1. RESEARCH INTO THE LEGAL STATUS OF THE PROPERTY
It is crucial to do a complete analysis on the updated main documents of the property -
Please note that, besides the above documents, there will be some properties and/or locations, that may require more, less, or different documents, and/or lead to specific types of research (ex. Plots of land for construction/development, commercial properties, planning issues, restrictions, public domain, preference rights, etc).
2. BE AWARE OF THE COSTS OF ACQUISITION AND ANNUAL MAINTENANCE
3. PROMISSORY CONTRACT - COMMITMENT!
In Portugal, it is often that the commitment on a property acquisition begins with the signing of the Promissory contract. This contract, despite not being where the transfer of title of the property ownership is stated, it will reflect all the business conditions agreed such as the price agreed for the property, method of payment, the deposit/down payment (usually 10% of the price), deadline for completion, obligations to be fulfilled by both parties, any agreed conditions as well as the consequences of non-fulfilment of the clauses included on the contract;
When we first mentioned that it marks the beginning of a commitment it’s precisely because, from the moment the promissory contract is signed, both parties will start having consequences on contract breach. The most relevant one is the general rule that states that, in case the buyer withdraws, he will then lose the deposit paid to the vendor; if the seller is the one to withdraw, he will be obliged to reimburse the deposit amount paid to the buyer together with an equal amount as a compensation resulting from the breach. Having said this, there is, alternatively to the deposit regime, the possibility of specific performance which, in any case, will work much better for the buyer having in mind that it is, in principle, easier, to oblige the seller to sell, than to oblige the buyer to buy.
4. PREPARE FOR THE DEEDS
Be aware that from the moment of signing of the promissory contract, generally there is not much more to be done until completion of deeds. It is important that the deeds are prepared in due course to avoid complications, delays, or, in some cases, even breaches of contract clauses (mainly the deadlines).
The buyer must organise the funds to pay the balance, to pay taxes of acquisition, to pay the notary fees and registration fees. This is usually done through the buyer’s representatives whom must liquidate the taxes before the deeds take place and pay them simultaneously with the deeds. Sometimes the transfers of the needed sums may take longer than what is expected. It is wise to check before with your bank.
All the possible apportions should be totally dealt with on the moment that the deeds are signed. The apportions are the annual payments that are usually divided between buyers and sellers according to each ownership period of the year.
Do not forget to issue (so that this may be in force from the moment of signing of deeds) insurance for the property. After the deeds take place, the insurance that was in the name of the previous owners will no longer protect the property.
5. COMPLETION DEEDS
This is the ultimate phase of the acquisition process (where we include the registration). The transfer of property title and the possession of the property is formalised by the signature of the public deeds, usually done in the notary by the parties or their representatives. The title deeds may also be done privately (it happens often when banks are involved in the acquisition).
After the deeds are signed, the registration of the property in the name of the buyers should be immediately submitted to the Registration Offices to avoid any risks. The registration will be completed in a couple of days and the owners will be able to see their names duly registered as property owners.
Information provided by renowned lawyer, Dr. Tiago Gonçalves Luis from Tiago Luis, Josue Coelho & Associados International Law office in Faro. For more information, please contact their law office at:
T: +351 289 887 440