Buying and selling property is always tricky, whether you’re a legal resident, buying a vacation home, timeshare, office building or simply investing in the Portuguese real estate market, buying or selling is always an adventure in bureaucracy. As with your home country, there are regulations, requirements and rules to consider. Murphy’s Law holds that anything that can go wrong will go wrong.
Knowing the ropes, due diligence and expert assistance can make your transaction move forward more easily, if not more smoothly.
Lawyer or no lawyer?
Portuguese law used to require a notary, which is kind of like a minor solicitor, but that is no longer required. It’s a good idea to retain an attorney (avogado) or solicitor (solicitador).
Licensed realtor
Unlicensed realtors abound, so ask for the realtor’s AMI number. It should be printed on all company collateral, such as Web sites, brochures, business cards and letter head.
A licensed realtor has the state-required qualifications and uses the required documentation.
The INCI, the government department regulating real estate, also bonds realtors.
Seller pays the agent’s fees, usually 3% – 5%, plus tax (21%).
The mortgage
Unless it’s a cash transaction, as a buyer you need a mortgage, whether fixed or variable rate. If you go to a Portuguese bank, you’ll need to supply the bank with:
Proof of income, including bank statements
Health records (to be sure you don’t die before you pay the mortgage off)
Life insurance to cover the mortgage (see above)
Property valuation, blueprints, etc.
Residency card, passport and identification
The process
If you are a first-time buyer, you’ll need a fiscal number (cartão de contribuinte) before you can open a bank account.
The local tax office (finanças) can provide you with one, and it’s very easy to obtain.
The bank will also need copies of your birth certificate and passport.
When you’ve agreed a price (buying or selling), there’s a legally binding promissory contract (contrato de compra e venda) to execute.
At that time, a 10% – 20% deposit is required.
A lawyer will (or has already) prepare the contract and it must be signed on licensed premises or before a notary. The contract will include:
Identification of the parties
Identification (article number) of the property
Price
Deposit amount
Signing date (closing date for the final deed-escritura)
Other considerations such as: use of the property before closing, etc.
Once signed, any default incurs penalties:
Seller’s default requires the seller to pay buyer double his deposit
Buyer’s default means seller keeps the deposit
As with any escrow, between signing the promissory contract and final deed, your legal representative will vet the property for:
Deed: use and planning restrictions
Clear title: no outstanding debt, liens, ownership or boundary disputes (unpaid debt follows the property, not the owner, including utilities and taxes)
Habitability: no unapproved building modifications and that the property has an occupancy license (licença de habitação)
Agreed fixtures and fittings in place
Once finalized, you’ll need to register the escritura with the Land Registry (Conservatoria do Registo Predial), tax office (Autoridade Tributária) and utility companies.
Registration with the Land Registry makes you the legal owner.
You’ll need your fiscal number for registration.
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Thinking of living, retiring or buying property in Portugal?
Click here for guides on living in Portugal [http://www.propdom.com/index.php/where/europe/portugal/portugal-overview]
Click here for guides on buying real estate in Portugal [http://www.propdom.com/index.php/where/europe/portugal/portuguese-real-estate]
James Harrison has lived on four continents with his family and is now the founder of PropDom:
PropDom – the worldwide property domain for all things regarding holidaying, buying a second home, investing in property and retiring abroad.
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