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Buying & Selling Property
 
  • The legal regulations are very specific when buying a property in Portugal, however, it is always advisable to use qualified legal advice or a qualified estate agent in any transaction. 
  • It is also important to insure that any plans in the Town hall referring specifically to the property do physically agree with the existing construction. A property for living purposes must also have the following documentation:
    1. A habitation licence for property constructed after 1951 or a certificate that the property was in existence from before 1951. 
    2. A certified insertion in the records of the Land Conservatory 
    3. A detailed "Caderneta Urbana" from the Tax Office 
Commercial and Industrial properties require: 
  1. A utilisation licence 
  2. A certified insertion in the records of the Land Conservatory 
  3. A detailed "Caderneta Urbana" from the Tax Office 
In the case of a rural property the following extra documentation is necessary: 
  1. A detailed "Caderneta Rustica" from the Tax Office 
  • Each Town hall and Tax Office tend to have local interpretations of the laws and regulations and these should be first checked. It is often very necessary to implement specific searches prior to acquiring a rural property.
  • There is specific law Decreto-Lei Nš 285/92 regulating Estate Agents practices. The seller of a property normally pays commissions but it is not a controlled percentage and it is sometimes agreed upon by the leading Estate Agents in each area. This law will be replaced by complete new legislation Decreto-Lei Nš 77/99 which will come into effect as of 16-06-99.
Here are the basic steps to help understand the procedures and legal acts that are involved in acquiring a property in Portugal. It is recommended that qualified legal advice be sought in any purchase. 
 
  1. Only use a Government Licensed Estate Agent. 
  2. It is quite normal for both Parties to initially enter into a Promissory Contract detailing the conditions of Sale - "Contrato de Promessa de Compra e Venda". This Contract is then legalised by registering it in the Notary Office. This Contract is legaly binding on both sides and the law requires the seller to repay twice the deposit should he withdraw from the sale. Likewise, it the buyer fails to complete he forfeits  the total of his deposit. There are specific laws on this act that a Lawyer will define. 
  3. It is often convenient for the buyer to ask a third party who he trusts and speaks the language to act for them in the matter. A document called "Procuração Pública" is prepared with the necessary details and registered in the Notary. This can also be implemented in Portuguese Consul in a foreign country or by your local Notary after which translation into the Portuguese language can be done. 
  4. Every buyer is required to obtain from the Tax Office (Finanças), a fiscal number. 
  5. Prior to act of completion, the purchase may be subject to a payment called "Sisa" to the Tax Office. Depending upon the nature of the purchase the amount can vary. In the case of residential properties the "Tabela de Cálculo de Sisa" in force for 1997 (this table is normally subject to annual change), is as shown in the table below. In the case of rural (Rustico) properties the calculation is at present 8% regardless of its value.
  6. Price in Escudos % to apply Amount to reduce
    up to 11,170,000$00 0% 0$00
    11,170,000$00 to 15,300,000$00 5% 558,500$00
    15,300,000$00 to 20,400,000$00 11% 1,476,500$00
    20,400.000$00 to 25,500,00$00 18% 2,904,500$00
    25,500,000$00 to 30,900,000$00 26% 4,944,500$00
    above 30.900.000$00 10% 0$00
     

An example: 
Suppose a property will cost 23.500.000$00. Multiply this figure bu 18% = 4.230.000$00 then deduct 2.904.500$00. Total tax to be paid 1.325.500$00

When all the above requirements have been completed the sale can proceed with the act known as "Escritura de Compra e Venda" which takes place in front of the  selected Notary and is recorded in his official books. It is at this time that the balance of purchase has to be made according to the signed Contract in Point 2 above. The Notary Office then issues normally a few days later a photocopy of the entry of this act which should not be mistaken for a "Title Deed" as known in the UK. 

On proof of the above act the property in question is then registered in the Land Registry (Conservatória do Registo Predial), in the new owners name. It is not obligatory for this to be don until the owner wishes to sell the property, however, it is strongly recommended that this registration is made immediately as a preventative measure against possible financial abuse by the previous owner. 

Consequently all utilities like water, telephone, electricity have to be altered into the name of the new owner. 


Additional costs:

On top of the local taxes ( Sisa ) as mentioned above one should take allow for the following additional costs: 
 
1. Notary fees: Approx. 1.25% of the value mentioned in the escritura
2. Registration fees: Approx. 0.05 % of the value
3. Legal fees: Normally between 1-4 % of the value, this depending on the complexity of the case and the person used to represent you.
4. Changing utilities: Depending but somewhere between 25,000 and 50,000$00
 

 

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