Conveyance is a complex process almost everywhere, and thus there are no shortcuts in Portuguese Property Law, these are some of its caveats.
The conveyancing process in Portugal can be quite straightforward – as long as you receive appropriate independent professional guidance.
If you have searched online for the ideal property then you may know that the first thing you will need to do is to get your Portuguese NIF number (fiscal number). This is quite straightforward.
However, you must also carry-out due diligence on the property to ensure that it is safe for you to invest your money in it. Unfortunately, there are many examples of situations where people have relied on non-experts – such as estate agents – to advise them on the legal situation of the property they are interested in.
As a result, buyers have found themselves in some desperate situations because what they were sold was not what they thought they were buying, in some cases they even lost all their money.
Conveyance is a complex process almost everywhere, and thus there are no shortcuts in Portuguese Property Law.
Some situations worth highlighting under Portuguese Property Law
Discovering after the purchase is completed that there are mortgages and/or other debts registered over the property. This can bring you huge problems because the debts will “follow” the property regardless of who is the owner. That means that in a worst case scenario, the property may need to be sold to pay those debts.
Finding out the property doesn’t have the necessary legal paperwork to go ahead with the purchase, such as the building licence (licença de habitação) or energy certificate (certificado energético). Once you pay the deposit your are ready to go ahead with the purchase. You don’t want the process to stop because the sellers doesn’t have the necessary paperwork as they should.
The thing is that many people wait until they have a buyer that pays a deposit before they move forward with obtaining the necessary paperwork. This means that, if you are in a rush to move and finish the purchase process, it can take much more time than you expected.
When the estate agents accept to list the property they must ensure they have everything to proceed with the sale as soon as a buyer pays the deposit, but this does not always happen. Are you willing to wait indefinite time and stress yourself pursuing the real estate agency to find out if things are ready to go? A lawyer will normally manage this for you.
The seller doesn’t have full power to sell because, for instance, the property ownership is subject to probate and not all of the beneficiaries accept the sale value.
This is a complex situation because a property in such circumstances should not be listed for sale at all. We need to distinguish the situations where the buyer has already paid a deposit and those where the deposit is not yet paid.
If the buyer hasn’t paid a deposit your lawyer will discuss this with the estate agent and with the sellers themselves, if possible. We need to understand why they are delaying the sale and if the sale is reasonably likely to proceed or whether the buyer should forget this and find a new property.
But if the client has already paid a deposit, under the Portuguese property law, we understand that the sellers are not complying with the promissory contract, and therefore the buyer has the right to received double the amount of the deposit for breach of contract.
The property is not registered for habitational purposes, and this means that if you are buying for this purpose and you start living there, fines can be levied by the City Council (from 500 € up to 100,000 €). These fines can be applied more than once if the person persists in living in an unlicensed property over a period of time.
This situation means that someone can spend in fines several times the amount they spent to buy the property in first place! This is something no one wants, and your lawyer will ensure that the licenses are obtained and in place. This kind of situation is very common especially in rural areas and with old properties.
Often, the conveyance may be the first sale of the property having spent generations in the same family. Or perhaps the property was built by the sellers themselves without getting the necessary engineering and arquitectural licences, and sometimes they even ignore the need to get the licence to sell the property.
Other times, they know the property is not licenced for habitational use but they try to sell it as a house, ready to live in. If the buyer signs the promissory contract (usually written in Portuguese and without proper translation) stating that the buyer understands the terms and the conditions of the property, although he is agreeing to buy something he’s not truly aware he can’t use as a house.
Please note, that these problems are often actively hidden from the unwary buyers – especially those from abroad who have little or no experience of how property matters work in Portugal. Of course, all such problems can be avoided by ensuring that you receive independent, expert legal guidance.