Property Conveyance
Below is a summary overview of a typical Portuguese conveyancing procedure once your offer has been accepted by the vendor :-
Searches
• The first job any reputable solicitor should undertake on your behalf is to check that there are no impediments on the title deeds i.e that the vendor/s are the legally registered sellers of the asset.
• Check that there are no liens, servitude or habitation restrictions on the property or whether any restrictions exist to the sale of the property.
• Notify you of any existing mortgages that may exist on the property.
Promissory contract of Purchase and Sale (Exchange of contracts)
• There is a misconception by the general public that signing a promissory contract is a legally binding requirement – this is not technically true, however, it is true to say that a promissory contract is signed between both parties in the majority of property sales in Portugal.
• The promissory contract is a prelude to the final deed and will detail the agreed purchase price, the deposit to be paid, any stipulations on the completion date, inclusion of furniture and any additional conditionality attached to the purchase that has been previously agreed by all parties.
• The level of payment (deposit) required here is down to the discretion of both parties but is typically around 10% of the asking price.
• If the vendor does not sell the property there will be an obligation to pay the buyer double the agreed deposit as compensation. If the buyer does not buy the property then the deposit will be forfeited.
“We always provide a copy of the promissory contract translated in a language of your understanding before we sign the final contract in Portuguese which will only be signed upon your authorisation” Vitor Ferreira
Power of Attorney
• In many cases our overseas clients may require a Power of Attorney which can come in many guises but is fundamentally about giving the authority for another person to act on your behalf.
• The POA can be signed either locally in a notary or sent to your home jurisdiction to be signed which will the require the necessary stamps – Apostille from the Portuguese Embassy.
“We always make sure that any POA that is signed on our behalf by our clients is clearly translated and with the full scope of those powers explained to you.” – Vitor Ferreira
Final Deed - Completion (escritura de compra e venda)
• This is the final contract for the purchase and sale of the asset and in essence formalises and registers the transaction between both parties. At this stage you are now the legal owner of the property and the vendor has relinquished all rights to the asset.
• The final deed can be signed at either a private notary or public notary with representatives from all parties present.
Associated purchase costs
• IMT - Transfer tax (Imposto Municipal sobre as Transmissões Onerosas de Imóveis)– This is the largest single cost associated with the purchase of a property in Portugal and this government tax works on a sliding scale based upon the purchase price with deductions.
To calculate the IMT that you will pay for your property in Portugal please click here.
• Acquisition Stamp Duty (Imposto do Selo) – This government tax is set at 0.6% of the declared purchase price at the final deed.
• Mortgage Stamp Duty – If you are obtaining a mortgage in Portugal for the acquisition of your property there is government tax is set at 0.6% of the laon amount secured.
For more details about mortgages available in Portugal please go here.
• Notary charges – This varies from notary to notary and can depend on the regime used for the final deed to be signed but typically this figure is circa Euro 750.00
Associated running costs (taxes)
• IMI (council tax) – Imposto Municipal sobre Imóveis – This is calculated on the registered tax value of the property (VPT ) on urban and rural properties.
• The tax is calculated based on the size, type, facilites and location of the property. IMI can be elected to be paid either in one, two or three instalments.
“I will always ensure that our clients receive a breakdown of the associated taxes and fees at the point of confirmation of the agreed purchase price and before the promissory contract is signed. Full transparency for our clients on the funding requirements for completion are very important to our firm!” Vitor Ferreira
Services provided after the completion
• Direct debits for utility payments
• It is recommended that a will be structured for all foreign nationals
For more information of our free will service please go here …..