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Notes on Property Purchase in Portugal

1. POWER OF ATTORNEY:

Power of attorney is essential if you wish our broker or lawyer to act on your behalf in your absence. Ensure the powers granted do not exceed those that you wish your representatives to enact on your behalf.

POA may be drawn up and registered in Portugal at any Notary Public(Cartório). This may also be formalized at any Portuguese Consulate, or at any foreign Notary Public and subsequently authenticated at the Portuguese Consulate.

2. NUMERO FISCAL DE CONTRIBUINTE:

This is a fiscal registration number, similar to the UK National Insurance number or US Social Security number and essential for all but very minor transactions in Portugal. For this you will require a current passport and your Birth Certificate. Our Broker or Lawyer will assist you in obtaining this document which will entail visits to the local Tax Offices and normally involves relatively little time and expense. You will be required to present your passport and advise the full names of Father and Mother – a copy of your Birth Certificate would be an added advantage. Your new "contribuinte" card is mailed to an address in Portugal within approximately 30 days – we suggest you use that of our Broker or Lawyer.

3. PROPERTY BROKER:

It is always best to use a trustworthy broker which is why we have taken great care in selecting our associates. Not only will a good broker help you find the property you require but he or she will make sure the price is fair, as well as working with your lawyer to ensure the property is legally owned by the seller and that there are no outstanding debts on it.

4. LAWYER(ADVOGADO):

Some Portuguese, particularly locals, dispense with the services of a lawyer in real estate transactions preferring to use a "solicitador" as it is assumed that their broker will take total care of their interests throughout. However, this might prove unwise for a foreigner purchasing in a foreign country and our own agent can call on the services of various lawyers, each one specialising in international law and in a specific foreign language. Clients are, of course, free to use their own lawyer of choice.

5. THE FINANCIAL ASPECT, BANK ACCOUNTS ETC:

As part of the European Union, money can be transferred in and out of Portugal quite freely. When transferring larger sums of money, one is generally recommended to avoid the international banking system which can prove unnecessarily expensive, and instead use the services of one of the companies specialising in foreign exchange transactions.

Euro mortgages are normally obtainable for 70% of the property's value, and can be arranged through local banks. Our broker or lawyer will be happy to introduce you to a sympathetic bank manager should the need arise.

6. SURVEYS AND PROPERTY SEARCHES

When purchasing resale property a survey is strongly recommended. This could save you any unpleasant surprises at a later date. Our associates will be happy to organize this on your behalf.

Comprehensive searches are essential to ensure that the property you wish to purchase has good clean title and your lawyer will need to carry these out at the following public departments:-

  • Conservatória do Registo Predial – Land Registry Office. Here will be found all records and information regarding the property, i.e. Ownership, detailed description, mortgages and any other outstanding charges or encumbrances.
  • Repartição de Finanças – Local Finance Department. - Here is found a further description of the property and taxes payable – Contribuição Autárquica or predial tax.
  • Câmara Municipal – Town Council. where information regarding planning permission, any planned future developments in your area, projects awaiting approval, building licences and occupation licences. In Portugal, full and thorough investigation of all of the foregoing is essential and the responsibility of your lawyer.

 

7. CONTRACT OF SALE AND PURCHASE:

This contract is prepared by the vendor’s lawyer in agreement with his or her opposite number acting for the purchaser. This contract is binding on both parties and contains:-

  • The seller's full details
  • The purchaser's full details
  • Location and detailed specification of the property
  • Conditions of payment(s)
  • Completion date
and is usually signed at the office of the vendor’s lawyer, in front of two witnesses.

 

At this stage a down payment is made – usually between 10-15%, but negotiable. The balance normally becomes due upon completion. A guide to all the expenses and taxes involved in the purchase procedure are listed below. In the case of overseas purchasers it is sometimes possible to modify these procedures to accommodate the circumstances. If a seller decides not to follow through with the sale, he or she will forfeit the deposit that has been paid. There are, of course, instances when a purchaser is justified in not closing on a contract for the sale. For example if the vendor is unable to provide the purchaser with a title free and clear, the purchaser has the right to walk away from the contract and will not forfeit his or her deposit.

When buying a property "off-plan" these procedures will differ somewhat as you could be required to deal directly with the developer of the property under construction. This may involve an extended payment plan, certain additional conditions of sale and interest payments. We urge you to consult with our broker/lawyer for guidance in such matters as they will always have your best interests at heart.

An interesting feature of this contract is the fact that if the seller decides to walk away from the contract, he/she is obliged to pay to the buyer a penalty amounting to twice the deposit placed by the purchaser in the first instance. Thus, in Portugal the purchaser of real estate is provided with a level of protection that is seldom found in other countries around the world.

7. ESCRITURA DE COMPRA E VENDA – Notarial deed of sale and purchase.

This is completion whereby the ownership of the property is transferred to you. All the relevant property documents are submitted to the notary, together with the proof of payment of tax on the transfer of the property known as Municipal Transfer Tax(IMT) whenever applicable. The ‘escritura’ is signed at a Notary on the date agreed by both parties to close the deal. At this time, the balance of the purchase price is paid to the vendor.

8. REGISTRATION

Although you have become the rightful owner of the property when you signed the 'escritura' it is the registration of the property in your name at the Land Registry Department which grants you full security of ownership, as it will produce effects against any third parties.

9. ADDITIONAL COSTS

Purchasers should be aware of the following additional costs(approximate):-

  • Notarial and registration fees – 1.5% of the purchase price
  • IMT – when applicable, up to 6.5% (depending on the type of property and price).
  • Lawyer's and Surveyors fees are usually subject to agreement. These fees will be subject to VAT/IVA (currently 21%).
  • Your lawyer will provide you with a detailed breakdown as part of his/her quotation. If you are considering taking out a mortgage, the bank may charge an arrangement and survey fee as in in the UK and other European countries.

 

10. WILL

It is strongly recommended that once you have purchased a property in Portugal in your own name you instruct your lawyer to prepare a will.

You are allowed to have a will exclusively for your Portuguese assets, without replacing the main will you may have in your own country. Most common types of will are also signed at a Portuguese Notary and are private and confidential.


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