Legal process of buying property in Portugal
Buying property in Portugal follows strict procedures . The Portuguese law is clear and objective, protecting the interests for both parts. The buyer and the seller.

The purchase is divided in the following stages:

1. Contract Promise of Purchase and Sell (Contrato Promessa Compra e Venda)
2. Completion Contract or deeds (Escritura de Compra e Venda)
3. Registration at the land Registry Office and Local Tax Office

The Contract Promise of Purchase and Sell (similar to an exchange contract in the UK) is a document signed by both parts (the buyers and the sellers) in the presence of a notary for properties already built. For properties still in development like ours the Contract of Purchase and Sell is a private document signed by both parts, as the license of usage as not been issued yet by the City Council (the license of usage is just issued by the City Council when the property is concluded).

Although we (the developers) are lawyers, if you are buying a property from us, you are very welcome to hire the services of a bilingual third party lawyer to ensure you that all the process complies with the Portuguese property laws, everything is correct and your interests are being well looked after. In Madeira there are plenty of good bilingual lawyers that can help you. We will provide you with all information you require.

At this stage (Signing the Contract Promise of Purchase and Sell) the buyer makes a deposit of a percentage of the full price of purchase. In the new constructions like this we are commercializing there will be several deposits over the time, depending on what stage of construction the houses are when you purchase them. It is agreed and written in the Contract Promise of Purchase and Sell when and how much you pay in this deposits over time.

This contract protects both parts involved. It guarantees you buy your house free of debts and restrictive clauses, if you give up buying you will loose your deposit. If the sellers give up selling they are legally obligated to give you the double of the deposit you have made.

If you are buying one of our properties still in development, you will be provided with:

1. Construction License (Licenca de Construcao) This document has been issued by the City Council to the developer. It identifies the property under construction and assures the developer has legal authorization to build that property.
2. Land Registration document updated, identifying the plot of land and showing the developers are the owners of the plot of land,
3. Architectural plans of the property
4. Full description of materials (carpentries, flooring, sanitary equipment, etc)

Stage 2:
Completion Contract, Deed (Escritura de Compra e Venda)
The Completion Contract is a document signed by both parts (the buyers and the sellers) in the presence of a Notary. The Notary will check the legal aspects of the transaction, the documents and their validity and that all taxes have been paid (IMT).

At this stage the purchaser must pay the remaining balance of the purchase, the IMT and the notary fees. It should be noted that the seller must be in possession of the remaining of the agreed price and the IMT must have already been paid when the Completion Contract is signed.

The completion contract is kept in the Public Notary Office.

You can request a certified copy whenever you need to prove the ownership of your property.

Documents required for completion contract to take place:

• ID documents
• Portuguese tax number
• Property Tax Document (Caderneta Predial) *
• Property Registration Certificate (Certidao de Teor) **
• License of Use (Licenca de utilizacao) ***
• IMT document, proving this tax has been paid

* Property Registration Certificate (Certidao de Teor)
This document is obtained at the local Land Registry (Conservatoria do Registo Predial) it shows the seller has the ownership of the property and no one else has those rights. It also certifies the property is free of charges, debts and mortgages. A Registration Certificate is a document issued with a time limit.

** Property Tax Document (Caderneta Predial)
This document is obtained at the local tax office, it certifies the inscription of the property for fiscal purposes, the current owner and their fiscal number. The document identifies the property by a unique fiscal number.

*** License of Use (Licenca de utilizacao)
The town hall provides a usage license. This document certifies the property is approved for the purposes of the original building permission.

Estimated Completion Contract Costs:
Notary fee: 400,00 Euros (Aprox.)
Lawyers fees: Depends on the lawyer you use

Stage 3:
Property registration
After signing the deeds, you now have to register the purchase at the Land Registry Office (Conservatoria do Registo Predial) and at the local Tax Office (Reparticao de Financas).

You should make sure that the registration document (Registo) is in your name at the Land Registry Office and also in the Tax Office as soon as possible after signing the deeds.

Documents you will need to bring when you do the registration in the land registry and tax office:

1. ID
2. Personal Fiscal number
3. Certified copy of the Completion Contract (Escritura de compra e venda)
4. Updated Property Tax Document (Caderneta Predial) *
5. Property Registration Certificate (Certidao de teor) *
6. License of use (Licenca de habitacao)
7. Document from Bank if you bought the property with a mortgage

* Just one of the documents (document 4 or document 5) is required, not both.

Land registry and tax office fees
Land registry office (Conservatoria do registo predial) fee is 50,00 Euros (Aprox.)
Tax office (Reparticao de financas) 400,00 Euros (Aprox.)

Guarantees
In Portugal, the legal period of guarantee over building problems in new properties is five years. During this period, any building problems detected (unlikely to occur with any of our properties) will be the developer's responsibility to fix.

Insurance
From the signing of the Completion Contract you are the new owner of the property and responsible for its insurance. It is recommended that the policy includes cover for fire, storm damage, and earth quake damage.

Bank account
Opening a local bank account is not required as many foreign banks have branches in Portugal. They can help in transferring funds and setting up regular payments for utility bills.

Property Management Companies
This companies can also work directly with banks to set up regular payments for utilities, and they can also arrange to have your Portuguese property rented out.

Personal Fiscal Number
As a future owner of a Portuguese property you need to have a Personal Fiscal Number. The Fiscal Number is obtained at the Local Tax Office. An advantage in opening a local bank account is that you are automatically assigned a Personal Fiscal Number immediately, therefore it saves you a visit to the Local Tax Office.

Taxes

IMT - Municipal Transaction Tax (IMT - Imposto sobre Transmissoes de Imoveis)
This is a one off payment due when the purchaser buys the property, paid at the Local Tax Office. This must be paid before the Completion Contract is signed. The value of tax is around 8% of the taxable values.

IMI - Property Municipal tax (Imposto Municipal sobre Imoveis)
IMI or is an annual tax based on your property value that every property is subjected to. You will receive a document issued by the local Tax Office informing you of the amount to pay, where to pay it and date the next payment is due. If the value is over 250 Euros, the payment can be split in two, first payment in April and the last payment in September. The value is around 0.8% of the taxable value of the property.


If you still have any queries regarding any of these legal procedures please fee free to get in thouch with us.