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Legal

Before making a purchase it is important to understand the legal requirements of purchasing property and land.

Here are the basic steps to help understand the procedures and legal acts that are involved in acquiring a property in Portugal.

It is quite normal for both Parties to initially enter into a Promissory Contract detailing the conditions of Sale - "Contrato de Promessa de Compra e Venda". This Contract is legally binding on both sides and the law requires the seller to repay twice the deposit should he withdraw from the sale. Likewise, if the buyer fails to complete he forfeits the total of his deposit. There are specific laws relating to this act that a Lawyer will be able to explain.

It is often found practical for the buyer to appoint a third party such as a Lawyer to act for them legally in the matter. A document named "Procuração Publica" is prepared with the necessary details and then in the Notary Office this document is signed and registered by the Notary. This official document can also be created in the Portuguese language outside Portugal in a Portuguese Consul in a foreign country, or, in a Notary in the language of the country concerned. In the case of the latter the document must have the Seal of the Notary and an Apostil attached. An official translation into the Portuguese language will later be necessary.

Every buyer is required to obtain a Fiscal Number from the local Tax Office (Finanças). This can be done locally. We can help with the procedure.

Prior to act of purchase, the purchase will be subject to a Municipal payment named "IMT - Imposto Municipal sobre Transamissões" which as from the 1st of January 2003 replaces the previous tax payment named "SISA". This payment is paid in the local Tax Office nearest to the property. The amount to be paid is related in terms of percentage by "platforms" to the cost of the property being purchased. In limited cases the buyer will be exempt from paying this Tax.

When all the above requirements have been completed the act of sale can proceed in any Notary Office. This act is known as the "Escritura de Compra e Venda" which takes place in front of the selected Notary and is recorded in his official books. The Notary will check prior to the act of sale that all the necessary documents are correct to ensure that the sale can proceed according to the facts provided. It is at this moment that payment is normally completed to the seller, and when applicable, the balance of purchase has to be made according to the signed Contract in Point 2 above. After the act is recorded the Notary Office will issue a photocopy of the entry which is the proof to the buyer that the act has officially taken place. The photocopy will carry the seal of the Notary but as further official copies can be requested at any time this document should not be mistaken for a "Title Deed"- as known in the UK.

On completion of the above Notarial act the property in question has then to be registered in the new owners name in the Land Registry (Conservatoria do Registo Predial).

The Portuguese do not normally employ a solicitor, partly because they have a reputation for being usually slow and often incompetent, but mainly because the deed is carried out by a notary, who is a publicly appointed lawyer whose duty is to ensure that all is legal and correct. However, if you do want to engage one, I can put you in touch with one or two who speak English and are used to dealing in these matters.

Some guidebooks will tell you that 15% should be added to the purchase price to cover taxes and other expenses. This is total NONSENSE. Extras amount to a very small fraction of this. The best thing to do with your guidebook is burn it. They are mostly compiled by people who’ve never set foot in Portugal, much less bought a property here, and contain damaging misinformation

Any questions, please contact me.