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Property of the week

Property of the week

2 bedroom apartment
Lisbon historical centre
99,000 euros
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Buyer's Guide

Step by step



WHY PORTUGAL?

* The Portuguese property market is a mature one, built up over the last thirty years.

* The country has an excellent infrastructure well served by motorways and regional airports.

* The government has a responsible approach to environmental issues with strict planning laws.

* In order to protect the consumers' rights in the construction and real estate market, the last four years has seen regulatory activity evolving significantly.

* There is in existence a relationship between Portugal and England which amounts in effect to the longest standing alliance which the world has known. We have had treaties and have been allies for over 600 years. This is one reason why the British are so welcome in Portugal!


HOW?

Below is an extract from the 'Emergency Guide to Property in Portugal', written by Portuguese solicitor Lita Gale. Available for purchase from www.litagale.com

"In most jurisdictions a contract can be made very simply, in writing, orally or by conduct, therefore, care must be taken to always read the small print. I strongly recommend that you do not sign documents or pay any monies until first having consulted your legal representatives.

Buying a Home in any country can be traumatic but it does not have to be and the joys and rewards of owning your own home make it all worth while. Good luck and enjoy your home in the sunshine!

This is a Quick Glance Guide to Terminology and the immediate checks to be made if you are interested in a particular property and before making any kind of offer on a property and to introduce you to some terms more commonly used and their Portuguese equivalent and at the same time to give you an explanation of the basic steps, which you will encounter throughout the buying process.

Power of Attorney ~ Procuração a person can instruct another to represent him/her by giving a Power of Attorney.

Consider Do you need to grant one? Do you understand the extent of the powers being granted and how the power may be cancelled? Do you have an up-to-date passport?

Make sure that you obtain independent legal advice before giving a Power of Attorney. It is illegal for a non qualified legal person to provide certain legal services.

There are many considerations that need to be taken into account such as: to whom you are giving the Power of attorney, and what protection you will have if wrong use is made of that power of attorney?

Mortgage/Charge ~ Hipoteca The bank normally arranges to value the property and issues a mortgage offer. The lending will be secured with a mortgage/charge over the property.

Mortgage Offer ~ Oferta de mútuo empréstimo e Hipoteca The bank’s formal confirmation that it will finance the purchase of the property. Consider You should not commit to purchase or enter into a building contract until you are certain that the bank will finance the transaction. If possible, the Promissory Contract should provide for the borrowing to take place with a ‘let-out’ clause in the event that you cannot fund the purchase.

Provisional Registration ~ Registo Provisório The mortgage or the purchase is registered at the Land Registry prior to the purchase of the property, after exchange of contracts.
Consider This is a very useful tool and step and should be used whenever possible but it can realistically be used in respect of existing properties.

Exchange of Contracts ~ Assinatura do Contrato Upon the signing of the Promissory Contract, the Seller becomes bound to sell and the Buyer bound to buy the property and the deposit is then payable to the Seller who normally retains it.
Deposit ~ Sinal Usually 10 to 20% of the Purchase Price.

Consider Reserva/Reservation It is common to enter into a reservation agreement to secure a property where certain conditions need to be met, such as for example, obtaining a mortgage offer, entering into a formal sale and purchase agreement, obtaining outline planning permission etc.

Substantial Breach ~ Imcumprimento Under normal circumstances a substantial breach of c ontract by the Buyer entitles the Seller to retain the deposit. A substantial breach by the Seller entitles the Buyer to receive twice the amount of the deposit.

Consider not every breach is a substantial breach of contract and specific steps have to be taken to prove breach of contract

Minor Breach ~ Mora Usually dealt with by way of damages.

Deed ~ Escritura. Also used to refer to the transfer of the property.

Habitation Licence ~ Licença de Habitabilidade/ Licença de Utilisação
Confirms that the property has been constructed in accordance with the Planning Permission. A Property may not be sold unless it has a Habitation Licence.

PDM ~ Plano Director Municipal Shows what may be built on the property and the area.

IMT ~ Imposto Municipal sobre Transmissões Property Transfer Tax (formerly Sisa Tax), payable prior to the signing of the Deed of Sale and Purchase. This payable normally on a sliding scale.

Fiscal Number ~ Número de Contribuinte Equivalent to a national insurance number. It is required by anyone who has property or other interests in Portugal such as Bank accounts.

Fiscal Representative ~ Representante Fiscal Anyone who has an interest in property or other assets in Portugal and is non resident in Portugal for tax purposes must have a Fiscal Representative. The representative is responsible for passing on to the non resident all communications received from the Portuguese Tax Authorities which also applies to their spouses.

Notary Public ~ Notario Público A property is transferred when the Seller and the Buyer sign the Deed (Escritura) before a Notary Public in Portugal. He/she acts as an Officer of the State in a similar capacity to that of a Registrar.

Consider The Notary Public’s role in Portugal is different to that of a Notary Public in the UK or the USA for example. In England and Wales the work of a Portuguese Notary Public is normally undertaken by Solicitors and they do not have any more powers than Solicitors. You do not need to sign your power of attorney before a Notary Public or the Consulate. Notaries are not governed by the Law Society.

Land Registry ~ Conservatória do Registo Predial. A Property of whatever nature may not be transferred unless it has been registered at the Land Registry in the name of the Seller. If the Seller is not the owner, the true owner will have to sign the transfer Deed.

Consider Whenever the property is built, altered or extended, such alterations should be registered with the Fiscal department and the Land Registry, so that the description of the property in their records matches the physical property.




Fiscal Department ~ Finanças The equivalent to the local Inland Revenue tax department for the area where the property is situated. A property may not be transferred unless it is also registered at the Fiscal Department.

Insurance Policy ~ Apólice de Seguro Arrangements must be made as soon as possible for insurance cover once you purchase the property. If the property is in an apartment block there is normally an insurance policy for the whole block. If you want to terminate an insurance contract you must serve notice in writing.

Consider Is the property insured? Have any claims been made on the policy? Do you need insurance cover for contents, maid and gardener? and remember to keep all receipts in case anything goes wrong so that you can prove ownership of any goods or may be damaged, lost or stolen.

Marital Regimes ~ Regime de Bens - there are 3 different types of marital regimes. Take care to know what this means and the effect of quoting the wrong marital regime in Portugal.

Consider Where were you married? Have you entered into a Partnership agreement? Have you entered into a Prenuptial Agreement?

Rights of Preference ~ Direitos de preferência Neighbours, Local Authority and or the Portuguese Architecture Institute (IPPAR) may also have rights to acquire the property and they must first say that they are not interested in acquiring the property.

Consider do not enter into a formally binding agreement unless these rights are taken into consideration. The Transfer deed may not be valid otherwise.

The Parties ~ As Partes Who are they? Where do they live? Are they bankrupt? Or, if the party is a company, are they in liquidation? Who has the power to represent them? Is the Seller registered as the owner of the property.

Consider always have this information verified independently.

Seller ~ Vendedor Ensure that you or your legal representative makes identity, residency and status checks.

Buyer ~ Comprador As for the seller, ensure that you or your legal representative makes identity, residency and status checks.

Estate Agent ~ Agente Imobiliário Estate agents in Portugal must be registered with their governing body.

Lawyers ~ This expression generally describes a person providing legal services and can be a Solicitor, Advogado, Solicitador, Prosecutors etc.

Solicitor ~ Advogado

Advogados ~ Are the equivalent to an English Solicitor and are addressed as doctors in Portugal.

Solicitador ~ Equivalent to an English Legal Executive. This is not a Solicitor.

Consider Many “Solicitadores” pass themselves off as “Solicitors”. They are not and they do not have the same level of study as Advogados or true Solicitors.

Non qualified Professionals ~ Be aware that non qualified legal persons are not permitted to undertake certain legal work and do not have Professional Indemnity Insurance to cover their work.

Consider A qualified legal person is a member of a professional body such as the Law Society or the equivalent in Portugal, being the Ordem dos Advogados or in the case of a Legal Executive in the UK the Institute of Legal Executives and in Portugal the Camara dos Solicitadores.

Consider Do not fall easily for the old line “you do not need a lawyer”, or easily accept the recommendation of the Estate Agent or the Seller or the Developer unless you can truly understand all that is going on.

Bank Account ~ Conta Bancária It is advisable to have a bank account in Portugal and you will also need to provide evidence and identification of who your parents are, your residency and proof of income and what is your profession as well as fiscal numbers.

Planning ~ What is the planning status of the Property? Has the work been finished recently? Is it more than 5 years old? What guarantees are there for the construction? Does the property have a Construction Licence? Does the property have a Habitation Licence?

Consider A property cannot be transferred unless it has a Habitation Certificate or proof that it is exempt from that requirement.

IPPAR Instituto Português de Patrimonio Arquitetonico The Authority who decrees whether a building or area is a listed building and the conditions imposed.

Listed Protected Buildings ~ Is the property a listed building? What conditions have been imposed by IPPAR or the Local Authority?

Listed Protected Areas Is the property situated in a Listed Protected Area? What conditions have been imposed by IPPAR or the Local Authority?

Caveat emptor ~ Buyer beware The property and contents are normally sold as seen other than as implied but define that normal wear and tear is excluded

Survey ~ Inspecção da Propriedade This should be done by reference to the plans of the property and its description at the Land Registry, Fiscal Department and Habitation Licence where there is one.

Engenheiro ~ Engenheiro Civil this is the equivalent to a Chartered Surveyor in Portugal is normally addressed by their title e.g. Sr. /Sra Engenheiro (a).

Valuation ~ Avaliação This is normally carried out by the Banks but it is not the same as a Survey.

Consider Even if the property is new you should consider always having a survey and valuation carried out.

Promissory Contract ~ Contrato Promessa de Compra e Venda This normally is provided by the Seller together with Evidence of Title and the plans of the property and contains the usual terms and conditions for buying the Property.

Building Works ~ Obras. Architect ~ Arquitecto

Building Contract ~ Contarto de Empreitada Which deals only with the construction, refurbishment or other building works rather than the sale of the land.

Consider always use a professional person to oversee the drawing up of a building contract.

Inventory ~ Inventário If the property is being sold with contents? If so these should be detailed in full and you should enquire as to whether there are valid guarantees in force.

Inspection ~ Inspecção It is highly recommended that you inspect the property and the contents and see if all is in working order before exchange of contracts and certainly before completion of the sale of the property.

Off Plan Properties ~ Certain property types such as apartments or property under Horizontal ownership which is under construction, are not capable of provisional registration. You are agreeing to buy a property which will be constructed and asked to pay a deposit and until title to that property is transferred you do not have any title to the property as it normally remains registered in the name of the vendor.

Book Completion ~ Marcação da Escritura The Promissory Contract normally provides for who is to book completion of the sale and purchase and also a mortgage where there is to be one. It has to take place before a Notary Public in Portugal.

Deliver Documentation ~ Entrega dos documentos In order to book completion it is necessary for all of the property documentation to be delivered in advance to the Notary as well as the identification documentation of the parties, such as copies of passports, powers of attorney searches etc.

Bank transfer ~ Transferência Bancária Make sure that you have the monies in place, ready for completion as soon as possible.

Consider Banks charge for transfers and for the clearance of cheques. Make sure that sufficient funds are transferred.

Pay Transfer Tax ~ IMT - has to be paid before the transfer of the property takes place and proof of transfer delivered to the Notary Public.

Completion ~ Escritura Completion of the transaction takes place at the office of the Notary Public who acts as a Registrar and enters the deeds in his/her books.

Signing Deeds ~ Assinatura da Escritura The Notary reads the Transfer Deed out aloud and the parties sign on their own behalf or on behalf of the persons they represent.

Translators ~ Tradutores If one or more of the parties do not speak English it will be necessary for a translator to be present who will also sign the deed attesting as to the authenticity of the translation.

Copy of Deed ~Cópia da Escritura The Notary always retains the originals and following completion, issues Certified Copies.

Certified Copy ~ Cópia Autenticada A certified copy of a deed or documents is usually done by the Notary Public in Portugal but can also be done by the Advogados.

Registration ~ Registo Following completion, the transfer and mortgage should be registered at the Land Registry.


Wills ~ Testamentos It is always advisable to make a Will but in certain cases your home Will may be sufficient.

Consider Take great care before making declarations or signing documents which may affect your residency and domicile status which could have implications as to the validity of your will. Each case and each person is an individual and therefore each case should be considered separately.


This Article is designed to be for guidance only and as informative and positive as possible but as with most legal matters its contents can at times make the process seem overwhelming and for that, I apologise, but anything to do with property is always a question of “Location, Location, Location!!!!” You should add to that expression “Information, Information, Information!!’’ too.

Lita Gale"


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