The path a property transaction will follow depends on its current form of ownership. If the property in question is owned by an individual(s) then a Promissory Contract of Purchase and Sale (Contrato Promessa de Compra e Venda) is drawn up by the purchaser’s lawyer. This document contains all the terms and conditions of the transaction and a time limit is established for the signature of the final public deed in accordance with the wishes of the parties. The contract is signed by both parties, or their legal representatives, at which point a deposit is requested to be paid which would normally constitute 10% of the purchase value or more as otherwise agreed.
This legally binding document proves that the purchase has now been contracted and sealed in accordance with Portuguese legislation. If a buyer defaults and fails to complete on the contract they may lose any deposit paid. If the vendor should default, the vendor is legally obliged to refund double the deposit, though the non- defaulting party may still have the option of asking for judicial execution of the contract al depending what has been agreed in the contract.
Note that in oder to enhance this it is mandatory that the signatures of the parties or their respective representative(s) have been verified by a notary. Completion on this kind of purchase takes place in the presence of a Notary, or alternatively at “Casa Pronta” which is linked to the Land Registry office. Checks are made that the IMT (property transfer tax) has been paid and the content of the final deed of purchase and sale is verified, before being read out to the parties (or their representatives). The deed is then signed and the balance of the transaction price is paid. The original of this document remains where the transaction was completed, bound into the official records.
Authenticated copies can be obtained at any time to prove ownership. A copy of the title deed is then immediately lodged in the local Land Registry office and Tax office and the change of ownership registered.