Buying Property Process13 June 2017
The process of buying a property in Portugal is similar to that of the UK. There are essentially two stages;
- The preliminary (promissory) stage
- The completion stage
Each comes with its own set of contracts.
As explained in our Legal and Tax section before starting the process of buying a property in Portugal it is important that you open a bank account and acquire a tax number (also known as a personal fiscal number).
Once the buyer and seller have agreed on a purchase price, both will sign a preliminary sale and purchase agreement (stating the agreed the price, the payment conditions and any other conditions of the purchase). This is called the “Contrato de Promessa de Compra e Venda”.
The promissory sale and purchase agreement is a private document that must be certified by authorised entities such as lawyers.
At the date of execution of the promissory agreement the buyer usually pays a down payment in the region of 20%.
It is quite common for developers to start selling the properties even before having the construction license. Strictly speaking the promissory sale and purchase agreement can only be executed after the issuance of the construction permit, so in this case the parties sign a simple reservation contract. This is quite a simple document where the buyer pays something to guarantee that the properties will not be sold to another entity.
This stage of the process normally happens 3-4 weeks after the completion of the promissory phase and essentially it encompasses the execution and registry of the purchase.
It is at this stage when the buyer must pay any remaining balance and also any taxes due on the purchase. Normally these funds have to be with the Notary before this stage is undertaken.
The execution of the acquisition, which may only occur after the issuance of the Use Permit by the Municipality, occurs when the buyer signs the “escritura” contract, called an ‘escritura de compra e venda’. The property is then registered (for a fee of €250.00) with the land registry department and also the local tax office.