Portugal is one of the most rewarding countries in which to buy property. Yet the legal process can be complicated and greatly impact the buyer’s investment and peace of mind. Portugal’s civil law, notarial deeds, and obligations of due diligence all need to be considered and navigated in a significantly different way to what property buyers are accustomed to in countries such as the UK, USA. Therefore, it is essential to select the right lawyer before signing the promissory contract. Buying property in Portugal – What does your real estate lawyer do? A Promissory Contract (CPCV – Contrato-Promissa de Compra e Venda) is signed by the buyer which includes a payment of a deposit to the purchase price (usually 10% to 30%). It is binding, and if the buyer withdraws from the contract, he will lose his entire deposit. Conversely, if the seller pulls out of the contract, he will be obligated to repay the buyer twice the amount of the deposit that was paid by the buyer in the CPCV. Due-diligence checks at the Land Registry (Registo Predial) and Tax Authority (Finanças): It is the advogado’s duty to verify that all property liens, mortgages, and other encumbrances have been removed prior to the signing of the Promissory Contract. Furthermore, your lawyer must also check the property’s owner(s) have paid all outstanding municipal taxes at the Serviço de Finanças prior to the final payment. Registration of NIB and NIF numbers: Your lawyer will obtain your Portuguese Tax Number (NIF) and open a Portuguese bank account (NIB number). Final Deed (Escritura Pública): This notarial deed is signed in the presence of a Notary Public and confirms the full completion of the contract as agreed in the earlier signed CPCV. Registration at the land registry and other subsequent post completion matters: Your lawyer will ensure the property is registered in the buyer’s name and complete all the subsequent steps, such as payment of the IMT (property transfer tax) and stamp duty and register at the land registry. Specialisation in Real Estate Conveyancing Buying and selling residential properties is a specialized field of law, and there are many lawyers in Portugal who specialize in criminal law and/or commercial law but have very little experience with property transactions. Therefore, when searching for a suitable advogado, ensure that he or she specializes in property conveyancing and confirm the percentage of their work that consists of residential property transactions. Language Can your lawyer communicate in your language? Even though all legal property documents are in Portuguese, your lawyer should be able to translate the contract(s) into your desired language prior to signature. The biggest mistake occurs at the start of the purchase process at the signing of the CPCV, and buyer fails to understand the terms and conditions prior to payment of the deposit. Registration with the Portuguese Bar Association All lawyers are registered with the Ordem dos Advogados (Portuguese Bar Association) – www.ordemdosadvogados.pt. When searching for the best property lawyer for your requirements, it is essential to verify that chosen candidate is registered to practice as a lawyer in Portugal. Independent Representation by Lawyer Buying property can be a complex process and should be managed by an independent lawyer who only acts for the buyer. Sellers are typically represented by their own lawyer and often property agents/developers recommend their own lawyers to act on behalf of the buyer. A buyer’s interest will not be protected if he is represented by the same lawyer that is representing the seller. Fixed Fee for Real Estate Lawyer Services Fees for buying property in Portugal are generally capped at 1% to 2% of the purchase price, with a minimum fixed fee. Always demand that your chosen real estate lawyer supplies a written agreement of fees for the services to be rendered. Such written agreement will outline terms of engagement and the payment terms. Past Experience with Foreign Buyers Many factors need to be considered in the purchase of properties by foreign buyers. Liens and other charges on a property must be cleared before the property can be sold. If a charge cannot be located, it is assumed that the charge does not exist. In Portugal, a charge on a property is registered at the local Land Registry Office, which maintains a record of all registered charges against a property. The Caderneta Predial (Municipal Property Book) and the Certidão Permanente (Property Certificate) are two core property documents. These two property documents are amongst the most important documents in property purchase transactions. A conservatória (register office) is responsible for maintaining the land registry records for a particular geographic area, known as an ofício. A Caderneta Predial is a property booklet, maintained by the municipality, which includes details of a property including the property address, property location details, owner’s name(s), and any outstanding municipal taxes. The Caderneta Predial must be updated following each change in ownership of a property. A Certidão Permanente is a certificate that includes details from the land registry for a specific property, and includes details of all registered property owners, any registered liens or charges on the property, and details of any outstanding land taxes. Red Flags to Avoid Buying property in Portugal is a complex process and has many pitfalls for the inexperienced. If the initial written terms of engagement between lawyer and client do not specify the fees to be charged by the lawyer for the conveyancing services to be rendered, then walk away. There is no reason for buyer and lawyer to negotiate terms of a written agreement of fees prior to commencement of work. Never permit lawyer to sign the Promissory Contract (CPCV) before he has examined the Caderneta Predial andCertidão Permanente in order to confirm the seller is the owner of the property, and there are no outstanding charges registered against the property. Any lawyer who recommends that you skip the examination of Caderneta Predial and theCertidão Permanente prior to signing the CPCV is NOT your advocate. How to Find a Real Estate Lawyer for Your Property Purchase It is hoped that the previous information will have made it easier for you to find the ideal lawyer to represent you. Following are the preferred ways in which to locate the ideal real estate lawyer to represent you when purchasing your Portuguese property. Your country’s embassy in Lisbon: Most Embassies maintain a list of lawyers that specialize in transactions for citizens of that country. A list of lawyers can be obtained from the embassy prior to your visit to Portugal. Verified buyers referrals: The referrals from other verified buyers who have purchased a property in Portugal, are an ideal source. A list of lawyers can be obtained from your agent. Portuguese Bar Association directory: The official directory of lawyers can be found on the website of the Portuguese Bar Association (Ordem dos Advogados) at www.ordemdosadvogados.pt. This directory will enable you to search for a specialist in the area of real estate property transactions in Portugal by location (office) and by specialty. Initial Consultation with Real Estate Lawyers Initial paid consultations with suitable candidates typically last between thirty minutes and one hour. These initial paid consultations with candidates should not be wasted by asking irrelevant questions. Only ask questions that will aid in your search for the ideal lawyer. We have detailed a number of relevant questions that you should ask a candidate prior to engaging that candidate. We have also provided guidance as to the ideal number of lawyers that you should consider. The Number of Residential Property Conveyancing Transactions Completed by Real Estate Lawyer in Last Year What is the lawyer’s typical fee for the type of property purchase that you are planning to complete? How will the lawyer communicate with you throughout the process of purchase? Provide an example of when due-diligence located a serious problem with the property prior to signing of the contract by buyer. Has lawyer dealt with other foreign buyers from the buyer’s country prior to? Is lawyer familiar with relevant tax treaties between countries and specific required documents for foreign buyers. Past Experience with Foreign Property Buyers Questions that you should ask a real estate lawyer candidate prior to engagement, have been set out above. A buyer needs to ensure that all aspects of the process are being managed by an expert who is not only well versed in all aspects of Portuguese law that pertain to property purchases but also very experienced in dealing with foreign property buyers. As the foreign property buyer will have entered Portugal on a non-resident status, the lawyer must also have expertise of Golden Visa schemes and/or other related property investment schemes. When searching for an ideal real estate lawyer for your property purchase, it is extremely important that buyer selects a lawyer who specializes in foreign property buyers’ transactions, is an expert in property transactions, and has substantial experience of completion of similar property transactions by foreign buyers. In summary, there are many property lawyers who specialize in residential property conveyancing in Portugal but not all have same level of experience of foreign property buyers’ transactions and Golden Visa applications. Thus, it is very important that all questions that need to be asked by buyer are asked in initial paid consultation in order to establish whether selected candidate is the ideal real estate lawyer to manage your property purchase. Recommended Time Frame for Completion of Real Estate Lawyer Services The timeframe for completion of all the real estate services for a property purchase in Portugal, will depend upon the specific terms agreed by the parties to the contract prior to signature of the Promissory Contract (CPCV). It is typical for due-diligence and signature of the CPCV to take between 2 to 4 weeks, but the time between signing of the CPCV and the Escritura Pública (Final Deed) can vary between 30 to 90 days. After the escritura has been signed, it will take an additional 2 to 4 weeks for the property to be registered at the land registry, and other post-completion matters to be completed by the lawyer. Thus, in summary, a buyer must ensure that his or her chosen lawyer provides him or her with a detailed schedule of expected actions and related time frames at start of process, in order to ensure that buyer is fully informed of all events and is able to plan his or her itinerary to Portugal accordingly. Power of Attorney (Procuração) It is extremely common for foreign property buyers not to be present in Portugal for the entire property purchase process. A power of attorney (procuração) must be granted to the lawyer to manage aspects of the purchase that require the lawyer to sign documents on behalf of the buyer. A procuração grants the holder of the power of attorney authority to act on behalf of the buyer for specific purposes and only for periods specified within the terms of the procuração. A written procuração must be signed in front of a Notary Public prior to be valid, and a certified copy of the procuração must be provided to the Notary Public prior to signature by Notary Public. The terms of the procuração must clearly outline all of the powers granted to the holder of the procuração and the terms specifying the purposes for which the holder of the procuração is authorized to act. All powers granted to holder of procuração must remain within the terms of the written procuração that was signed in front of the Notary Public by the buyer, and none of the granted powers may be used by holder of the procuração for any other purpose. A procuração is valid for a maximum period of 5 years, and may be cancelled at any time prior to expiration of the procuração by the buyer. Once a procuración has been cancelled, it is considered to be null and void, and the holder of the procuração must immediately return the original copy of the cancelled procuração to the buyer. Conclusion In conclusion, buying property in Portugal is a complex process, but the key to a safe purchase is selection of the right real estate lawyer (advogado) to manage your property purchase. It is the investment in your purchase that will protect your interest, and it is best to take time to find ideal lawyer for your property purchase to ensure that all aspects of your property investment are managed correctly to ensure that your investment provides the maximum returns for minimum effort.
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