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  Portugal Golf - Buying Property

Portugal Buying Property Information

Here are the basic steps to help understand the procedures and legal acts that are involved in acquiring a property in Portugal. It is always recommended that qualified legal advice be sought in any purchase.

It is important to insure that any plans in the Town Hall referring specifically to the property do physically agree with the existing construction. A property for living purposes must have the following documentation:

a) Habitation License for property constructed after 1951 (Other documents may be required)
b) A Certified insertion in the records of the Land Conservatory
c) A detailed "Caderneta Urbana" from the Tax Office

Commercial and Industrial properties require both Points b. and c.

In the case of a rural property the following extra document is necessary which is a detailed and an up-to-date description of the property as is named "Caderneta Rustica". This document is issued by the local Tax Office.

It is quite normal for both Parties to initially enter into a Promissory Contract detailing the conditions of Sale - "Contrato de Promessa de Compra e Venda". This Contract is then legalized by registering it in the Notary Office. This Contract is legally binding on both sides and the law requires the seller to repay twice the deposit should he withdraw from the sale. Likewise, it the buyer fails to complete he forfeits the total of his deposit. There are specific laws relating to this act that a Lawyer will be able to explain.

It is often found practical for the buyer to appoint a third party such as their Lawyer to act for them legally in the matter. A document named "Procuração Publica" is prepared with the necessary details and then in the Notary Office this document is signed and registered by the Notary. This official document can also be created in the Portuguese language outside Portugal in a Portuguese Consul in a foreign country, or, in a Notary in the language of the country concerned. In the case of the latter the document must have the Seal of the Notary and an Apostil attached. An official translation into the Portuguese language will later be necessary.

Every buyer is required to obtain a Fiscal Number from the local Tax Office (Finanças).

Prior to act of purchase, the purchase will usually be subject to a State payment named "Imposto Munipal Sobre Transmissões - IMT" which replaced the originally known Tax known as "Sisa". This Tax is paid in the local Tax Office nearest to the location of the property being purchased. The amount charged is dependent upon the nature of the purchase and does vary. In certain cases the buyer will be may be exempt from paying this Tax if the value of the "Escritura" is below the figure of € 80,000.00. Below is shown a table for your guidance based on a series of "platforms of sale value" and is applicable to all urban purchases. All Rural properties are subject to a flat 5% Tax based on the "Escritura" value. Any purchase in an Offshore Company is subject to a Tax of 15% applied to the "Escritura" value.

€ 80,000.00 up to € 110,000.00 Tax = 2%
€ 110,000.00 up to € 150,000.00 Tax = 5%
€ 150,000.00 up to € 250,000.00 Tax = 7%
€ 250,000.00 up to € 500,000.00 Tax = 8%
Over € 500,000.00 Tax = 6%

Then all the above requirements have been completed the act of sale can proceed in any Notary Office. This act is known as the "Escritura de Compra e Venda" which takes place in front of the selected Notary and is recorded in his official books. The Notary will check prior to the act of sale that all the necessary documents are correct to ensure that the sale can proceed according to the facts provided. It is at this moment that payment is normally completed to the seller, and when applicable, the balance of purchase has to be made according to the signed Contract in Point 2 above. After the act is recorded the Notary Office will issue a photocopy of the entry which is the proof to the buyer that the act has officially taken place. The photocopy will carry the seal of the Notary but as further official copies can be requested at any time this document should not be mistaken for a "Title Deed"- as known in the UK.

In completion of the above act the property in question has then to be registered in the new owners name in the Land Registry (Conservatória do Registo Predial). This next registration is not obligatory until the owner wishes to sell the property. However, it is strongly recommend that this registration is made immediately after the Notary act as a preventative measure against a possible financial abuse by the previous owner.

Buying Property Tips

Besides it's economy, Portugal is on of the best places in Europe to live. Sunshine, sandy beaches, good fresh food, friendly people, and the least polluted climate in Europe.

The "Tips" below are written purely as safeguards in order to avoid some of the mistakes that a few people have made over the years.

In Portugal there are many methods available of finding and purchasing a property. Many of them appear at first sight as potential shortcuts but later they often cause added expenses to the buyer. These particular routes can be likened to a "minefield" of opportunities for a potential purchaser to be misled. It is obviously important to reduce to a minimum the chances of unwisely parting with money.

It is prudent to only use a Real Estate Agent licensed by the Portuguese State.

The Real Estate Agents in Portugal are no different from elsewhere. There are many good and helpful Agents and there are also the unscrupulous ones who find anything justified to gain a sale. It is not difficult to discover the right Agents to use.

a) Printed information is available from sources outside Portugal. This information should be treated with circumspect as it could be incorrect or out-of-date.

b) Outside Portugal many Agencies have been established as contacts to seek potential local buyers. The information available from these Agencies are often based on superficial knowledge of the laws and regulations.

c) Some countries have established mutual Chambers of Commerce, and when approached they will supply a list of Agents who are there members. This list can be used as a useful reference but it should not be taken as the true representation.

d) When you have chosen your area select one local agent, if more, than be careful.

e) Research the local reputation of each Agent.

f) A good Agent will first encourage the buyer to explain their needs in some depth so as to advise and select properties correctly.

g) The time of an Agent is as valuable as the buyers - good Agents will tend to show you properties that you can afford and that meet your needs.

h) Many Agents have past and present knowledge in regard to the history to many properties and developments. This can be very valuable in the case of re-sales as they will know the quality of the builder and what may be hidden under the concrete.

i) As there are many aspects in purchasing a property, the good Agent will assist you through all the necessary steps - he will also provide the "after the sale" service that is always necessary in any foreign country with different regulations.

j) Some friendly individuals are in most cases paid money by the seller for the introduction that results in a sale of property. Most important of all - if anything goes wrong these third party people have no legal responsibility in your purchase.

k) If anything goes wrong these people have no legal responsibility in your purchase

m) Lawyer's offices are often busy with clients with problems caused by a decision to purchase a property directly from a seller without using an Agent, or even worse, not using an experienced lawyer.

n) When choosing a Lawyer, Architect, Engineer, or Builder, it is advisable to select from those names of people who are based and mainly work within the geographical area in which a buyer's property is located. These professional people should have well-established contacts in their local State and Municipal offices that can be used to implement a chosen project or assist in the making of a purchase.

o) In selecting who to use the advice of a Real Estate Agent should be sought as it is in their best interests to recommend good people as they will be probably dependant on these services to bring a sale or a project to a successful conclusion.

p) When selecting a Lawyer for your conveyancing you will find that they are all conversant with several languages, particularly English. Their fees can vary according to the total value involved. A normal percentage for a middle priced property is 3% as listed in their Table of Fees. In some cases it is possible to negotiate for a lesser percentage but your final lower agreement may end up related to the quality of the professional service received.

q) A lawyer will also be able to provide practical advice on all the financial matters and costs relating to a intended purchase and carry out the necessary searches. Be sure that your fully understand what the charges are and what they will be doing for their fee. It is important to consider that every country has its own manner of "doing things". A buyer become very frustrated by trying to impose their own will, and not trying to bring their understanding inline with the system that applies in Portugal. However, this does not act as an excuse for inefficiency or misleading information.

r) It is advisable that any agreements between a client and an architect, project manager, builder, or contracted supplier, must be in writing. Any changes to the original agreement, however small, should also be placed on paper and signed by both parties for later reference in case of possible conflict.

s) It is reasonable to state that the majority of older properties in the Algarve have been architecturally changed over the years without the correct documentary procedures being implemented. Garages have been turned into bedrooms, terraces enclosed, extensions built. We recommend that a potential buyer should see that the following two documents are checked in this respect. Firstly, that the description on the "Caderneta" issued by the local Tax Office (this is a form of Log Book), agrees with the physical aspects of the property. Secondly, the plans as lodged in the Town Hall (Câmara) relating to the construction area also agree with these physical aspects.

t) Please note that just as in other European countries there will be annual "rates" to be paid to the Municipality and they are renamed from the previous "Contribução Autárquica" to the new name of "Imposto Municipal Sobre Imóveis - IMI". This change has also involved a new structure of lower Tax being applied but against an updated value on every individual property. The new value that will be placed on the property by the local Tax Office according to their own internal valuations.

u) The final "Tip". By just using a intelligent approach and commonsense, any purchase will become the same pleasurable experience as buying in your home town. We cordially invite you to join the many thousands of other very happy home owners in Portugal.



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