10 Steps towards buying a property in Portugal

Nuno Caetano

Licensed Broker

10 Steps towards Buying a Property in Portugal

All legal issues are put in place by Certified Legal Companies

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, you must have someone helping you who does. Usually that person will be your 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 you need to have a Fiscal Number (número de identificação fiscal or NIF). This can be obtained from the Finances department at the City Hall (Câmara Municipal). When you obtain this, you need to provide an address in Portugal; usually your estate agent or lawyer can help with this. In order to open a bank account in Portugal, you need to have your NIF number, and also provide copies of your passport.

3. Price

Once you have found your property, you need to agree a price, usually through your 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

You also need to appoint a solicitor or lawyer to act on your 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 your work, although you must expect to pay them a larger fee than you would to a 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 Técnica 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 you are 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 you effectively become liable for any outstanding debts on the house; this is something that your solicitor/lawyer will check for.

7. Do a topographical survey

Another point to note is that you 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 your new neighbours has a claim to part of your land, and it is not unknown for a neighbour to own a 10m square plot in the middle of your 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 Deed of Sale(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 Sale (Escitura Pública 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?
  • Has any survey been completed to your satisfaction
  • If furniture of fixtures and fittings are included are they specified?

When all checks are completed, the Deed of Sale (Escritura) can then be signed by both parties in the presence of the Notary, and the balance of the monies can be exchanged. This can be done by Power of Attorney (Procuração), if you wish.

The Notary will also make sure that all taxes will be paid.

Once the Deed of Sale (Escitura) has been signed, the Notary will issue you 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 office (Conservatoria do Registo Predial), for which there is a charge, and this needs to be submitted within 30 days. Effectively, you are not the legal owner of a property until the Escitura has been registered at the land registry office. Make sure that you do this on time, or you may be liable for a financial penalty.

10. Register

Just as a final note, don’t forget to register with the tax office (finanças) all your services, such as water, gas, electric and telephone.

BY: Nuno Caetano