Buying in Portugal

Purchasing a property in Portugal should be a stress-free

and straightforward process

Most property purchases in Portugal are entirely trouble-free and by working with experienced professionals, buyers can avoid the potential pitfalls. A good estate agent and a lawyer with solid experience in real estate conveyance will ensure that your purchase is a smooth and pleasurable process.

The four stages of property purchase are:

1. Agreeing on an offer, appointing a lawyer and diligence
2. The promissory contract
3. The title deed
4. Registration

Stage 1 – Agreeing on an offer

If something goes wrong with a sale, it is more often than not during this first stage, between the time when a sale has been agreed and the promissory contract is signed. In most cases, vendors will not agree to remove their property from the market until the promissory contract is signed and a deposit has been paid, so the longer this stage is drawn out, the higher the chance of the vendor finding another buyer.

The agent plays an important role here in ensuring that all paperwork relating to the property was in order before placing the property on the market, hence avoiding lawyers discovering problems such as illegal extensions, or swimming pools without planning permission that could hold up a sale. During diligence, the lawyer will carefully check the land registry documents alongside the tax certificate and habitation licence whilst performing searches to establish the property’s status with regard to court injunctions, mortgages, etc. Only once all is in order will your lawyer agree to proceed to the promissory contract.

The buyer would usually be present to sign both the promissory contract and the title deed, however, should this not be possible the buyer may vest power of attorney in a third party, usually this being their lawyer.

Stage 2 – The promissory contract

If all paperwork is in order, it should take no longer than a few weeks at the most to reach promissory contract, hence securing the deal for both the vendor and the buyer. The deposit is usually 10% of the agreed purchase price and under normal circumstances this would be non-refundable should the buyer not complete the purchase. However, should the vendor back out of the deal after having received the deposit and having signed the promissory contract, the vendor would usually have to pay back double the amount of all funds received as a deposit, as compensation to the buyer.

Stage 3 – The title deed (escritura)

The title deed, signed before a notary, includes a detailed description of the property and records the transaction with the authorities.

Stage 4 – Registration

It is the buyer’s lawyer’s duty to file the title deed with the relevant government bodies, hence updating the official records reflecting the change of ownership.

The costs

Lawyers usually charge the buyer a fee of 1% + VAT of the total transaction value. The buyer is also liable to pay the property transfer tax known as IMT. This tax is calculated on a sliding scale varying between 1% of the total amount up to €92,407 and a maximum of 6% for any amount above €550,836.

In addition to this, the buyer must also pay the notary and registration fees along with costs for general documentary expenses, which usually add up to around 1,5% of the purchase price in the case of a cash purchase or up to 2.5% if a bank and a mortgage is involved.