BEFORE YOU SIGN

Once you have made a verbal agreement to purchase a property, your lawyer will check the legal status of the plot or villa you wish to buy: Does the seller have clear title to sell? Is the property exactly as described in the documentation? Does it have any debts or charges attached to it?

It is advisable to instruct an independent chartered surveyor to carry out a comprehensive survey.

PAPERWORK

Each property should have the following documents:

• Title deeds (Certidão do Registo Predial), held at the local Land Registry. This defines the property by location, size, and facilities and contains the property’s legal history.

• Official Tax Documents (Caderneta Predial). This gives the property its fiscal identification number and sets the base for its rateable value for the payment of the local rates (contribuição autárquica).

• Habitation Licence (Licenca de habitabilidade/utilização) All residential properties built on or after 1950 need to have a habitation licence, issued by the local council, which shows if it complies with all the relevant building regulations.

FISCAL NUMBER (NUMERO DE CONTRIBUINTE)

If you are buying the plot or property, you will need a fiscal number. The process is not complicated, and

will be handled by your legal adviser.

PROPERTY TRANSFER TAX (SISA TAX)

This is the Sales/Transfer tax, and is payable by the buyer on any property with a value of more than 60,015.49 Euros. The rate is variable, and is based on a sliding scale according to the price of the property. The maximum rate is currently 10% for properties valued over 166,054.81 Euros. The buyer’s lawyer can advise the current rates, which vary a little each year, at time of purchase.

This tax is payable before the final Deed (the escritura) is signed; proof of payment is required by the Notary.

PROMISSORY CONTRACT (Contrato Promessa de Compra e Venda)

The buyer’s lawyer usually draws this up, and it should include all relevant details of the property, the price, the payment schedules, the completion date and include any special terms and conditions agreed by both parties. At this stage, the agreed deposit, normally 10% of the purchase price, is paid to the seller. There will be penalty clauses contained in this document in the event of either party withdrawing from the sale or purchase after this contract is signed.

THE FINAL DEEDS (THE ESCRITURA)

The Escritura will be signed at the Notary’s office. The balance of the purchase price is paid at this time, and the Notary subsequently enters the transaction in the official records. Usually, only after signing the Escritura can the buyer take official possession of the property.

Your lawyer will sign both the promissory contract and the final Deeds on your behalf, having first received your power of attorney. In alternative you would be able to sign both personally.

The period of time between the promissory contract and the signature of the final Deeds can vary according to the wishes of the buyer and seller, this timescale is stated in the promissory contract, but in general it is 30-60 days.

REGISTRATION (Registo Predial)

Once the Notary has entered the transaction into the official records, one copy of the Deeds is registered at the local Land Registry and one copy is given to the buyer to prove ownership. The registration process can take several months, and the buyer’s lawyer will ensure that it has been done.

NOTARY AND REGISTRATION FEES

These are the responsibility of the buyer, and are paid separately, at the time of signature of the Deeds, and at the time of entering the record at the local Land Registry. Both will total around 2.5% of the purchase price.