Specific steps to buying real estate property in Portugal
As in many countries the world over, the first step in the real estate purchase
process is the execution of a preliminary contract for sale. In Portugal, this initial
contract is called the contrato de promessa de compra e venda. This particular agreement
is a legally binding contract that sets forth the conditions of the sale.
The contrato de promessa de compra e venda is drawn up by a notary. At the time
that this contract is executed and signed, the purchaser of the real estate is called
upon to place a deposit for the real property that is subject to the transaction.
In Portugal, the deposit that normally is paid by a buyer of real estate is between
ten and twelve percent. If a seller elects not to follow through with the sale,
he or she will forfeit the deposit that has been paid. Of course, there are instances
when a buyer is justified in not closing on a contract for the sale of real estate.
For example, if a seller cannot provide to the buyer a title free and clear, the
buyer then does have the right to walk away from the contract and will not forfeit
his or her deposit.
An interesting feature of the preliminary contract in Portugal is the fact that
if the buyer walks away they will simply loose the deposit. If the "contracto
de compra e venda" (CPCV) has already been signed, the buyer will loose the
value they have paid (usually 10 - 15%).
If the SELLER walks away before the "CPCV" they will need to pay twice
the deposit. If the "CPCV" has already been signed then the SELLER is
obliged to pay twice the amount paid in the CPCV.
Thus, in Portugal, the buyer of real estate is provided with a level of protection
that is found in very few other countries around the world. Indeed, this level of
protection really is almost unheard of anywhere else in the world.
Another requirement that is unique to Portugal when it comes to the purchase of
real estate is one in which the buyer of real estate is obliged to obtain a "Fiscal
Number" from the local Tax Office. This requirement applies to foreign nationals
who are interested in buying real estate in Portugal as well as to citizens of that
country. The process of applying for and obtaining a Fiscal Number is very simple
and does not require a great deal of time. Indeed, the process really involves completing
what is in reality a very simple form and submitting it to the local Tax Office
where it can be processed in no time whatsoever.
The real estate sales process in Portugal moves at a pretty fast clip. Generally
speaking, the signing of the final contract and deed -- which is known as the escitura
de compra e venda -- will occur within three to four weeks of the execution of the
initial contract for sale. Once this agreement and related documentation is executed,
the ownership of the real estate will transfer by operation of the law from the
seller to the buyer. Although the buyer will become the legal owner of the real
estate at that juncture, there still is a bit more work to do to completely conclude
the real estate purchase process.
The final step that a person needs to take when purchasing real estate in Portugal
is the payment of the Imposto Municipal Sobre, a tax imposed on real estate transactions
in that country. In addition, the buyer will be obliged to register -- either personally
or through a lawyer -- the deed with the Land Registry Office.
Overall, there are no added obligations on a foreign national who purchases real
estate in Portugal. The rules, regulations and legal schemes that apply to citizens
of Portugal apply similarly to foreign nationals who are interested in buying real
estate in that country.