Purchasing a property in Portugal is a relatively straight-forward process. Here we explain the fundamental points to bear in mind...
Always deal with a Government licensed agent - if you are in doubt, every licensed agent must display their licence in their office and on all advertising. For example, our licence number is AMI 6232.
Licensed agents have professional insurance together with other guarantees and are accountable for their actions. So make sure you have a good start: by working with true professionals you'll soon see how simple purchasing a property in Portugal can be.
Once you've found your dream property, what next? The first step of course is to make an offer. Our advice is to give as much positive information as possible to the vendor to support your offer. You should consider:
- How quickly you wish to complete the purchase
- If you need finance
- How much deposit you are prepared to pay (constructors in particular often offer a discount when a large deposit is paid)
- If you wish to buy any of the fixtures and fittings
Your offer should be discussed with us first - we usually know the client / owner very well and can help to negotiate a deal which is agreeable to both vendor and purchaser.
Once decided on your chosen property, we recommend that you seek the services of a registered and qualified surveyor. This will reassure you of your choice, raise any issues that need to be addressed immediately plus (if necessary) recommend additional guarantees that should be inserted into contracts. One thing's for sure: you'll know exactly what you're buying, as a surveyor won't be biased by enthusiasm or sentiment for the property, as you may be. A survey offers peace of mind.
Buying a new home can be a daunting prospect, and even more so in a foreign country where the language and purchase laws are very different. However, with our help plus a reputable legal advisor there's no need for concern when buying a property in Portugal. Select a lawyer/solicitor who normally carries out property conveyance and who is able to respond in a set timescale to your requests. We have reliable English-speaking lawyers that we work with on a regular basis and who provide a solid professional service at reasonable cost. Another major benefit is that a lawyer can be given power of attorney, thereby saving you considerable time and expense travelling to Portugal to sign documents in person.
A lawyer will ensure that:
- The property is duly registered in the Vendor's name.
- There are no changes, mortgages or encumbrances registered on the property.
- There are no fiscal debts, like predial tax Contribuição Autárquica.
- The property was built in accordance with Portuguese regulations and that planning permission was granted by means of a document known as a habitation licence.
Most lawyers will help with the connection / re-connection of services such as gas, electric etc. This should be agreed during initial meetings.
The promissory contract is a preliminary contract drawn up to cover the purchase of any property. It is 'promissory' because both parties effectively promise to enter into a final contract to buy and sell the property - known as the escritura (final deed) - which is done at a later stage, drawn up and signed before a public Notary. This is the vital binding document signed by both parties. It identifies the parties, regulates the terms and conditions agreed (such as 'subject to mortgage'), the price, the completion date and all the other relevant conditions.
A deposit is also required upon signing the promissory contract. The amount may vary, but be prepared to pay a minimum of 10% of the agreed purchase price. It is advisable that this amount should never exceed 50%. This deposit is released / paid upon signing the promissory contract. In individual circumstances - and with most new-build properties - a separate payment structure will be advised and agreed.
If all the above formalities are fulfilled but the vendor then decides he/she no longer wishes to sell the property (i.e. breach of contract) you have two options:
(a) demand compensation equal to twice the amount of the deposit you paid
(b) force him to sell it to you by seeking an order of 'specific performance' of the contract. This is obtained by taking out legal proceedings against the vendor in court and involves a considerable amount of time, money and patience.
If, on the other hand, it is you who no longer wishes to proceed with the purchase, then your deposit is lost to the vendor, who can also try and force you to buy through the same system of 'specific performance'.
A promissory contract is not obligatory but once signed it becomes fully binding and must be fulfilled. After the promissory contract, we then enter the notarial deed of purchase and sale. Completion is known in Portugal as the 'Escritura Pública de Compra e Venda', the process through which ownership of the property is transferred to you. All the property documents must be submitted to the Notary, together with proof of payment of tax on the transfer of the property known as 'IMT'. The escritura is signed at a Notary's office on the same date it was agreed to finalise the purchase, and the balance of the purchase price is paid to the vendor at this time.
Even though you have become the owner of the property by signing the escritura, it is only by final registration of the property in your name, which grants you full security of ownership, and protects you against the actions of any third parties.
The connection of water, electricity and telephone follows the acquisition of your house. You will be required to fill out new application contracts for the supply of these services to your property. You should ensure that there are no debts left by the previous owner before the signing of the escritura, or you will be liable for any outstanding payments. |