Questions and answers about buying property in Portugal

1. How does buying property in Portugal generally work? When should I contact you?

In general, clients come to us after they have already chosen a property and agreed on the key terms with the seller, such as the purchase price and the timeline for completion.

However, those who prefer can seek advice before beginning their property search. This approach offers the advantage of clarifying certain legal and practical aspects at an early stage, allowing these factors to be considered when selecting a property.

2. What happens when I have found a property?

Once you have found your dream property and requested our assistance, we will begin by providing you with detailed information about our terms and conditions. After you have accepted these, we will complete the legally required formalities for anti-money laundering compliance – and then we can get started.

Our next step is to review the property documentation, prepare a comprehensive report, and discuss with you:

1. any outstanding questions,

2. identified risks,

3. and our recommended course of action.

If further steps are necessary (such as obtaining additional documents or reviewing construction files), we will take care of these next.

Only when all issues have been clarified will the contract be finalized – either directly through a purchase agreement or initially via a preliminary agreement, followed later by the main contract.

3. Is it necessary to be represented by a solicitor when purchasing property?

There is no legal obligation to engage a solicitor. However, it should be noted that

1. in Portugal, properties are often offered for sale that are not fully compliant with the law.

2. The notary does not provide legal advice.

4. What formalities must be completed before accepting a mandate?

In accordance with Portuguese anti-money laundering legislation, before accepting a mandate we are required to:

1. verify the identity of our clients;

2. confirm the lawful origin of the funds intended for the purchase.

   
   

5. How much is your fee?

Our fee for comprehensive assistance with a property purchase is typically 1% of the purchase price plus VAT (23%), in line with standard market practice.

6. What documents do I need to purchase property in Portugal?

The following are required:

• a valid identity card (only for citizen of EU/EEA and Switzerland) or passport,

• a Portuguese tax number (we usually apply for this on your behalf),

• proof of address.

7. What services do you provide in connection with a property purchase?

Our services include:

• a thorough review of all property documentation,

• clear advice on potential risks and the best course of action,

• handling all legally required steps through to completion of the purchase.

Our goal is to ensure that you can:

1. sit back and relax,

2. stay regularly informed about the progress of your transaction,

3. be involved in all key decisions,

4. and ultimately receive updated ownership documents in your name.

   
   

8. What role does the notary play in buying property in Portugal?

When the contract is signed, the notary verifies the formal requirements for a valid purchase agreement, such as:

• whether the correct parties are present,

• whether all legally required documents are available,

• whether applicable taxes have been paid.

Important to know:

1. The notary checks only the documents required by law – no others.

2. This review is purely formal; actual compliance with reality is not verified.

3. No legal advice is provided (only legally required information is given).

4. Once the contract has been signed and registered in the land register, the purchase is considered complete – the notary has no role in enforcing or executing the contract.

9. Do I have to be present when the contract is signed?

No. You can grant us a notarized power of attorney, enabling us to take all necessary steps on your behalf.

10. What to consider when granting power of attorney?

The power of attorney must include specific wording and be notarized. We will draft the document after consulting with you.

If you are in Portugal, the power of attorney can be signed locally before an authorized official. If you are abroad, we recommend signing it at a Portuguese embassy or consulate – this avoids the need for legalization and saves time and money.

11. What powers are usually granted by a power of attorney?

Typically, the power of attorney grants authority to:

• sign both preliminary and final contracts,

• transfer utility contracts and licenses (e.g., deep well license),

• apply for a Portuguese tax identification number.

  
  

12. What should be considered when drafting the power of attorney?

It must be decided whether the power of attorney:

1. should apply exclusively to one or more specifically named properties, or

2. should apply generally to any property in Portugal without further specification.

Advantage of the second option:

If a planned purchase does not go ahead, the power of attorney remains valid for other properties.

13. How is the purchase price paid? Do I need to have a Portuguese bank account?

A Portuguese bank account is not absolutely necessary.

When signing a preliminary contract, a deposit of around 10% of the purchase price is usually required. This can be paid by bank transfer, even from an account outside Portugal.

The remaining balance must be paid in full upon signing the main contract. Payment is typically made by a bank-certified cheque issued by a Portuguese bank.

If you do not have a Portuguese bank account, we offer the option of transferring the remaining purchase price to our law firm’s client account one week before the contract signing. We will then arrange for the certified cheque to be issued on your behalf.

14. What security does reserving a property offer?

When booking through a real estate agency, their specific terms and conditions apply.

Important: A reservation agreement does not legally secure the purchase. If the seller withdraws without valid reason, claims for damages may arise – for example, reimbursement of verifiable costs incurred in connection with the intended purchase.

The reservation deposit is not equivalent to the down payment made when signing the preliminary contract. A reservation is merely a declaration of intent, and failure to honor it may, under certain circumstances, lead to claims for damages.

15. Is it necessary to conclude a preliminary agreement?

No, a preliminary contract is not mandatory. If all documents are complete, the purchase agreement can be signed directly.

In practice, however, property transactions in Portugal usually take place in two stages:

1. signing a preliminary contract,

2. signing the main contract within an agreed timeframe.

One reason for this is that under Portuguese law ownership is transferred immediately upon signing the main contract. The preliminary contract therefore serves to establish all purchase conditions in a binding manner, including the timeline for completion and handover of the property.

16. What types of preliminary contracts are there?

As a rule, a simple written preliminary contract is concluded, which is signed by both parties before a notary, solicitor or other authorised professional. This contract is only binding between the parties.

Alternatively, a preliminary contract that is effective vis-à-vis third parties can be concluded. This offers greater legal certainty, as it is entered in the land register and thus secures the chronological order of the legal consequences. However, it involves higher costs (notarial certification, land registry fees).

Such a preliminary contract can be useful, e.g.:

1. in the case of longer periods until the main contract is concluded,

2. in the case of uncertainties regarding the seller's solvency.

17. How much is the deposit when buying property?

The deposit is usually 10% of the purchase price, payable upon signing the preliminary contract.

However, the parties may agree on a different amount if they wish.

18. What happens if I withdraw from the purchase after making the deposit?

The deposit serves as security for the seller. If the buyer withdraws from the purchase without valid reason, there is no entitlement to a refund.

The situation is different if the seller breaches the contract – for example, if the property does not have the promised characteristics which are essential to the buyer. In such cases, the buyer is usually entitled to a refund of the deposit and an additional amount of equal value as compensation.

19. What security does the land registry extract offer in Portugal? And what value provides the information contained in the property tax record?

The land registry extract (certidão do registo predial or certidão permanente) provides information on:

1. who owns a particular property,

2. which third-party rights are registered (e.g., mortgages or other encumbrances).

Important notes:

• Certain third-party rights in rem do not appear in the land register, such as a right of way that has been used for decades.

• The property description in the land register is not always reliable – especially regarding plot size and existing buildings.

• Even the property tax record (caderneta predial) does not guarantee that the buildings are legal or correspond to reality.

The competent municipal authority ("câmara municipal") is responsible for verifying legality. Depending on the year of construction, a usage permit may be required. Based on the information in this permit, it may also be advisable to request the latest approved building plans in certified form from the municipal authority.

To interpret these documents correctly, it is essential to understand the respective roles of the authorities involved – land registry, tax office, and municipal authority.

20. Rural properties: What to consider in terms of building regulations?

Many people dream of living in the countryside – but Portuguese lawmakers aim to concentrate the population mainly in cities to facilitate infrastructure and public services.

As a result, building opportunities in rural areas are severely restricted.

Anyone interested in a rural property should be aware of the following:

• For residential purposes, construction is generally permitted only where a legally erected building already exists.

• This building must still be standing and not in a state of serious disrepair – its structure and intended use must remain recognizable.

• Such buildings benefit from grandfathering rights and may be rebuilt or altered; however, enlargement is not automatically allowed.

• The development potential under public building law must be assessed on a case-by-case basis.

  
  

21. Rural properties: What if I just want to build a wooden house?

On 8 January 2024, a change in the law provided legal certainty: Modular or prefabricated buildings of a permanent nature — meaning structures composed of load-bearing or non-load-bearing elements or building systems that are partially or fully manufactured in a factory and subsequently assembled either on-site or by connecting individual modules — are subject to the same approval requirements as conventional buildings. This applies regardless of whether the buildings are demountable or transportable.

In practice, this means that even a timber house or a structure based on containers or other modular systems must comply with standard building regulations and obtain the necessary permits.

22. Rural properties: What to consider with regard to water supply and sewage?

Special requirements apply to rural properties that are not connected to the public water and sewage system:

A) Water supply via deep wells

• Using a deep well requires a licence from the competent water authority, APA (Agência Portuguesa do Ambiente).

• This licence must be transferred to the new owner upon purchase of the property.

B) Private sewage systems

There are two types:

1. Closed systems

   - These require regular emptying, subject to a service fee.

2. Systems with treatment and overflow

   - These also require an APA licence,

   - which must be transferred when ownership changes.

23. Rural properties: Do adjacent neighbours have a right of first refusal?

Yes – in many cases, adjacent neighbours have a statutory right of first refusal, particularly for land with agricultural potential.

The specific requirements depend on:

• Property size

• Land classification: If both the property being sold and the neighbouring property are located in an agriculturally protected area, a right of first refusal usually applies.

Planned sales must be formally notified to neighbours entitled to this right. Failure to do so may result in legal challenges at a later stage.

24. What taxes are payable when purchasing property? When are they payable?

When purchasing property in Portugal, two main taxes apply:

1. Stamp Duty (Imposto do Selo)

• This amounts to 0.8% of the purchase price.

• If the agreed purchase price is lower than the standard taxable value set by the tax authorities, that official value will be used as the basis for calculation.

2. Property Transfer Tax (IMT – Imposto Municipal sobre Transmissões Onerosas de Imóveis)

• The tax rate varies depending on:

  • Type of property (e.g., rural or urban)

  • Intended use (e.g., permanent residence or holiday home)

Both taxes are generally payable immediately before signing the final deed of sale. However, in certain cases, IMT may become due earlier — for example, if the preliminary contract allows the buyer’s contractual position to be transferred to a third party.