The Buying Process

Purchasing a Privately Owned Property:

Letters of Intent: Once a property is chosen and a deal is agreed upon, ‘Letters of Intent’ are drafted by the agent for both the buyer and the seller. These letters outline the negotiated terms but are not legally binding. Once signed, they are sent to the respective legal representatives.

Due Diligence: The buyer’s lawyer conducts due diligence on the chosen property, ensuring all documentation is in order and the property is fit for sale without obstacles or outstanding fees.

Promissory Contract: Prepared by the purchaser’s lawyer, the Promissory Contract (Contrato Promessa de Compra e Venda) is signed by both the buyer and the vendor. It is the legally binding preliminary contract of sale and purchase, accompanied by a deposit usually amounting to 10% of the purchase price, traditionally made through the buyer’s lawyer. Portuguese law penalizes vendors withdrawing after signing the Promissory Contract, requiring them to return double the deposited amount. If the purchaser withdraws, they forfeit their deposit.

Final Deed: Signed at a notary’s office by both parties, the Final Deed (Escritura) completes the transfer of ownership to the buyer. In cases where either party cannot be present, power of attorney can be granted to their legal representative. The remaining balance, along with associated taxes, is paid, finalizing the transaction. The new owners are registered in the Land Registry by their legal representative, and utility bills are updated in their name.

Privately Owned Property – Purchasing cost:

Legal Expenses: Typically 1-2% of the purchase price.

IMT (Property Transfer Tax): Variable, ranging up to 8% with amounts deductible. For residential properties valued over EUR 1 million, the rate is 7.5% and no amount is deductible.

Stamp Duty: 0.8% of the purchase price.

Notary & Registration Fees:Typically between EUR 1,000 – 2,000.

Purchasing a Property Held in a Corporate Structure:

Letters of Intent: Similar to privately owned properties, ‘Letters of Intent’ are prepared and signed, outlining the negotiated terms.

Due Diligence: The buyer’s lawyer examines the property and corporate structure to ensure everything is in order.

Share Purchase Agreement: The buyer’s lawyer prepares this document outlining sale conditions. Signed by both parties with a 10% deposit typically paid through the buyer’s lawyer. The transaction may occur under the company’s jurisdiction or an alternative, either Portuguese or otherwise. The remaining balance is transferred, and the management company transfers share ownership to the buyer. This process is usually swift, straightforward, and conducted in English.

Corporate Structure – Purchasing cost:
Legal Expenses: 1-2% of the purchase price.

IMT: Not applicable in corporate ownership.

Stamp Duty: Not applicable in corporate ownership.

Notary & Registration Fees: Not applicable in corporate ownership.

Management Company Fees: Vary based on the management company.