Buying Property in Portugal
10 Steps toward Buying Property in Portugal
Buying a property in Portugal follows a similar process to that of the UK. However, it is important to note that as an expatriate, there are other considerations to be aware of.
Note: This article will explain the basic process of buying property in Portugal, but is not intended to be a detailed manual.
1. Get local
For starters, while it is not necessary to be able to understand the language, one should enlist the help of someone who does. Usually that person will be an expat's lawyer or solicitor, as there is a large amount of technical Portuguese involved in the buying process.
2. Fiscal Number
In order to purchase a property one needs to have a Fiscal Number (numero de identificação fiscal or NIF). This can be obtained from the Finanças department at the council offices (camara municipal). When one obtains this, one needs to provide an address in Portugal. In order to open a bank account in Portugal, one needs to have an NIF number, and also copies of their passport.
Once a person has found their property, they need to agree on a price, usually through the estate agent. Generally, it can be agreed that the property will be taken off the market; however, that is not always the case, as many owners have the property marketed by more than one estate agent.
4. Appoint a lawyer
One also needs to appoint a solicitor or lawyer to act on one's behalf. As a general rule of thumb, a solicitor will only perform the basic functions required to ensure a legal purchase, and a lawyer will perform more thorough investigations during the purchase. For that reason, it may be better to use a lawyer for the work, although one should anticipate a larger fee than that of the solicitor.
5. Get documents ready
There are four main documents that need to be provided to prove a house's readiness for sale. These are:
- Certidão de Teor – This confirms that the seller has title to the property, that it is registered in his/her name, and indicates any outstanding debts or mortgages on the property.
Ficha Tecnica de Habitação - Gives all the information about the property, such as the builder’s details, the materials used and who supplied them.
Caderneta Predial – This confirms the size of the property, its location and boundaries, although this can be quite vague.
Licença de Utilização - Confirms that the description of the property is in accordance with the property one is buying.
6. Exclude other parties
The solicitor/lawyer will also check that there are no other interested parties. This is particularly important in Portugal, as much of the older property and land that is available has been passed down through families over many years. This means that there may be a second-cousin-twice-removed that has a 1/18th share in the property. All interested parties, no matter how small, need to agree to the sale. Only one needs to object and the whole thing could be thrown into confusion. Also note that one will effectively become liable for any outstanding debts on the house; this is something that the solicitor/lawyer will check for.
7. Do a topographical survey
Another point to note is that one will need a topographical survey to be performed on the land and structures, to ensure that the boundaries are correct. Traditionally, everyone knew everyone else in the villages, and also where their land started and finished. The boundaries were marked by specific rocks and trees, but now the land registry needs an accurate picture of the land as they update their records with new purchases. It may be that one of the new neighbours has a claim to part of the land, and it is not unknown for a neighbour to own a 10m square plot in the middle of one's land.
8. The Promissory Contract
Once all the correct checks have been made, a Promissory Contract is made, and both parties agree to the sale. This is accompanied by a deposit of 10% (usually, but could be higher). Once this Promissory is in place, there is a financial penalty to both sides. If the buyer backs out, they forfeit their deposit, and if the seller backs out. They are legally obliged to return double the deposit.
The Promissory Contract (contrato de promessa de compra e venda) contains:
The identification of both parties
The identification of the property, its registration number and tax number
Confirmation of clear title
The price agreed
The deposit amount
The date of deadline for signing the Final Deed (Escitura)
Use of property in the interim period if required
9. Deed of Purchase and Sale
Once the Promissory is in place, the Deed of Purchase and Sale (Escitura Publica de Compra e Venda) is drawn up. Prior to signing this, the lawyer will make a number of additional checks on the property. These will include:
Any planning restrictions on the property that could restrict any future plans.
Are all utility bills and taxes paid? All debts on a property are inherited by the new owner.
Have any works or alterations been done to the property that are not registered and don’t comply with the authorities or have a habitation license (Licença de Habitação).
Are there any restrictions on the use of the property?
Have all the surveys been completed to your satisfaction?
If furniture of fixtures and fittings are included are they specified?
When all checks are completed, the Escitura can then be signed by both parties in the presence of the Notary, and the balance of monies can be exchanged. This can be done by Power of Attorney (Procuração), if one wishes.
The Notary will also make sure that all taxes will be paid.
Once the Escitura has been signed, the Notary will issue the buyer with a stamped copy and you can get additional copies which is advisable.
The original will carry the seal of the Notary but do not confuse this for a Title Deed. The property then needs to be registered on the Land Registry (Conservatoria do Registo Predial), for which there is a charge, and this needs to be submitted within 30 days. Effectively, one is not the legal owner of a property until the Escitura has been registered at the land registry. It is important to do this on time, otherwise one may be liable to a financial penalty.
Just as a final note, don’t forget to register with the tax office (finanças) for all services, such as water, gas, electric and telephone.