Legal Guidelines Purchase

1. Starting the Purchase Process

Once you’ve found a property you’re interested in buying, it’s common to make an offer to the seller through your real estate agent. Once the price is agreed upon, you should appoint a lawyer to guide you through the process. The next step will be to sign a Promissory Contract of Purchase and Sale (CPCV), which should be done as soon as possible. The entire purchase process can take from a week to several months, depending on how quickly both parties proceed and whether all necessary documents are ready.

2. Promissory Contract of Purchase and Sale (CPCV)

The CPCV is a legally binding contract between the buyer and the seller, including:

• Identification of both parties;
• Description of the property;
• Payment terms;
• Penalties in case of breach of contract;
• A list of items included in the sale, such as furniture;
• The expected date for the completion of the purchase.

At this stage, the buyer pays the seller a deposit, usually between 10% and 20% of the purchase price. This contract protects both parties: if the seller withdraws, they must return double the deposit to the buyer; if the buyer backs out, the seller can keep the deposit.

3. Tax Identification Number (NIF)

Before purchasing a property or opening a bank account in Portugal, you will need to obtain a Tax Identification Number (NIF) from the tax authority. You’ll need a valid passport and proof of address to get this number.

4. Purchase and Sale Deed

The Purchase and Sale Deed is the official document that finalizes the property transaction. It can be signed immediately or after the CPCV, depending on the agreement between the parties, typically within a 90-day limit. Once the deed is signed in front of a Portuguese notary, your lawyer will register the property in your name at the Land Registry Office and ensure that all utility contracts are transferred to your name. The registration with the tax office is automatically done by the notary.

5. Lawyer’s Role

The lawyer (or solicitor) prepares the CPCV after ensuring the property is free from debts or encumbrances, such as unpaid taxes, mortgages, or condominium fees. They also assist in obtaining a NIF if needed. With a power of attorney, the lawyer can sign all documents, including the CPCV and deed, on the buyer’s behalf. After the deed is signed, they will also handle registering the property and transferring utility contracts.

6. Legal Costs

Lawyers may charge a fixed fee or a percentage of the purchase price, which can be up to 1.5%.

7. Municipal Property Transfer Tax (IMT)

This tax must be paid by the buyer before the deed is signed, and the amount depends on the purchase price. For properties up to €550,836, the tax rate is progressive, ranging from 1% to 8%. For properties priced above this, a fixed rate of 6% applies. For plots or properties within a tourist complex, the rate is always 6.5%. The IMT is also slightly higher for second homes compared to primary residences.

8. Stamp Duty, Notary Fees, and Registration Costs

The buyer is also responsible for paying stamp duty, which is currently 0.8% of the purchase price. This can be paid before or at the time of the deed. Notary fees vary depending on the property price, and registration fees for the new owner are €225 if done online or €250 at the Land Registry Office.

9. Real Estate Agent’s Commission

In Portugal, the seller usually pays the real estate agent’s commission.

10. Corporate Property Ownership

Some properties are owned by companies, offering the option to purchase the company instead of the property itself. Many of these companies are domiciled outside Portugal, such as in Delaware, USA, although some properties may be owned by Portuguese companies as well.