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Guide to buying property in Portugal

Clients consider buying real estate in Portugal for numerous reasons: the Algarve’s all year-round climate, its range of outdoor pursuits, from golf to water sports as well as its compatibility with family life – it is generally considered a safe area, full of activity and fun.

Buying property in Portugal should be relatively straightforward, but we would always recommend that you engage the services of a reputable agent, lawyer and notary. The following information, prepared for us by Dr Patricia Dias, has been compiled as a guide for potential buyers of property in Portugal. It does not seek to provide or replace legal advice which you should obtain, nor is it intended to have any contractual effect.

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When a purchase has been chosen, typically the buyer is asked to sign a promissory contract (the first legal commitment in Portugal on a property purchase) and pay a 10% deposit. If the buyer withdraws after the promissory contract is signed, they may forfeit the deposit; if the vendor withdraws, the buyer's deposit is returned and the vendor may have to compensate the buyer further. A lawyer can explain the specific rules in more detail.

If the buyer is purchasing off-plan and the new development is under construction, the buyer is typically required to pay the purchase price in stages.

The buyer’s lawyer will:

  • Confirm that the property's legal documents are in order
  • Verify that the property is registered in the name of the vendor
  • Establish that no mortgages, seizures or charges are registered on the property
  • Check that the property has all the necessary licences in place

Once the necessary searches have been carried out, the deed or ‘escritura’ in Portuguese, is then booked with a local notary. The deed is the official document identifying the vendor, which is signed before the notary by both the buyer and vendor. After this document is signed the property is then registered in the name of the buyer at the local Land Registry Department and Tax Office.

The escritura includes a detailed description of the property, the name of the vendor, the name of the buyer, the price paid and the verification that all of the documents have been checked by the notary. It also declares that the full price has been paid. If the buyer is not able to sign the escritura, they may give the power of attorney to their lawyer. This document can be signed either in Portugal or in their country of residence.

Notaries are now private in Portugal and their task is to certify that the escritura has been signed and that all legal documents have again been checked. The notary fees will vary according to the purchase price and the time spent on the transaction.

Additional fees include:

  • VAT (IVA in Portugal) will be charged at the legal rate of 23%
  • A registration fee of &euro 250 is typically charged by the Land Registry Department for a straight forward purchase

For more information, we have produced a guide to buying property in Portugal that will give you an introduction to the legalities of buying complicated legal system as well as a brief summary of the taxes involved in the purchase of real estate.

If you have any questions please feel free to contact us, we would be delighted to discuss this process in more detail with you.