Buying Process

It is advisable to use an established local agent with a proven track record so you can benefit from their local knowledge and contacts. A reputable agent will ensure that all the relevant property documentation is in place before listing a property which will save time and potential problems during the sale procedure. Local agents are also in a good position to recommend efficient and trustworthy lawyers. Throughout the sale process the agent will liaise with all parties involved, overseeing each stage and preempting any problems.

A licensed estate agent in Portugal is obliged to hold copies of the documentation listed below to verify the property’s legal status and owner’s identity

• Seller’s Identification – passport or ID card
• Seller’s Fiscal Number – tax registration number
• Caderneta Predial - property tax document which shows the current property owner, the property tax number, the property’s dimensions plus the local taxes payable annually.
• Conservatória do Registo Predial – property/land registration certificate. This is a description of the property detailing its legal owner and any outstanding debts on the property
• Licença de Construção - building licence. Necessary when a building is being sold under construction
• Licença de Utilização – habitation licence issued by the local town hall showing the property meets the legal construction requirements. Only residential properties built after 1951 require a habitation licence.
• Escritura - Existing title deed dating from the current owner’s purchase. This is only necessary for resales.
• Ficha Técnica - technical details of the construction of the property; relevant to all properties completed after March 2004.
• Energy Certificate – current certificate showing the property’s energy performance now required for marketing purposes.
• Inventory – full list of items included in the sale.

• Views the property with their chosen estate agent
• Makes a verbal offer through the agent who will negotiate the purchase price on their behalf
• Once an offer has been accepted the agent will confirm this in writing to both parties (buyer and seller)
• Appoints a Portuguese lawyer. The agent can help you select a lawyer if you don’t already have one and will work closely with your chosen legal representative to make sure the purchase reaches a speedy and successful conclusion
• Pays a reservation fee to the lawyer, if required by the seller to do so
• Appoints a Power of Attorney if they are not going to be present for either of the contract signings. This is usually your appointed lawyer
• Obtains a tax number - this is normally done by the lawyer
• Sets up a bank account which can be arranged by the lawyer
• Agrees a date with vendor (though the agent or the lawyer) for the signing of the Promissory Contract (Exchange of contracts)
• Arranges to transfer a minimum 10% of the purchase price (deposit) to the lawyer ready to be paid to the seller upon the signing of the Promissory Contract. Any amount already paid as a reservation fee will be deducted from the deposit amount
• Signs Promissory Contract in the presence of the lawyer, unless he has given Power of Attorney to the lawyer to sign the Promissory Contract on his behalf
• Pays IMT (Transfer Tax) - usually transferred to the lawyer's bank account to be paid at Escritura
• Signs Escritura (completion final deed). The notary records the sale price and grants full security of ownership

• Receives the relevant property documents from the estate agent and/or the seller
• Checks the documentation and cross references the information with the tax office and the land registry
• Meets the purchaser to discuss the property purchase
• Discusses whether a Power of Attorney is needed
• Sets a date agreed by the vendor and purchaser for the signing of the Promissory Contract
• Draws up the Promissory Contract
• Receives 10% deposit from the purchaser to be paid when the Promissory Contract is signed
• Is present at the signing of the Promissory Contract where a date is set for the Escritura (Completion)
• Arranges provisional registration of a mortgage, if applicable
• Receives payment of the IMT tax from the purchaser prior to Escritura and pays it to Finanças (tax office). IMT tax amounts are listed on page 4
• Is present at the signing of the Escritura at the public notary’s office
• Pays the notary’s fees
• Registers the sale with the Land Registry at a public notary’s office where the sale price is recorded and full security of ownership granted

This normally works out to be approximately 1.5% of the purchase price of the property but for higher value properties the fee can be negotiated down.

Documentation required to open a bank account in Portugal

• Fiscal Number (Portuguese tax registration number)
• Copy of ID card or passport
• Utility bill confirming address of purchaser’s main residence
• Copy of tax return or P60

The documentation required for a mortgage application includes bank and savings accounts, statements and letters of reference. Specifically;

If applicant is employed

• Salary/pay slips for the previous three months
• Latest tax return or P60
• Reference letter from employer

If applicant is self-employed

• Latest bank accounts or company tax return
• Latest personal tax return
• Letter from the purchaser’s accountant confirming the turnover and net profit of the company

The legal process for buying property in Portugal is in two stages; Contrato de Promessa de Compra e Venda (Exchange of Contracts) and the Escritura (Final Deed of Completion).

Contrato de Promessa de Compra e Venda - Exchange of Contracts

The purchaser should appoint a lawyer to whom he can give power of attorney to sign the contracts on his behalf if necessary. Once the purchase price is agreed both purchaser and vendor will sign a Promissory Contract and the purchaser pays a deposit of 10 - 30% of the purchase price. The deposit legally secures the property and under Portuguese law both purchaser and vendor are protected; if the vendor withdraws from the sale the deposit is doubled and returned and if the purchaser withdraws the deposit is forfeit. A date for the completion of the purchase is set at the signing of the Promissory Contract.

Escritura (Completion, Signing of the Final Deed)

The time taken to complete the sale, though normally thirty to sixty days, could be as little as fourteen days depending on whether a mortgage is required or not. Once the Escritura (Final Deed) has been signed the IMT (Land Transfer Tax) and Imposto de Selo (Stamp Duty) is paid and the remaining balance of the property purchase price, plus the notary’s fees, is paid by the purchaser. The property is now registered with the Land Registry Office and legally owned by the purchaser.

Land and property require an IMT (Tax) payment which is paid by the purchasers before the Escritura (final deed) is registered. The funds are usually transferred to the lawyer who pays the tax to the Finanças (tax office) who issues a document as proof of payment. The tax amount will vary depending on the property type and value:

• Habitation: see table below
• Flat rate of 5% for rural property
• Flat rate of 6.5% for commercial property or land for construction