliminary contract makes the sale subject to obtaining a mortgage, failure to obtain financing may dissolve the contract without penalty. Check this point in the text before signing.
Sources
In the same chapter
- Confirmatory deposit (caparra confirmatoria): when it becomes a payment on account and whether you need an invoiceAt the notarial deed (rogito) the deposit (caparra) becomes part of the price. If the sale falls through because of the buyer, they lose it; if the seller is at fault, they must return it twice over.
- Bare ownership: is it worth buying?Bare ownership costs less than full ownership, but it does not give you the use of the home while the usufructuary is alive. Here is what to check before you sign.
General information, not legal or tax advice: the law and the notice of sale prevail.
