Don Carvaggio's villa was a residence in the Old City of Jerusalem.
It was here that in 1190, the Crusaders located the Chalice, thought to have been an ancient artifact hidden within the Temple of Sand, but in fact a woman by the name of Adha. Before the Templar leader Basilisk sent knights to capture her, he was assailed by the Assassin Altaïr Ibn-La'Ahad at the Templar's Hold in Tyre. When the Assassin defeated him in a duel, Basilisk bargained for mercy in exchange for two vital pieces of information. Altaïr accepted, and in this way learned of this residence as the true location of the Chalice. It was through the other revelation, that of a plot to poison the city of Acre to end its siege, that Altaïr was delayed in reaching the villa first. All this was part of Basilisk's plan, so that the Crusaders would catch the Chalice long before the Assassin could if he chose to save Acre, but Altaïr burned down the Crusaders' ships to stymie their head start.
Thus, when the Templars at last sent two captains and one sergeant by the name of Sadad to apprehend Adha at Don Carvaggio's villa, Altaïr was just moments behind. In the furious chase that ensued, many elite Templars were killed, and Adha was rescued by the Assassin, though she would be captured again shortly afterwards in Tyre and ultimately executed.