Guide to buying property in Portugal

GUIDE TO BUY PROPERTY IN PORTUGAL

General information

When you look for a property with a real estate agent, please make sure that the agency that you work with is government licensed, CarvoeiroAtlântico Mediação Imobilíario Lda is nº. IMPIC 7319, APEMIP 3731.

The reason for this is because the agents must always renew their license by means of formation and courses annually. This is to make sure that all requirements and regulations are being strictly controlled and the standards up kept. This license imposes strict regulations on the company and gives both buyers and sellers peace of mind with regards to all property transactions.

When buying Portuguese law defines the legal position of both parties and with the deeds the buyer assumes full possession, also any onuses, liens and obligations that belong to the property.

When you have found the property of your dreams and your offer has been accepted, you need to appoint a Portuguese lawyer to act on your behalf. We can supply a list of local lawyers that we have worked with over the years, who will speak your language and together we work as a team to advise you on all aspects of the legal side of buying the property, so you don’t have to worry.

 

Below are some important points to help understand the buying process:

Legal Process

Promissory Contract and Deposit

Final Deed 

Registration, Taxes and Legal Fees

 

 

 

 

 

 

Legal Process

The purchase of property in Portugal is relatively straightforward provided the ownership of the property is clear and the purchase laws are strictly adhered to. The process consists of two stages - the promissory contract (contracto promessa de compra e venda) and the final deed (escritura).

The lawyer will organise fiscal numbers (tax number required for all property owners) for you and establish that all buildings including swimming pool are formally registered correctly with all entities as well as checking for any possible onuses, liens or obligations that maybe registered on the property. This is done by checking the property documentation i.e. Caderneta Predial, Certidão do Registo and the Habitation Licence all of which have to be updated and be current when presented to the Notary on the signing of the deed.

Rather than flying to Portugal and home again during the buying process, the simple way is to give your appointed lawyer Power of Attorney (PoA) to buy on your behalf. The whole process can be conducted by e-mail, the lawyer will require copies of your passports and a utility bill as proof of address. They will then produce a general PoA to buy property on your behalf in Portugal which they will e-mail to you, in Portuguese and in your own language, so that you understand what you are signing. You then go to your local Notary to have your signatures witnessed, the Notary can then arrange for the PoA to be sent to the relevant Government department for an ‘Apostille Stamp’ which under the ‘Hague Convention’ legalises the document in Portugal. Once you send the original PoA back to your lawyer, they can then proceed to the next stage of the buying process.

 

Promissory Contract and Deposit

This is a legally binding agreement between both parties. On signing the contract, the buyer pays a deposit which is normally 10% of the agreed purchase price. This deposit is non-refundable unless specifically stated in the contract. If the buyer breaks the contract, he loses the deposit, and likewise, if the vendor defaults he is legally obliged to return the deposit, plus compensation, which is usually equal to the sum of the deposit.

It is acceptable for the buyer to ask for a copy of the contract translated into their mother tongue.

The contract covers a number of points including the following:
* Confirmation of the precise identity of the vendor and the buyer
* Precise description of the property
* Confirmation of the clear title of ownership
* Agreement for payment of deposit and terms if the contract is broken
* Proposed date of completion of the purchase.

Before the contract is signed, the vendor (or their lawyer) has to produce all the relevant paperwork relating to the property. This is for you as the buyer (or your lawyer) to complete the necessary searches to ensure there are no outstanding debts for example; rates, bank loans against the property.  Since January 2009 the vendor must provide an Energy Certificate which will grade the property in much the same way as domestic appliances.

Approximately 10 days before the deed date the lawyer will ask you for the balance of the purchase money plus the costs and expenses. All the Portuguese taxes have to be paid by the buyer at least 3 days before the deed is signed.

 

Final Deed

The Deed (Escritura) is the official document for the transfer of the property and is signed in the office of the Public Notary with the buyers and sellers lawyer both present.

The deed is read out aloud by the Notary and the relevant documentation relating to the sellers, buyers, the property and purchase taxes, have to be presented by the respective lawyers to the Notary, who checks to make sure the information is correct and current. After which the deed is then signed.

Should you decide to be present to sign yourselves and if you do not speak Portuguese, then you will need a translator, as the Notary will not let you sign the Deed if you do not understand the content.

 

Registration, Taxes and Legal Fees

Registration

After the Deed is signed the property will be registered in your name as the new owner at the local Land Registry Office (Conservatoria do Registo).

Taxes

Property Transfer Tax (IMT) - is levied on a sliding percentage scale according to the purchase price of the property.

Stamp Duty - is levied on a sliding percentage scale according to the purchase price of the property, when registering the purchase at the Land Registry following completion of the final deed.

Notary fees

This is calculated according to the agreed purchase price of the property and levied at between 1.5 percent and 2 percent. There is a nominal charge for stamp duty and for registering of property at the land registry following completion of the final deed.

Lawyer's fees

Normally between 1 and 2 percent of the purchase price although some lawyers charge a set fee but we would recommend that all costs are requested when instructing the lawyer to act on your behalf.