Buying process

The process of buying a home in Portugal

The legal procedure of buying a home in Portugal is quite straightforward, even as a foreigner. Even though this is the case, we recommend contacting a local solicitor or lawyer to help you with the process to avoid any surprises. Contacting a solicitor before you start looking for a property can be useful so that they can help set up a Portuguese bank account and request the required Portuguese NIF number, or tax ID.

Step one: Find a property.

Perhaps the most exciting part is organising viewings of properties that match your criteria. Of course, ten Hoopen Realty is here to help you define your search parameters and help you navigate the local property market. More about that here.

Step two: Make an offer!

Once you have found your dream home it’s time to start negotiating, where possible. We generally recommend starting with an offer of around 15% to 10% under the asking price, depending on how the price compares to comparable properties on the market. Once we have negotiated a price that is acceptable for both the buyers and the sellers, we instruct the lawyers to take care of the paperwork.

Step three: Reservation (optional)

As the due diligence process can take some time, it can be useful to sign a reservation agreement with the vendors, typically a €5,000 reservation, which is held in your lawyer’s client account. This agreement takes the property off the market and the vendor should cease viewings. This shows intent to the vendor and gives you, the buyer, a little more security that the property won’t be sold from under your nose. However, the deal is not secured until the all-important next step, the ‘Contrato Promessa de Compra e Venda’ or ‘CPCV’, known in English as the ‘Promissory Contract’.

Step four: Promissory Contract of Sale and Purchase

Generally, we aim to sign the CPCV within 14 days of signing the reservation agreement. In this time the lawyers will have time to do the necessary due diligence, checking for any debts, liens, or legal issues with the property. It is important to ensure that all the required licenses are in place and that the property matches the plans registered at the town hall.

Upon signing the promissory contract, the buyers will pay a deposit of typically 10% to 20% of the purchase price, minus the reservation amount. The size of the deposit reflects the time between signing the promissory contract and signing the deed. Longer period means higher deposit.

The CPCV is a legally binding contract, in which the following key details of the deal are stipulated:

• The agreed price
• The identities of both the buyers and vendors
• The date or timeframe to sign the ‘escritura de compra e venda’ (ECV) or purchase deeds
• What is included in the purchase price, e.g. furniture, in the form of an inventory list which is attached to the contract
• Payment Terms
• Any other terms and conditions

This contract is not mandatory, though it is used in most real estate transactions in Portugal. We at ten Hoopen Realty strongly advise you not to skip this step. Upon signing the CPCV, the buyer commits to purchasing the property and the seller commits to sell the property to the buyer. If the buyers were to pull out of the deal, they would lose their deposit. If the vendors pull out of the deal, they will have to pay back the deposit, plus the same percentage on top.
This contract can be signed personally, or your lawyer can sign on your behalf with a power of attorney or even acting as ‘business manager’.

Step Five: Public Deed (Escritura)

The final and most exciting step is signing the deeds at a Portuguese notary and getting the keys to your new home in the sun! As you would expect, this step is a highly regulated process in Portugal and ensures once again that there are no legal issues with the property. At this stage you will pay the IMT or purchase tax and stamp duty, after which the property is legally yours! Your lawyer as the buyer will register you as a new owner in the Registo Predial, or land registry. You will receive a copy of the entry and the deeds, and you’re all set to start enjoying your new life abroad.

If you have any more questions or want to get started on finding your dream home, get in touch with us today on:

+351 963 766 261 or email sales@tenhoopenrealty.com