Buyers guide to Portugal - A step-by-step guide to purchasing property in Portugal
Buyers guide to Portugal
It is advisable to negotiate through a Government licensed Estate Agent (Mediador Autorizado) who has an AMI Number and whose conduct is subject to enforceable rules. Our Associate offices have all the appropriate licences to conduct real estate in Portugal and abide by the Jackson-Stops & Staff charter of good practice.
Prior to Viewing
Before making the journey to Portugal, it is advisable to ensure that sufficient funds are available to cover the deposit. Normally this is 10% of the purchase price. A cheque from a foreign bank account can take up to 10 days to cash, therefore, it is advisable to have a credit card available so as not to risk losing your preferred property.
We recognise the realities of purchasing property abroad, and we appoint a personal consultant to familiarise you with the process involved, thereby, taking the hassle out of finding a property to match your requirements.
Most importantly, our advice is ‘come and see for yourself’. While we don’t offer free flights and accommodation, as this might put you under an obligation, we can arrange your visit. If you require this service, we would use our contacts to find the best value flights and accommodation and, once your travel details are confirmed, your consultant will select properties that best meet your requirements. The consultant will then prepare a shortlist of these properties enabling you to achieve in 2 or 3 days what would normally take 2 or 3 weeks, therefore, by the time you arrive, the hard work is done!
Choosing a lawyer
The procedures and legal acts involved in acquiring a property in Portugal can seem complicated, we aim to hasten the process and explain the basics.
Using a UK based lawyer can often substantially increase your legal costs and most certainly delay the sales process. It is worth remembering that prior to any contract being signed, the following legal procedures must have been completed.
Always use an independent Lawyer or Solicitor (Advogado or Solicitador) who are fully qualified and whose conduct the Portuguese Law Society controls, and can provide documentation in the language of the purchaser. Never use a lawyer who is acting for the vendor or a Lawyer who shares the same office as the vendor’s lawyer. You can give your Lawyer or anyone else specific Power of Attorney to sign documents on your behalf, but closely monitor procedures to ensure that the proper steps are being taken, without excessive delay. Lawyer’s fees are generally between 1.5% and 2% of the purchase price of the property.
- A lawyer must be appointed to conduct a report on the entire property. The report must include details of land classifications and any future municipal development plans
- A lawyer will need to inform the Land Registry that the property is in the ownership of the new owner and is free of charges and embargoes and is up to date with payments of local contributions and community charges etc.
Having chosen a property, your Lawyer should search the local Land Registry (Conservatoria do Registo Predial) to confirm that the vendor (Vendedor) has clear title of ownership and that no one else has rights, charges or mortgages over the property. Your Lawyer must also check that the property registered conforms to the actual building and plot size being sold to the purchaser.
Your Lawyer will apply for a fiscal number (numero de contribuinte) at the local Tax (Finanças) office, this document is mandatory and you must have one in order to purchase a property. The fiscal number will come in the form of a card, which you will need for payment of annual property taxes, supply of services to the property or to open a Portuguese Bank Account.
Your Lawyer will obtain from the vendor the official tax document (caderneta predial) relating to the property and will check that the description of the property (number of rooms, area of house, area of land, etc.,) is the same as in the Land Registry.
Your Lawyer will obtain a copy of the usage licence (licença de utilizaçao) from the local Town Hall (Camara Municipal). For residential property, you will also need a Habitation Licence (licença de habitaçao), which confirms the town hall has inspected the property and that it complies with the planning permission and building regulations. Non-residential licences need to stipulate the appropriate commercial or industrial use.
If purchasing a plot of land for the construction of a future home, it is important for the property to have either a building licence, or the possibility of obtaining a licence, subject to architectural plans submitted to the authorities, and that the land is registered for building purposes and not as agricultural land.
Planning permission can also be based on a previously granted licence for construction, or a building such as a ruin, which is also classified as being an acceptable basis on which a licence can be granted.
We strongly recommended the following enquiries be made:
Ask your lawyer to examine the local development plan to ensure that there are no developments or construction planned for the area. All this does add to the legal expenses, but it cannot be stressed enough that in making these enquiries you will fully understand all the obligations you are taking on in making this investment. It should not be assumed that Portuguese laws and building regulations are the same as those required in your own home country.
A Promissory Contract of purchase and sale will be drawn up by your Lawyer (Contracto de Promessa de compra e venda) and must be signed by you and the vendor, it should include:
- Identification of the parties
- Identification of the property
- Agreed terms and conditions of the contract
Normally, at this stage, you pay the vendor a deposit of 10% of the full purchase price, the contract can be signed in front of a Notary and is legally binding on both the purchaser and the vendor. If the purchaser defaults the deposit is forfeited and if the vendor defaults, the purchaser is paid double the deposit (if a clause of specific execution is included, the vendor cannot withdraw and the purchaser can legally force the vendor to sell).
Finally, the purchaser’s lawyer registers the property with the local Land Registry in the name of the new owner.
When the registered owner of a property changes, utility companies require the new owner to arrange contracts. You must appear in person at the relevant provider’s offices, this will invariably be extremely time consuming, however, for a reasonable charge, your Lawyer can deal with these transfers on your behalf.