Steps Involved in a Property Purchase

Step 1: Get a lawyer

It is advisable to use a Portuguese speaking broker and solicitor who knows their way round the system.

Note: Many solicitors speak English and French but the purchaser may wish to use the services of a translator for documents and the official signing.

Step 2: Find an estate agent 

 The estate agency should be licensed  by the  government.  Ask to  see the  certificate. A list of reputable estate agents can often be found through the purchaser's Chamber of Commerce.

The agent should have knowledge of the area, real estate fees, and charges.

Step 3: Verification

After the decision to proceed with the purchase of the property, we recommend that before signing any contract, you should check if all the documentation of the property is in accordance

Step 4: Contract of Sale & Deposit

The solicitor will draw up a Contract of Sale (Contrato de Promessa de Compra e Venda) which is a legally binding document setting out all the conditions of the sale. It is drawn up by a Notary and will eventually be signed by all parties and their legal representatives.

On the day the  Contract  of Sale is  signed the buyer will be required to  pay the  agreed deposit (usually between 10% and 20% of the purchase price). For new properties under construction the payment terms are made in stage payments  as the  construction  is completed.  These terms are negotiated  with the  estate agent or  builder. It  is advisable  to pay the deposit cheque to the agent, lawyer or broker representing you, and not the vendor. The deposit is held by the agent until completion.

The drawing up of a contract indicates a legal intention to purchase and sell. If the seller decides to withdraw from the sale they are legally obliged to repay twice the deposit paid. If the purchaser decides to drop out of the purchase they lose the deposit.

Step 3: Obtain the Deeds Certificate

Once a property has been found, the lawyer representing the client will obtain a Deeds Certificate (Escritura) from the Land Registry confirming that the property is available and for sale. Make sure the solicitor has the Escritura.

Step 4: Contract of Sale & Deposit

The solicitor will draw up a Contract of Sale (Contrato de Promessa de Compra e Venda) which is a legally binding document setting out all the conditions of the sale. It is drawn up by a Notary and will eventually be signed by all parties and their legal representatives.

On the day the Contract of Sale is signed the buyer will be required to pay the agreed deposit (usually between 10% and 20% of the purchase price). For new properties under construction the payment terms are made in stage payments as the construction is completed. These terms are negotiated with the estate agent or builder. It is advisable to pay the deposit cheque to the agent, lawyer or broker representing you, and not the vendor. The deposit is held by the agent until completion.

The drawing up of a contract indicates a legal intention to purchase and sell. If the seller decides to withdraw from the sale they are legally obliged to repay twice the deposit paid. If the purchaser decides to drop out of the purchase they lose the deposit.

Step 5: Exchange of Contracts

The solicitors representing both parties will agree upon a date when contracts will be exchanged. This is usually one month after the Contract of Sale is drawn up. During this time the solicitors need to make all the necessary conveyancing checks on the property to make sure that what is outlined in the contract is as stated. The solicitor will also need to check that there are no outstanding mortgages or unpaid taxes against the property.

Step 6: Pay the Property Transfer Tax

Once all the legal checks have been made and before the contracts are exchanged, the property transfer tax (Imposto Municipal sobre Transmissoes, which replaced SISA in 2003) must be  paid. The lawyer representing the client will deal with this at a tax office nearest to the property in question. How much is paid depends on the value of the property and type of property.

Step 7 - Transfer of ownership

Once all the  checks have been made both the Contract  of Sale and the  Transfer  of Title Deeds (Tftulo de Propriedade/Escritura de Compra e Venda) can be exchanged and witnessed by a notary. These documents are signed by both parties and their lawyers in the presence of the notary (Notariado). The notary makes various  copies and keeps the  original. Each of the parties has a copy and one is registered with the public records office. The lawyer will arrange for registration  with the Land Registry in  the purchaser's  name which ensures proof of legal ownership.

Step 8 - Pay the Stamp Duty Tax

With the conclusion of the public deed, in the presence of a notary, stamp duty tax should be paid a rate over the property value.