Legal matters in Portugal

Buying a property is always one of the largest and most significant purchases you will ever make. It can be a complicated business with essential checks required to help ensure that all is in order, including the legal status of the dwelling. It’s important that you don’t let your heart rule your head. If you don’t speak the language or understand the system, you need a good solicitor.

The solicitor

Lawyers’ charges vary between 1% and 2% for a property purchase. This will be money well spent, especially as a lawyer can help you avoid some common problems with a home purchase or sale, which may cost you more money in the long run.

It is wise to appoint a solicitor that is a specialist in Portugal property law and comfortable speaking your native language, especially if your Portuguese is not perfect.

Among other things, your solicitor will prepare the signing of the Title Deed, represent you at the Notary’s and register the property with the Portuguese Land Registry. But first they should check that the estate agent you are dealing with is properly authorised to act on behalf of the client, while ensuring that the contract protects your rights and your money.

The Power of Attorney in Portugal

If you want to acquire property in Portugal, but are finding it difficult to spend the necessary time out there, you could potentially take out a power of attorney. This would enable the legal process to continue without you being in Portugal. You can nominate a trusted individual, such as a friend, legal representative or relative based in Portugal, who will represent you in specified transactions, but this must be recorded as a legal document signed in the presence of a Portuguese notary.

Legal process

The legal side falls into two parts, the preliminary promissory buying and selling contract (‘contrato de promessa de compra e venda’’) and the completion contract (‘escritura’).

Phase 1: Preliminary promissory buying and selling contract

Once a price has been agreed between the buyers and seller, both parties will sign a preliminary promissory buying and selling contract (contrato de promessa de compra e venda) and the buyer will make a deposit of around 15%, although this figure is usually significantly less on new build properties.

The contrato de promessa de compra e venda, similar to an exchange of contracts in the UK, legally secures the purchase, and is subject to satisfactory searches having been returned.

The Portuguese law protects both parties involved. The deposit is forfeited if the purchaser does not proceed, and if the vendor withdraws double the deposit is paid to the purchaser by the vendor. This contract must be signed in the presence of the Notary.

Prior to the signing of the contrato de promessa de compra e venda, your legal representative will need to obtain the following legal documents:

Property Registration Certificate (‘Certidão de Teor’)

This check is made at the local Land Registry (‘Conservatória do Registo Perdial’) to ensure that the vendor has the ownership of the property and no one else has those rights and also if it is free of debts, including a mortgage.

A Certidão de Teor, which describes the property’s legal history and provides proof of ownership, is required to perform the completion process at the Notary’s office.

Property Tax document (‘Caderneta Perdial’)

This is an official tax document, obtainable at the local tax office, which certifies the inscription of the property for fiscal purposes, the current owner and their fiscal number, a description of the property, and the property’s unique fiscal number. This document also confirms what annual taxes are payable on the property.

Phase 2: Completion

The completion of the purchase normally occurs around a month after the signing the contrato de promessa de compra e venda although this timescale is left to both parties to negotiate. This involves the buyer and vendor signing the final contract, called an ‘escritura de compra e venda’, although this can also be signed on your behalf by your appointed Power of Attorney.

At this stage the purchaser must pay the remaining balance of the purchase price (minus the deposit already paid), along with all necessary taxes and notarial fees. Once this has been done and the property is registered at the Land Registry Office and Local Tax Office, it is legally yours.

Continue to section 3: Taxation

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