Minimizing risks when buying real estate in Portugal

For many, buying property in Portugal represents an attractive investment. However, especially with cross-border real estate transactions, careful preparation is essential to minimize risks. In this article, I explain the most important aspects to consider when buying property in Portugal and provide practical recommendations on how to avoid potential pitfalls.

Key aspects of risk minimization when buying real estate

Minimizing risk when buying real estate begins with a thorough examination of the property and the legal framework. It is crucial not to rely solely on first impressions or verbal information. Instead, all relevant documents should be reviewed and examined.

Below you will find the key measures to sustainably reduce risks when buying real estate in Portugal.

1. Comprehensive legal review (“due diligence”)

A complete document review is the most important step in minimizing risk.

Buyers should have the following documents checked in particular:

Land register extract (certidão do registo predial)

• Ownership

• Mortgages and encumbrances

• Registered rights of third parties

Important: Not all real rights appear in the land register – for example, rights of way used for many years.

Tax office documents (caderneta predial)

• Tax classification

• Area specifications (which, however, do not always correspond to reality)

Building documents of the municipality

• License of use (licença de utilização)

• Building plans and approved modifications

• Building law status of all buildings on the property

Especially in Portugal, the building regulations situation is often complex, making expert analysis essential.

2. Do I need a lawyer to buy property in Portugal?

It is entirely up to each individual whether or not to seek legal advice and representation when purchasing real estate. However, it is important to note that the Portuguese notary only checks formal aspects and does not provide legal advice.

A lawyer:

• thoroughly examines the property,

• Identifies legal and construction law risks,

• drafts or reviews contracts,

• coordinates processes with the seller, as well as the notary, real estate agent and other involved persons.

3. Preliminary agreement or direct purchase agreement? Strategic hedging

In Portugal, acquisitions are predominantly carried out in two stages:

1. Preliminary contract (Contrato‑Promessa)

2. Main contract (Contrato definitivo)

A preliminary contract creates legal certainty and binds both parties.

In more complex cases, a preliminary contract that can be registered in the land register can be advisable. This offers additional security, as it is legally binding against third parties – for example, in the case of longer deadlines or doubts about the seller's solvency.

4. Identify and avoid risks related to building law

Missing permits, outdated plans, and unregistered extensions are common risk factors.

The examination is particularly important:

• whether all buildings were legally constructed,

• whether subsequent modifications are approved,

• whether the actual usage corresponds to the official information.

An unclear building law situation can have significant consequences – from restrictions on use to demolition orders.

5. Specific risks associated with rural properties (“Quintas” / “Herdades” / “Montes”)

Rural properties are popular, but they also present particular challenges:

• Limited building possibilities: New buildings outside urban areas are severely limited.

• Existing building protection: only legally constructed old buildings may be renovated; expansions are often limited.

• Water supply: Deep wells require an APA license, which must be transferred to the buyer.

• Wastewater systems: depending on the type, licensing is required.

• Neighbor's right of first refusal: applicable in many cases.

6. Secure process: Power of attorney, payment methods and practical organization

Those who cannot or do not wish to be present in person can issue a notarized power of attorney . This should include, among other things:

• Application for a Portuguese tax identification number (NIF)

• Signing of preliminary and main contract

• Rewriting utility contracts

Payment processing

• Down payment: usually 10%

• Final payment: usually a bank-certified check from a Portuguese bank

7. Taxes and costs at a glance

When buying real estate in Portugal, the following costs are particularly relevant:

• Stamp tax (Imposto do Selo): 0.8%

• Real estate transfer tax (IMT): dependent on the type, value and use of the property

Both taxes must be paid before the contract is signed .

Furthermore, the following costs will be incurred:

• Notary fees

• Registration fees

Conclusion: Minimize risks with structure and expertise

A successful property purchase in Portugal relies on careful preparation, thorough document review, and professional guidance. A structured approach, careful assessment of building regulations and legal aspects, and not relying solely on information from real estate agents lay the foundation for a safe and smooth property acquisition.

Minimizing risk is not a matter of chance — it is the result of a well-planned and professionally guided purchase decision.