Real estate in Portugal: contract of purchase and sale
Buying a home in Portugal is as special as it is complex. To make sure everything goes smoothly, there is nothing better than being well informed at the time of your real estate purchase. This can be done on your own if you speak the language correctly but can also be done by having a english-speaking estate agent accompany you to the property market who will act as a go-between and keep your interests at the forefront.
If you wish to be accompanied by a Portuguese real estate agent for your property purchase in Portugal, use the button below and the dedicated contact form. A professional will come back to you for a first contact about your project.
Contract of sale and purchase of real estate in Portugal
It is important that you have a clear idea of the process of buying real estate in the country and more particularly of the characteristics of the promise to purchase and sale contract. It is also fundamental whether you are buying or selling a property in Portugal as this is the main element that will protect both parties if it is properly drafted.
In this article you will find a detail of the advantages of this real estate purchase or sale contract but also the external elements that can affect your purchase or sale and to which you should therefore pay special attention.
From the first visit of the property in Lisbon or elsewhere until the conclusion of the sale at the notary’s office, there is a period of time during which there may be unfavourable situations for the purchase of your home in Portugal. Thus, the real estate sale and purchase contract will allow you to avoid other buyers to outbid you and you will be legally assured that there are no unforeseen events, delays, penalties or other inconveniences.
Usually used in Portugal, the drafting of this contract is not compulsory by law but it can be very important and useful to carry it out when buying a property or land in the country.
- It is a written document
- It has legal value (Article 410 No. 1 of the Civil Code).
- It is drawn up and signed between those who promise to sell the property and those who promise to buy the same property.
Portuguese real estate purchase and sale contract
The real estate purchase and sale contract must comply with certain rules and contain certain key elements and information such as :
- the identification of the seller and the buyer of the property: full name, address, civil status, identity card number and tax identification number (TIN)
- Identification and characteristics of the property: Address, type, description, additional parts (such as a swimming pool, garage or annex)
- Elements of the building or housing permit or proof that it has been requested from the Municipal Council by a declaration
- The selling price of the house in Portugal and the method of payment
- The value of the deposit paid by the buyer and the date of payment (usually 10 to 20% of the value of the sale of the property). Element that proves the seriousness and the real intention of the buyer. This amount is delivered at the time of the execution of the real estate sale and purchase contract.
- Confirmation that the property is not subject to any charges at the time of signing the real estate contract.
- The date foreseen for the execution of the public act (Final Purchase) and the respective penalties applicable in the event of delay or annulment
- Confirmation that the dwelling is in a habitable condition with all that this implies: networks, water, electricity, sewerage and gas installation in normal operating conditions.
Application of the Portuguese real estate contract
This real estate purchase and sale contract, although it is not mandatory, has certain particularities that you should be aware of before signing it. Indeed, certain factors external to both parties can influence the finalization of the sale. It is therefore preferable when buying a property in Portugal, to be aware of these elements and to know how to protect yourself from them if the sale or purchase does not take place.
When the buyer does not have the necessary amount of money for the purchase and has to resort to bank financing, the approval of the real estate credit is a factor that can interfere negatively in the acquisition of the property. You must make sure in advance that the bank will approve the loan for the amount necessary for your purchase. You should therefore include a clause in the contract that cancels it if the requested credit is refused, without having to forfeit your deposit.
If you want to buy a house under construction in Portugal and the builder does not finish the work, for example, the property contract will legally allow you to demand the repayment of double your deposit. This is also valid if the owner renounces to sell the property for any other reason.
The next step is to consider the obstacle that a change of ownership may present. To remedy this, the law provides for the possibility of drawing up the contract with the buyer of the property, its seller but also with third parties. The signature of these third parties allows the buyer to acquire the property in question regardless of who owns it at the time of purchase.
Another external factor to be protected against is the death of the seller. In this case, even if the owner refuses to sign the contract, be aware that the law provides for a mandatory action for damages. This action allows the seller’s signature to be replaced by a judicial authorization, thus allowing the buyer to purchase the property even in the event of the seller’s death.
The completion of this contract of protection of real estate purchase or sale can only be done if you are not able to obtain a document from the municipal council. It is only after an inspection by the municipality of four key areas (sanitation, water, gas and electricity) that this licence can be granted or not.
If you are planning to buy in Lisbon or elsewhere, please do not hesitate to consult the latest information about the property market in Portugal or the taxation of property purchases.
