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Elena Bargelli and Ranieri Bianchi

This chapter explores the black market in the private rental sector in Southern European legal systems, with a particular focus on Italy. The black market is an often neglected real world phenomenon constituted by unofficial, informal contracts which violate binding legal rules, in particular public law rules on tax, registration and inhabitability requirements, and are therefore mostly kept secret by the parties. Such secretive and illegal arrangements, which render resort to the courts more difficult, tend to disadvantage the weaker party, typically the tenant. Against this background, the Italian legislator has introduced sanction mechanisms under private law aimed at giving tenants incentives to report black market practices without endangering their own position. However, the mandatory adaptation of the contract to the advantage of the tenant has been declared void by the Italian Constitutional Court. Yet, other sanctions continue to exist: landlords may only enforce written and registered contracts whereas tenants may ask for registration even at a later stage to invoke their rights. Yet these measures presuppose an effective, swift and affordable judicial system trusted by the tenant, which is not fully present in Southern Europe in general and in Italy in particular.