Purchasing Property Made Easy
The Legalities of purchasing Portuguese Property Made Easy
Buying a property is likely to be one of the single biggest purchases you will make in your lifetime and you are going to need help from the following people.
A property Lawyer.
A property surveyor.
A notary.
If you buy a Portuguese property without utilising these people you are literally asking for trouble.
The cost for a solicitor or lawyer to purchase a property is usually under €1,000
It is preferential to find a solicitor that is a specialist in Portugal property law as some general solicitors, although able to do this for you, might not make such a good job of checking the properties documents. Before you sign any documentation, you should arrange for a Building surveyor to view the property in person. We recommend a Portuguese speaking RICs approved building surveyor to do this for you. The cost of this is usually between 500 euros and 1000 euros.
We recommend our partner IMC www.ianmcmahon.com but just in case he is not available in your area there are 27 in the list below to choose from.
RICS Registered Surveyors in Portugal
If all checks out with the structure of the property you should introduce your surveyor to your solicitor. The reason for this is your solicitor has not viewed the property, only the plans and may not be familiar with any add-ons or illegal alterations that have been made to the property. It is also a good idea for the surveyor to view the plans against the property they have just surveyed.
If all is well, you can proceed.
The next stage of the process is to have your solicitor check out that the estate agent, (providing that the seller is using one) is authorised to act on behalf of the client. If you are dealing with a private seller your solicitor or lawyer should check that the seller has all of the correct details relating to the property. These are:
Certidão de Teor (Land Registry Document) This proves that you own the property and also lists any charges, mortgages or financial burdens placed against the property.
Caderneta Predial (Tax Registration Document) This document outlines the tax situation of the property and includes the property’s inscription for fiscal purposes, the current owner and the property’s fiscal number.
Escritura (Deed) This is the document that the owner would have signed when they purchased the property.
Licença de Habitabilidade (Habitation License) This is required for any properties built after 1951 and shows that the property has been inspected and received a certificate to deem it habitable.
Ficha Técnica de Habitação (The Property’s Technical Report) This details any technical information about the property, like the builder’s details and materials used to construct the property, such as insulation or heating etc.
Certificação Energética Avaliação (Energy Rating Certificate) – Since 2009 the owner is legally required to provide an energy rating certificate when selling property in Portugal. These certificates expire after 10 years and cost around 400 Euros.
Planos de Propriedade (Property Plans) These are the plans of the property that the local council hold and will highlight any unauthorised changes that have been made to the properties exterior.
Número de Identificação Fiscal (Tax Identification Number) The properties unique Fiscal Number and Annual Council Tax.
So just before we get down to the nitty-gritty of signing paperwork, here are few common problems and issues that can get missed.
Houses owned by family members.
When properties are handed down to families from deceased parents the homes are sometimes portioned up in ownership between the family members. It must be agreed by all owners of the property that it can be sold. Difficulties can arise if certain family members are not present in Portugal or indeed do not want to sell their share.
Water Source Ownership
Sometimes, in days gone by, before the advent of mains water in Rural Portugal, wells were dug by family members and the water rights shared between various family properties. This may not be written down and it’s important that if the property has a free water source that you get your solicitor to check out who has rights that can be exercised over the source. This includes boreholes, wells, water mines, streams and rivers. For example, you might find a property with a water mine that feeds a small stream and have the idea to use the water for something different causing the steam to run dry. This can cause problems if you neighbour also relies on the stream for his livestock and has rights over the source.
Walkways & Rights of Access
“Direitos de passagem públicos” means a public right of way and they can pass through your land particularly in rural areas. There are also ancient rights, sometimes used for access to land or vineyards, that cannot be fenced off or blocked and it’s important that if one exists on or across your property that you know in advance. The older generation will walk right through your garden if they have been doing it for centuries and these rights may not appear in the property’s paperwork. If you are buying land in rural areas look out for tracks that show visible lines of use across your terrain, or if you can ask a neighbour.
Outbuildings, Walls & Ground Cover
Many Portuguese properties have outbuildings and if built after 1951 must have the relevant documentation. If they predate 1951 then this is not necessary. Be very careful of buildings such as kennels, poultry houses and log stores that are permanent fixtures. Many councils have many different rules and regulations as to what is allowed and what is not. For example, your particular local council may not allow walls to be built in stone or block to be higher than other 1 metre, some allow 2 metres, some insist on metal etc, etc. You may also come across different types of land regulations such as REN (ecological land). These portions of land have strict rules regarding all aspects of buildings and ground cover. They have also been part of the government's devolution strategy and are now in the hands of local councils, each with very different ideas. There is also Rede Natura 2000, the main instrument for nature conservation in the European Union and if you buy land that is highlighted to fall under this strategy you will be heavily restricted in the future.
So, the rule is don’t go buying property or land thinking you can lay down a concrete driveway and set up camp. It’s quite simply not that easy. Remember when viewing property via an agent or private seller it’s important that you discuss boundary’s and land rights when viewing the property, particularly with isolated or rural properties.
Useful Links
Power of Attorney in Portugal
If you want to acquire property in Portugal but cannot get here due to work commitments or even quarantine implications, you can take out a power of attorney. This would enable the legal process of purchase to continue without the need for you to be present in Portugal. You can nominate an individual, such as a friend, legal representative or even a relative based in Portugal, who will represent you in specified transactions, but we recommend a lawyer or solicitor that you trust. This act must be recorded as a legally binding document signed in the presence of a Portuguese notary.
Signing of Documents
There are two parts to purchasing or selling a Portuguese property.
Firstly, the preliminary, promissory contract (‘contrato de promessa de compra e venda’).
Secondly, the completion contract (‘escritura de compra e venda’’).
This document details who is buying and who is selling the property, the property details and the price of the purchase. It also outlines the deposit that is being paid. The seller can set the deposit amount, but you do not have to accept their amount. You can negotiate what you want to put as a deposit. The normal amount is between 5% &15%. It is best to pay your solicitor the deposit into their client account, never their personal one, in advance of signing the promissory. Under Portuguese law, which protects both buyers and sellers, the deposit is forfeited if you, the purchaser, do not proceed with the purchase. If the vendor (seller) withdraws, double the deposit is paid to the purchaser by the vendor. This contract should ideally be signed in the presence of the Notary.
Completion
The completion of the purchase should occur around a month later, but can be done more quickly if both parties are happy or a date can be set in the future for completion. The completion contract called an (‘escritura de compra e venda’ or sometimes just referred to as the ‘escritura’) now needs to be signed by both parties and or the Power of Attorney, in the presence of a Notary. Once signed the balance of the purchase price, minus the previously paid deposit along with all necessary purchase taxes and notarial fees must be paid in full.
Once the property is registered at the Land Registry Office and Local Tax Office, it is legally yours.
Top tips.
Expect a long day at the notary, although you will have an appointment, no one is usually in any rush. Also, when you are given the documents to check that they are correct whilst in the notary’s office, do just that, as mistakes in names and addresses and places of birth are easily made.
Ensure your solicitor speaks your native language.
Ensure that you have all of your Portuguese documentation with you.
Including Furniture in the Purchase.
It is allowed to buy properties in Portugal fully furnished. If you are doing this, it reduces the price of the actual property and therefore reduces its tax liability. This option is well worth discussing with the seller, particularly if they are moving out of Portugal as it's often costly for them to take their possessions with them.
For example: If you view a house valued at 250,000 Euros you could ask for the house furnished and reduce the houses value down to 235,000 Euros for the purposes of tax. It’s important to discuss what you can offset against furniture with your solicitor or accountant.
Happy house hunting…
