The legal process of buying property in Portugal (for European buyers)
Buying a property in Portugal: what you need to know in legal terms!
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Legal steps to follow when buying property in Portugal
Article updated on: 23/01/2025
Buying a home in Portugal as a European citizen requires thorough preparation and an understanding of local legal requirements.
Whether it’s for a primary residence, vacation home or rental investment, it’s important to have a clear understanding of the Portuguese real estate market to secure your project and avoid pitfalls.
This guide, designed for European buyers, will take you step-by-step through the legal process of buying property in Portugal.
You’ll find all the information you need to identify potential challenges, avoid unpleasant surprises and complete your purchase successfully with professional and personalized support.
Table of contents
1) Property Reservation
Once you’ve found your ideal property and your offer has been accepted, you can proceed with the reservation. This step involves making a deposit, typically around €5,000 (although this amount may vary depending on the property’s price).
Payment of the deposit
The reservation amount is transferred to an escrow account, managed by your lawyer or the real estate agency. This account holds the funds until the signing of the Promissory Contract (CPCV in Portugal).
Securing the property
In theory, the reservation ensures that the property will be removed from the market, preventing its sale to other potential buyers until the CPCV is signed. However, it’s important to note that due to high competition in real estate markets in major cities (like Lisbon or Porto), some property owners may refuse to hold the property and prefer to keep it available for other buyers.
In summary, the reservation is an initial step to secure the process, but it does not replace a thorough legal analysis or the completion of necessary legal formalities for the purchase.
Initial legal checks
During the reservation period, your lawyer must conduct several essential checks regarding the property:
- The presence of any mortgages or outstanding charges.
- The identification of restrictive clauses.
- Compliance with required building permits.
These checks are essential and must be completed before signing the CPCV to ensure that all property information is accurate and up-to-date.
Limitations of the reservation
While it is an important step to protect the buyer, it’s worth noting that some property owners, particularly in highly competitive markets, may refuse the reservation. In these cases, it is advisable to assess the feasibility of this step on a case-by-case basis.
2) Hiring a lawyer in Portugal
When buying property in Portugal it is essential to hire a qualified lawyer. The lawyer plays a key role by carrying out all the necessary legal checks and ensuring that the transaction complies with Portuguese law.
Legal checks
Before signing the Promissory Contract (CPCV), the lawyer must
- Verify that there are no encumbrances, mortgages or debts on the property.
- Identify any restrictive covenants or legal restrictions.
- Confirm that the property complies with the Local Urban Plan (Plano Director Municipal or PDM) registered with the Câmara Municipal.
- Ensure that the building or use permits comply with current legislation.
These checks are essential to avoid future problems, such as purchasing a property without the necessary legal permits or burdened by undisclosed restrictions.
Power of Attorney
It is customary to give your lawyer a Power of Attorney (an official document allowing him to act on your behalf) during the purchase process.
If you are unable to establish this power of attorney in Portugal, it can be arranged in your home country through the Portuguese embassy or consulate with the assistance of a local notary.
However, it is recommended that you complete this step directly in Portugal as it is often quicker and less expensive.
Lawyer’s fees
The fees for a lawyer specializing in real estate transactions are usually between 1% and 1.5% of the purchase price, excluding VAT. These fees cover all the steps necessary to ensure a safe transaction.
Legal services of Tagus Property
Tagus Property offers an in-house legal service provided by experienced lawyers specializing in real estate transactions. This service includes
- Personalized assistance throughout the purchase process.
- Comprehensive legal checks to ensure that the transaction complies with the law.
- Security and transparency at every stage of the transaction.
If you need recommendations or additional information about legal assistance, we’re here to help!
3) Signing the Promissory Contract in Portugal
The Promissory Contract (CPCV) is a legally binding preliminary agreement that formalizes the deal between the buyer and the seller. This document is usually signed a few days after the reservation. However, in many cases, especially in the current market, it can be signed directly without going through the reservation stage.
Once the purchase price has been agreed upon and the documents and contract have been reviewed and validated by the lawyer, both parties sign the CPCV. At this point, the commitment to buy and sell becomes legally binding.
Terms and conditions of the CPCV
The CPCV contains all the terms agreed upon between the buyer and the seller, such as
- The purchase price of the property.
- Deadlines for completing the transaction.
- Any special clauses or conditions relating to the property.
Although not mandatory, the CPCV can be registered with a notary for greater legal security.
Payment of the deposit and penalty rules
Upon signing the CPCV, the buyer pays a deposit to the seller, usually between 10% and 30% of the total property price. This deposit serves as a guarantee for both parties and is subject to the following rules under Portuguese law:
- If the buyer withdraws: The deposit is forfeited to the seller.
- If the seller withdraws: They must return double the deposit to the buyer as compensation.
These penalties are established by Portuguese law, even if they are not explicitly mentioned in the contract.
Suspensive clauses
It is possible to include suspensive clauses in the CPCV, such as
- Making the sale conditional on securing a bank loan.
However, this practice is rare and often rejected by property owners in the Portuguese real estate market.
The importance of a trusted lawyer
At this crucial stage, and before signing the CPCV, it is essential to engage an experienced and reliable lawyer who can
- Review the contract to ensure that it protects your interests.
- Ensure compliance with Portuguese law.
- Confirm that all necessary conditions are included in the CPCV.
Tagus Property lawyers
At Tagus Property, all our lawyers specialize in real estate and taxation and are fluent in English. This ensures smooth communication and a simplified process at every stage.
If you need assistance to ensure that the CPCV is compliant and your interests are protected, our team is here to assist you throughout the process.
4) Obtaining a NIF (Tax Identification Number)
Before signing the final deed of sale, each foreign buyer must obtain a Tax Identification Number (NIF). This number is essential to complete any real estate transaction in Portugal.
What is the NIF?
The NIF is a number issued by the Portuguese tax authorities. It plays a crucial role in various legal and financial procedures in Portugal. This number is required for
- Opening a bank account.
- Pay taxes and fees associated with the purchase of real estate, such as IMT (Municipal Transfer Tax) and IS (Stamp Duty).
- Formalize real estate transactions and other official contracts.
How to obtain the NIF
The procedure for obtaining a NIF depends on where you live:
- In person in Portugal:
The NIF can be requested at any Finanças (Portuguese Tax Office) office. - Through a tax representative:
If you are not resident in Portugal, but in a European Union country, you are no longer required to appoint a tax representative resident in Portugal (this requirement has recently been removed). - With the help of Tagus Property:
Tagus Property can handle the entire process of obtaining your NIF. Our team will coordinate directly with the tax authorities, ensuring a quick and hassle-free process.
Required Documents
To obtain a NIF, you will need to provide
- A valid form of identification (passport or ID card).
- Proof of residency abroad (such as a utility bill or official residency certificate).
Obtaining a NIF is an essential step for any foreign buyer wishing to purchase property in Portugal. With Tagus Property’s assistance, this administrative process is simplified, allowing you to meet all legal requirements quickly and efficiently.
5) Finalizing the deed of sale
The Promissory Contract sets a date for the signing of the official Deed of Sale (escritura pública), which formalizes the transfer of ownership. This deed is usually signed between 2 and 12 weeks after the completion of the promissory contract.
The deed of sale process
The deed of sale is signed in the presence of a notary and is the final step in the transaction. The main steps include:
- Payment of the final balance:
The buyer transfers the balance of the purchase price to the seller by bank check. - Legal verifications by the notary:
The notary verifies the validity of all documents presented by both parties and ensures that the transaction complies with Portuguese law. - Signing the deed of sale:
Once the deed has been signed, the Notary issues an official copy of the “escritura pública” (deed), confirming that the property has been legally transferred from the seller to the buyer.
Registering the property with the Land Registry
Once the deed has been signed, the notary will register the property at the Conservatória do Registo Predial (Portuguese Land Registry).
This registration is an important step to ensure that the property is officially recognized and that the transfer is legally protected.
Updates and notifications after transfer of ownership
Once the property is transferred, the new owner must notify certain entities to update contracts and services associated with the property. These include:
- Electric and gas utilities: Transfer utility contracts to the new owner.
- Local services: Updating contracts for water, telecommunications, and insurance.
The final step to owning your property in Portugal
Completing the deed of sale is the final step in officially becoming the owner of your property in Portugal. With proper legal assistance, this stage will go smoothly, ensuring a safe and hassle-free transaction.
Support from Tagus Property
Tagus Property offers a comprehensive service to guide you through this final stage. The agency ensures that
- All necessary documents comply with Portuguese law.
- The property registration is completed correctly.
6) The role of the notary in Portugal
In Portugal, notaries are legal professionals with public authority to prepare and certify contracts. However, their role in real estate transactions differs significantly from that of notaries in other countries, such as France. Although both nations share a legal system rooted in the Napoleonic Civil Code, the Portuguese peculiarities, particularly in the real estate sector, deserve attention.
Key differences in the role of notaries in Portugal
A. Limited involvement in advisory services
Unlike in France, Portuguese notaries are not charged with advising the parties involved in a real estate transaction.
- This is the responsibility of lawyers, who represent their clients’ interests, carry out legal checks and ensure compliance with the law.
B. A role focused on notarization
Notaries intervene primarily in the final stage of the process, during the signing of the official deed of sale (escritura pública).
Their main tasks include
- Authenticate the signatures of the parties.
- Verifying the payments between the buyer and the seller.
- Supervising the transfer of ownership.
Notaries do not participate in the intermediate steps of the transaction; their role is limited to ensuring the validity of the final deed.
C. Role of lawyers in verifying compliance
In Portugal, lawyers (or sometimes banks in the case of a mortgage) are responsible for carrying out due diligence. These legal checks include
- Reviewing the property documents.
- Checking the clauses of the Promissory Contract (CPCV) to protect the buyer.
- Confirming the legality of the property.
D. Escrow accounts for real estate transactions
In real estate transactions, payments related to taxes, notary fees and the balance of the purchase price can be made through an escrow account supervised by a lawyer or, in some cases, a notary.
- These accounts comply with the standards of the Portuguese Bar Association, ensuring transparency and security in financial transactions.
E. Payment of the deposit and guarantees in the Promissory Contract
If a Promissory Contract (Contrato de Promessa de Compra e Venda or CPCV) is signed prior to the sale, the deposit is paid directly to the seller. This differs from the French system, for exemple, where the funds are usually held in escrow.
According to Article 830 of the Portuguese Civil Code, penalties apply in the event of non-compliance with contractual obligations:
- If the seller withdraws: He must return double the deposit to the buyer.
- If the buyer withdraws: The seller may keep the deposit as compensation.
Summary
In Portugal, the role of the notary is primarily limited to validating and authenticating the final transaction, while lawyers play a key role in legal verification and representation of the parties. This clear division of responsibilities ensures an organized process. However, it is crucial for any foreign buyer to engage a competent lawyer to ensure the entire transaction process.
7) The Role of Tagus Property Real Estate Agency
Tagus Property manages multiple transactions each month and supports you at every stage of the property purchase process in Portugal.
We operate with full transparency in the best interest of our clients, assisting from the initial project analysis to property selection, organizing viewings, negotiating the price, verifying the compliance of contracts and documents related to the chosen property, and finalizing the process with the signing of the authentic deed of sale.
Comprehensive Expertise for a Seamless Process
We have specialists for every aspect and phase of the transaction, ensuring:
- Personalized guidance tailored to your project.
- Streamlined organization to save you time and effort.
- Professional oversight to expedite the process and secure your investment.
Tagus Property takes care of all the necessary steps on your behalf to simplify and accelerate your property purchase in Portugal.
Disclaimer : The information provided is for general guidance only. Tagus Property cannot be held responsible for any potential errors or inaccuracies.
Your turnkey property project in Portugal
Tagus Property offers a comprehensive and personalized service to support you throughout your property purchase journey in Portugal. Here’s what we provide:
Tailored Support for Your Real Estate Project
- Project Analysis:
- Detailed study of your real estate project.
- Review of financing options (if needed).
- Customized Planning:
- Development of a precise set of requirements based on your needs.
- Proposal of a personalized assistance mandate tailored to your project.
- Expert Guidance:
- Personalized support from a local market expert.
- A single French-speaking point of contact.
Efficient Property Search and Selection
- Market Research:
- Comprehensive market prospecting.
- Targeted selection of properties based on your requirements.
- Property Pre-Visits:
- Pre-visits to properties, including analysis of the surrounding environment (neighborhood, visual nuisances, etc.).
- Detailed pre-visit reports provided to you.
- On-Site Visits:
- Organization of property visits for shortlisted options.
Negotiation and Purchase
- Negotiation:
- Price negotiation and offer terms for the selected property.
- Legal and Administrative Assistance:
- Securing the sale deed with the support of a lawyer to verify purchase/sale contract terms.
- Assistance with the notary process and organization of the authentic deed signing.
Post-Purchase Support
- Relocation Assistance:
- Help with settling in, through our network of local partners (if needed).
Tagus Property simplifies your real estate journey in Portugal, ensuring a seamless and secure experience from start to finish. Feel free to reach out for more information!
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