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Portugal - Buyers Guide |
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When buying we strongly recommend you to instruct a local lawyer to ensure that all is in order. If dealing with a new development it must be checked that the plot/land is suitable for building purposes, i.e. zoning restrictions, building regulations, access to an official road, availability of water and electricity supply, telephone lines.
In the case of purchase of an apartment or house the lawyer needs to check building planning and other permits, the history, reputation and reliability of a developer and the title to the property.
Portugal continues to align its laws with those of the other EU
countries and adjustments continue to be made. For this reason it is absolutely essential
that you deal only through a competent Portuguese lawyer or agent.
Lawyer
In Portugal called Advogados and many established on the Algarve speak
excellent English. It is always advisable to get an independent recommendation from someone who has used
their services. We will be happy to provide a list of reputable and recommended local lawyers.
The Notary Public
Unlike the UK, the Portuguese legal system depends heavily on the Notário, whose job it is to
ensure that all parties are in agreement and the documentation is
correct. Since January 2005 there are both Public and Private Notarios.
The Buying Process
First, establish your budget remembering that on top of the purchase price an average of around 10%
will be required to cover the various taxes and expenses. There is a Maximum of 6% for properties over
€ 500.000. The cost of the Notary is less than 1% - Registration is normally less than €
500 and lawyers on average 1% plus the equivalent of VAT.
Also factor in an allowance for any renovations, decoration, furniture and if appropriate, the cost of
moving house. If you are in a position to finance your purchase the conveyancing process can be initiated.
Should you have any doubts regarding finance we shall be pleased to help.
Briefly the steps are as follows :
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A Promissory Contract which legally binds both parties to the transaction and starts the whole process in motion. At this stage the purchaser is normally required to pay a deposit of at least 10%, but this may differ. |
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The local Tax Office is advis ed of the transaction and a new tax contribution number (NIF) - which is normally obtained prior to signing contracts - is registered. |
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All documentation required for the purchase of the property is handed to the Notary. |
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The Property Transfer Tax ( SISA ), now called I.M.T., is paid at the local Revenue Tax Office. For current rates and other information, please check with our office. |
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Make an appointment at the Notary's Office. |
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Execute the Deed of Transfer ( Escritura ) at the Notary's Office. |
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The property is now considered as transferr ed to the new owners.
Registration
of Property - this is done at the Land Registry ( Conservatória ), and formalises
the change of ownership. |
Note :
Provided you leave a Power of Attorney with your lawyer, they will be able to sign documents
on your behalf after you have returned home. They will become responsible for presenting to the Notary
all appropriate documentation so ensure that they communicate well in English and that they fully
understand your requirements. In addition to the documents listed here, they will also require
photocopies of the purchasers' passport(s), matrimonial details, statement of occupation and an
outline of your financial arrangements.
The Promissory Contract :
This is legally binding and is signed by the vendor as well as the purchaser. The following points are
important -
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The property to be purchased, must be totally free of all obligation such as mortgages, outstanding debts to the state, local authorities and others. |
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In the case that possible future repairs are to be charged to the vendor, the general condition of the property should be listed and agreed. |
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A comprehensive inventory should be made of the grounds, all buildings and
their contents. |
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The financial consequences of withdrawal by either one of the parties should be
stipulated and explained. |
Other important items in the contract :
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Detailed personal identification of both parties. |
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The exact location of the property and its registration number. |
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The expiring date of the promissory contract and the date when completion is due. |
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The deposit paid by the purchaser, in principal 10-15% of the total amount and the date the final payment is due. |
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The signature of both parties and the date. |
Registration at the Tax Department :
At the Tax Department you will receive a personal Tax number ( Número de Contribuinte )
which the lawyer requires before the contract can be signed.
This will also enable the local finances to send you the annual Property Tax demands.
Property Transfer Tax ( I.M.I. ) must be paid before the transfer can be completed.
The main contract ( Escritura ) will be written by the Notary in Portuguese. It is compulsory to get
a translation by an official translator.
Provided your Lawyer has a suitable Power of Attorney, all of the above can be completed in your
absence.
For more information on buying in Portugal please contact us. |
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