Buying Property
Process of buying a Portuguese property
In Portugal the
purchase of a Portuguese property is a regulated process. To ensure that the
Portuguese property you wish to buy is free of debts and restrictive clauses,
it is essential to employ an English-speaking lawyer or solicitor to protect
your own interests. We also recommend that you deal with Portuguese estate
agents who are government licensed; they must be identified by an AMI number.
Banking in Portugal
Opening a bank account in Portugal
is not required, but it is recommended. Many foreign banks have branches in Portugal, and
they can help in transferring funds and setting up regular payments for
utilities so you won't have to worry about keeping a close eye on bills when
you are out of the country. Property management companies can work directly
with banks to set up these payments, and they can also arrange to have your
Portuguese property rented out. However, you will need a tourist licence if you
wish to rent short term.
Personal Fiscal Number (Numero fiscal de contribuinte)
As a future owner of a Portuguese property you need to have Personal Fiscal
Number, which can be obtained at the Local Tax Office in Portugal. If
you are not resident in Portugal
you will need a tax representative.
Legal process for buying a Portuguese property
The legal side falls into two parts, the
preliminary "promissory buying and selling" contract (Contrato de
Promessa de Compra e Venda)
and the Final Deed (escritura).
Stage 1: Preliminary "promissory buying
and selling" contract
Once a price has been agreed upon with the
vendor both parties will sign a preliminary "promissory buying and
selling" contract, called a Contrato de Promessa de Compra e Venda and the
buyer will make a deposit of 10%-30% of the purchase price (except in the case
of new constructions where this deposit will be considerably less). The deposit
can vary depending on the price, location and the real estate agency you work
with. Many purchasers also hire a lawyer to help to negotiate a 10% percent
deposit, opposed to paying a larger deposit. The "promissory"
contract, 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 can be signed in the presence of the
Notary.
Before signing a preliminary "promissory
buying and selling" contract, you or your legal representative will need
to obtain the following legal documents:
Property Registration
Certificate (Certidão de Teor)
At the local Land Registry (Conservatória do
Registo Perdial), this is to check if the seller has the ownership of the
property and no one else has those rights and also if it is free of charges and
mortgages. A Registration Certificate should be issued with a time limit. The
Registration Certificate describes the property's legal history and proof of
ownership. The Registration Certificate is required to perform the completion
process at the Notary's office.
Property Tax document
(Caderneta Perdial)
At the local tax office obtain an official tax
document. The official tax document 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. The official tax
document mentions the patrimonial value which forms the basis for how much the
owner will pay in local yearly taxes. If the property is new then the official
tax document will not exist in and a temporary certificate will be issued by
the building developer.
License of Use (Licença de
Utilização)
Obtain a copy of the usage license from the Local Town
Hall. In this document you can check if the
property is approved for the purposes of the original building permission. For
residential property it is necessary to have a habitation license. For non
residential it is necessary to have a commercial or industrial license. This
usage license document needs to be presented at the stage of signing the
"promissory buying and selling" contract.
Energy Certificate
Stage 2: Completion
(escritura de compra e venda)
The completion of the purchase should occur anywhere
between approximately 3 - 4 weeks after signing the "promissory buying and
selling" contract, unless decided otherwise between the parties, when the
"escritura" deed, called a escritura de compra e venda is ready to be
signed by both the vendor and purchaser. The signing of the
"escritura" can be carried out on your behalf by granting your lawyer
Power of Attorney.
Prior to the signing of the deed the transfer
tax (IMT) and stamp duty (Imposto de Selo) must be paid in order for the deed to
take place. The IMT Tax is variable depending on the value of the property and
whether the property is for permanent residence, second home, commercial or
industrial.
At this stage the purchaser must pay the
remaining balance of the purchase price (purchase price minus the deposit),
plus notarial fees to the notary. The "escritura" is the equivalent
to the Deeds of the property. From the signing of the "escritura"
contract the purchaser is responsible for the insurance of all the buildings on
the property. It is recommended that the policy includes cover for fire, flood,
storm damage and earthquake damage.
The signing of the "escritura" ends
with the transfer and new registration of the property in the presence of the
official notary. Once this has been done and the property is registered at the
Land Registry Office and Local Tax Office, and is legally yours. You should
make sure that the registration document (Registo) is in your name and is
lodged with the Land office and also in the Local Tax Office as soon as possible
after the signing of the "escritura". There are strict time limits
imposed.
Fees and Commission
The purchaser is liable for transfer tax (known
as IMT), stamp duty (known as IS) and notarial / registration / lawyer fees.
Transfer Tax (IMT)
Transfer tax and stamp duty on that tax must be
paid just before the "escritura" is signed. The transfer tax plus
stamp duty is Portugal's
equivalent of the UK's
Stamp Duty. Once the transfer tax has been paid a Transfer Tax and Stamp duty
(IMT + IS) documents are then issued by the tax office, which proves the
payment has been made. The transfer tax to pay depends of the value of the
property that is declared. |
