Do your research

Buying property in Portugal

First and foremost, do your research.

Work out:

  • What is your budget?
  • Where do you want to buy?
  • What style of property do you prefer?
  • Do you have your mortgage and financials in place?
  • Do you have a trustworthy, knowledgeable lawyer?
  • Have you obtained your Portuguese Tax Number (NIF)?

Now you’re ready to start your search…

So what’s next ?

If you’re buying a brand new property from a developer, you may need to lodge a reservation deposit with your lawyer, normally E2-4,000.  This is held ‘in escrow’ until the promissory contract is signed.  If they buyer does not wish to proceed, this will be returned.

If buying an older/existing property, instruct your lawyer to prepare a provisional contract and give him the vendor’s lawyer’s details.  At this stage, you will need to make an advance payment.

Consult a professional builder or ask for a survey, so you’re aware of work needed, from an unbiased source.  You may need things to be actioned before you agree to buy.  List these and pass them to your lawyer.

How to find a lawyer

A qualified property lawyer is priceless.   We can suggest options to you of lawyers we have worked with previously, all of whom are bilingual.

If you’re unlikely to be present for all the stages of the buying process, you will need to arrange Power of Attorney (Procuração Pública) stating the terms of the deal and signed by all parties involved. This document is then registered at a Notary.  The POA document saves you coming to Portugal each time your signature is required.

Before signing the Promissory Contract, the lawyer will undertake checks to ensure that the property is free of debt and restrictive clauses, and if buying land, that all the necessary permissions are correct and you are able to build on the land.

Any plans in the local Town Hall (Câmara Municipal) relating to the property must agree with the existing/actual construction.

Costs

Lawyers’ fees vary but you should assume a figure of 1-2% of the overall property purchase price.

Your lawyer will tell the costs of completing the purchase, including Property Transfer Tax (IMT) and Notary fees. (Allow a further 6% of the purchase price over and above lawyers fees.)

Promissory Contract
Once the price is agreed and all documents in order, both parties can move towards signing the Promissory Contract.   Any specific terms and conditions agreed by both parties that relate to the purchase need to be clearly set out within this document.

This Contract is then legally registered with the Notary. At this stage, the buyer normally pays a deposit of 10-30% to the seller – under Portuguese law, if the buyer defaults, he loses the deposit to the seller, BUT if the seller defaults he is obliged to return double the value of the deposit to the buyer.

The vendor must prove that the financial affairs of the property are up to date. All charges (such as mortgages, debts. liens or utility bills) must be paid off and the property sold with vacant possession and free of encumbrances.

One the promissory contract is signed, your lawyer releases the deposit to the purchaser or their lawyer and a signature date is agreed for the Final Deed (Escritura Pública).

Final Deed
According to the Portuguese Civil Code, the act of purchase and sale of a property must be completed at a public notary. The notary is an independent public or private identity who acts as official witness and legal guarantor of property ownership transfer.

Transferring the property from one owner to another is signed by both parties or by their representative lawyers and witnessed by the notary who ensures that all documentation is in order.

After this, payment is normally released to the seller.

 

A photocopy of the notarised entry (showing the notary seal), is now the buyer’s proof that the act has officially taken place. The buyer keeps the original (further official copies can be requested at any time).

 

Note:  The Final Deed document is not the “Title Deed” – as it is known elsewhere – this is completed by the lawyer three to 12 weeks after signing the final deed and once the property has been registered with the Land registry Office (Conservatoria do Registo Predial).

 

To buy a property in Portugal, you need an NIF number (Fiscal ID number) – this number is also required to open a bank account, buy property or a car and pay tax.

 

PLEASE NOTE:

These notes are for guidance only and do not replace the need for professional legal advice.  Laws and regulations change all the time. Do not trust advice from anyone with a vested interest in providing it, with the exception of your chosen lawyer.

 

Enjoy the purchase of your home in the sun but do not forget you need to continue exercising normal business caution the minute you step off the aeroplane!

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