Improvements, Additions and Transformations

Wanting to deal with the improvement works provided for by the legislature, it is necessary to distinguish preliminarily between Improvements, Additions and Transformations.

For all cases there is an aptitude to change the fund, increasing its: a) productive capacity: themaximum amount of product that can be obtained from an economic entity given given certain factors of production; b) earning capacity: the ability of the company to optimize the utility of the resources employed; c) market value, compared to the value the asset would have had without the investments.

We should not overlook the fact that additional requirement for improvement to occur is durability, that is, the ability to persist over time.

In essence, as a result of the improvements, the grantor should have a concrete and present opportunity to sell his property, or to lease it, or to cultivate it, obtaining a more profitable selling price, rent, or crop, respectively.

It is, therefore, long-term investment in a productive activity for the purpose of obtaining, consolidating and increasing its profit or income. This refers to capital investments on land that result in an increase in land asset value or an increase in production, profitability or farm value.

In the knowledge that the aforementioned distinction responds to dogmatic rather than practical needs, it is nevertheless appropriate to reiterate, even in brief, the tripartition made over the years by the legislature and brought to fruition with Law 203/82, divided into: Improvements, Additions and Transformations.

By improvement, we mean an intervention that is intrinsic or in the strict sense inherent to the landed estate (typical examples are: spiking, breaking up, draining).

By the same criterion, then, we could define an addition as an intervention, instead, extrinsic i.e., distinct from the fund, autonomous and separate (examples, in this case are pertaining to the building, or a tree planting).

Finally, last category concerns transformation interventions, which can be described as innovations in the farm regime such as, for example, switching to less intensive crops or conversion to forested land.

Transformation represents a new element, one introduced by Art. 16 l. 203/82, the true meaning of which is the relevance the law gives to the concept of “agricultural use.” With Article 16 of the Law on Agricultural Contracts, the legislature wanted to confirm that “economic destination” is a decision of the tenant entrepreneur who is thus freed from the limitation of “economic use of the thing” imposed by Art. 1615 c.c. that granted greater weight to the landowner’s dispositive power.

Attorney Chiara Roncarolo

Attorney Maurizio Randazzo