Buying a property in Portugal follows a similar process to that of the UK. However, it's important to note that as an expat there are other considerations to be aware of.
Note: This article will explain the basic process of buying property in Portugal, but isn't intended to be a detailed manual.
1. Get local
While it isn’t strictly necessary to be able to understand the language, it's best to 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, expats will need 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).
Once an expat has found their property, they need to agree on a price. This usually happens through the estate agent. Generally, it can be agreed that the property will be taken off the market during negotiations. However, this is not always the case, as many owners will have the property marketed by more than one estate agent.
4. Appoint a lawyer
Expat property buyers will also need to appoint a solicitor or lawyer to act on their 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 several main documents that need to be provided to prove a house's readiness for sale. These include:
- Certidão de Teor – This confirms that the seller has title to the property, that it’s 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 document 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 or 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. All interested parties, no matter how small, need to agree to the sale. Expats should also note that one will effectively become liable for any outstanding debts on the house. This is something that the solicitor or lawyer will usually 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. However, the land registry now 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 the newly purchased 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 putting down a deposit of around 10 percent. 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.
9. Deed of Purchase and Sale
Once the Promissory is in place, the Deed of Purchase and Sale or 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.
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 if one wishes. Once the Escitura has been signed, the Notary will issue the buyer with a stamped copy and any additional copies.
The original will carry the seal of the Notary but expats should not confuse this for a Title Deed. The property then needs to be registered on the Land Registry, 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’s important to do this on time, otherwise one may be liable to a financial penalty.
10. Registration for services
Finally, expats should not forget to register with the tax office for all services, such as water, gas, electricity and telephone.