Buying a property in Portugal
The following important information is a basic guide to help a Foreigner understanding the necessary procedure and legal requirements, regarding the purchase of a property in Portugal.
This information is a general guide to help you understand how to buy property in Algarve, and do not substitute a proper & legal advice - For more professional advice contact a Solicitor or a Lawyer.
Reservation of property
When you have decided to buy a property you will be asked to make a reservation deposit payment and sign a reservation proposal "Proposta de Compra" to ensure that the property can't be sold to another purchaser by your estate agent. The Estate Agent will reserve the property during 15 days. This document is not a contract. The reservation deposit is refundable.
Promissory contract
After the price is agreed, the next step is to sign a Promissory Contract "Contrato de Promessa de Compra e Venda" detailing the conditions of the sale. This contract is legally binding on both parties; Should the Vendor not complete the sale, he is required by law to repay twice the amount of the deposit to the Buyer. Should the Buyer not complete the purchase, the Vendor is entitled to retain the deposit paid. At this moment a date for completion will be fixed, and it is customary to pay a minimal deposit of 10% of the price.
Tax/Fiscal number
An application has to be made to obtain a Tax/Fiscal Number "Numero de contribuinte" from the Tax Office. Without this Tax/Fiscal Number document, a Buyer will not be able to make the deeds, to pay the property taxes or opening a bank account in Portugal.
Technical certificate
Since 16th August 2004, a new requirement has come in effect from the Technical Certificate (BI-Ficha Tecnica). All constructed properties, which were completed, must have a Technical Certificate, which gives the technical details of the construction. This document is provided by the builder / owner, and is part of the property.
License of Use
This document "Licença de utilização" certifies the use of the property approved by the local Town Hall "Camera Municipal", this license reassures that the property was built according to the plans and laws. The properties built before 1951 are not obliged to have this document.
Property Tax certificate
This document "Caderneta Predial" certifies the inscription of the property for fiscal purposes and also identifies the owner On the local tax Office, it describes the property: areas, nr. of rooms, area and type of plot, etc. From the day of signing of deeds the new owner have 30 days to register the transfer ownership at the tax department.
Property Registration certificate
This is the most important document regarding a property "Certidão Predial", it is given by the Land Registry Office and contains all the history of the property since it was a plot of land. Once the Deeds have been completed the new owner of the property should have it registered in their name. It is the registration document that gives the prove of ownership.
Survey of the property
If you are buying a new build property there is a 10 year builder's guarantee from the date of construction. If you are buying a resale property it is possible to make arrangements and advise to have the property surveyed.
Deeds
To complete the purchase of the property it is necessary to sign the deeds by both parties, which take place in front of a Notary and it is recorded in official books. At this act the Buyer make the final payment to the Vendor, who will simultaneously pass over possession of the property. The Notary then issues a photocopy of the act. Once the Deeds have been completed the new owner of the property should have it registered in their name.