LEGAL INFORMATIONS YOU SHOULD KNOW:

BUYING IN PORTUGAL F.A.Q. (FREQUENTLY ASKED QUESTIONS)

We have listed below the questions most frequently asked about legal matters by our clients these will help you understand the process of buying a property in Portugal.
If you have any questions not listed below, please feel free to contact us by email. info@rey-estates.com

F.A.Q.

Are any permissions needed?
Do I pay a deposit to the vendor?
When are the contracts exchanged?
What if I change my mind?
Is a Portuguese lawyer necessary?
How do I choose a lawyer to represent me?
What will the lawyer do for me?
Do I need anyone other than a lawyer?
What is a notary?
Can you assist in raising a mortgage?
Are there any restrictions in transferring money to Portugal?
Are there any additional fees to pay like stamp duty in the UK?
What are my ongoing commitments and obligations ?
What happens in the event of death?
Are properties freehold?
Who pays commission?

Any more questions?
The next step.

Are any permissions needed?

Generally, no special permission is required to buy a property in Portugal (unless it is in a sensitive military area)
Can I negotiate on the purchase price and conditions?
Once you have chosen a suitable property, the purchase price, terms and conditions are discussed with the vendor. Your offer may be subject to a mortgage, or you may require a delayed completion. This must be stated at the time of the offer. We can recommend a lawyer who can help you with this process.

(back to top)

Do I pay a deposit to the vendor?

A deposit is not normally paid direct to the vendor, but to the selling agent or lawyer representing you in your purchase. The minimum normally required is 5% of the purchase price. This reservation deposit is paid by cheque or telegraphic transfer, and will reserve the property until contracts can be exchanged at which time a further 10% paid over.

(back to top)

When are the contracts exchanged?

Upon acceptance of the offer by the vendor and payment of the reservation deposit, the next step is to exchange promissory contracts. This normally takes place within about 3 to 4 weeks once you have issued your legal representative with a limited power of attorney for the conveyance of the selected property has been issued and the necessary funds have been transferred to his or her client account. Your legal representative would have made steps to make sure the property is free of debt or problems as above, and the promissory contract will set out the agreed selling price and the date of completion at the notary. It is normal practice at this stage to pay 10% of the purchase price.

(back to top)

What if I change my mind?

You are committed by the signing of the promissory purchase contract, and if you choose not to complete the transaction you will lose your 15%. If you have not reached this stage of the purchase all you will lose is your reservation deposit. Should the vendor decide not to complete the sale then he must return all deposit in double.

(back to top)

Is a Portuguese lawyer necessary?

As the Portuguese legal systems is different to Britain’s and Ireland’s, your lawyer will make checks and enquiries on your behalf, the whole process is little more troublesome than the buying and conveyance of a property in the UK or Ireland.
Problems can arise when prospective buyers decline to use a lawyer and later find legal complications, which affect their ownership rights.

(back to top)

How do I choose a lawyer to represent me?

We can recommend a number of different lawyers who can represent you in your purchase. They will speak in your native language, can be reached by phone, fax, and email, and are happy to ensure that your purchase is as trouble-free as possible. A lawyer will provide legal guarantees that the purchase of your property is free from any debts or charges, and that all fees including electricity, water and community fees are paid up to the day of completion.

(back to top)

What will the lawyer do for me?

Having instructed a lawyer to handle the purchase, you have the reassurance that all the important aspects will be covered.
1. The title of the property is checked.
2. The person selling the property actually owns it.
3. Whether there any charges on the property.
4. Building licenses and permissions are in order, where applicable.
5. The terms and conditions stipulated by the seller are checked for fairness.
6. A report of the findings in then compiled for you to consider, before proceeding with the signing of Promissory Contracts

After the signing of the contracts your lawyer will then arrange:
1. The transfer of the title into your name.
2. For any fees and taxes to be paid.
3. For the title in your name, to be registered in the Local Land Registry.

(back to top)

Do I need anyone other than a lawyer?

Under Portuguese law any non Portuguese, non resident purchaser of property in Portugal must appoint a Fiscal Representative in Portugal. The Fiscal Representative will arrange your Portuguese Tax Number (needed for the purchase) and manage any taxation liabilities that you may have in Portugal on an ongoing basis. This covers such things as Council Tax, Income Tax in the event of rentals and Capital Gains Tax in the event of future sale. Your lawyer should be able to recommend a specialist in this are to you.

(back to top)

What is a notary?

A notary formalizes the sale of a property; they check that the title deeds and purchase are in order before the final payment is made, and the purchase document signed. Your legal representative will then with a copy of the Escritura (Title Deed) register your property with the local land registry office, and the final registration of the documentation normally takes around 1 month.

(back to top)

Can you assist in raising a mortgage?

We can give you advice and assistance in obtaining finance in the UK. Additionally we can recommend Portuguese banks that specialize in offering mortgage facilities to foreign purchasers where the only security required is the property or property “to be built” in Portugal.

(back to top)

Are there any restrictions in transferring money to Portugal?

There are no restrictions in transferring money in or out of Portugal. It is always best to transfer sterling and exchange it in Portugal. At a later date your Fiscal Representative or your lawyer can help you open a bank account in Portugal. In the meantime any transfers associated with the purchase should be remitted to your lawyers Client’s Account.

(back to top)

Are there any additional fees to pay like stamp duty in the UK?

Yes there are; as a rule you should allow on average an additional 6% on top of the purchase price, to cover fees including the notary, property registration and transfer tax. The exact costs depending on the property purchased are as follows:
• Notary and land registry fees around 1,5%
• IMT Tax (Stamp Duty) 6,5% on any land purchase
• IMT Tax (Stamp Duty) between 6% and 0% based on a sliding scale depending on the sale price of apartment, townhouse or completed villa purchase.

(back to top)

What are my ongoing commitments and obligations ?

If you spend less than 6 months per year in Portugal then you classed as non-resident. However you are obliged to:
Appoint a Fiscal Representative in Portugal who will take care of paying your local annual property taxes (Council Tax ) and paying any applicable taxes on income derived from activities in Portugal, including that derived from renting your property.
Insure your property and contents. Additional liability insurance cover if the property is to be rented out.
Pay car taxes and insurance where applicable
Pay electricity, water and other bills.

If you spend more than six months a year in Portugal you are deemed a permanent resident and would be expected to pay taxes and social security contributions. Many of the above points are requirements and income tax will usually be assessed on your worldwide income. It is common practice for foreigners living in Portugal to employ the services of an accountant or gestor to advise on this.

(back to top)

What happens in the event of death?

Jointly owned property does not automatically pass in full to the surviving spouse or partner, but is dealt with according to the wishes expressed in a will, or under the rules relating to intestacy. Whilst it is not compulsory it is much cheaper, quicker and more straightforward to make a will in Portugal.

(back to top)


Are properties freehold?

Yes they are.

(back to top)


Who pays commission?

The vendor pays our commission; you the buyer pay no fees or commission.

(back to top)


Any more questions?

If you require any further information, or have any questions please do not hesitate to contact us! info@rey-estates.com

The Next Step

This is just a guide to buying a property in Portugal. Though the matters themselves are sometimes more involved than indicated here, the whole process is usually smooth and trouble free.
So take the next step to owning a property in Portugal, simply contact us to discuss your needs and requirements, and/or to arrange an inspection visit.

(back to top)