Selling a Property in Portugal

Disclaimer
Every effort has been made to offer information that is current, correct and clearly expressed. The information in this summary is intended to be no more than a general overview of the position and certain details have been deliberately omitted. The contents of this page should not be taken as an authoritative statement of Portuguese law and practice. Neither the author nor the publisher are responsible for the results of actions taken on the basis of information contained in this summary, nor for any errors or omissions. This text is not intended to render legal, accounting or tax advice. Readers are encouraged to seek professional advice concerning specific matters before making any decision.

The process and laws for selling a property in Portugal are very similar to those for buying a property.

• See the AngloINFO INFOrmation page on Buying a Property in Portugal

Preparing for the Sale

The seller must make sure that all civic municipal responsibilities such as paying any outstanding Municipal Council Tax (rates) are up to date. Not paying all of the council tax owed could mean that any property purchased in Portugal could be auctioned off to the highest bidder by the authorities. If selling an apartment block or condominium there may be final maintenance and service charges to be paid (Liquidação dos Encargos do Condomínio).

Once a buyer has been found and a sale agreed the seller should also arrange to pay in full and then cancel utility services such as the electricity, gas, water, insurance and telephone (Recisão das Assinaturas).

Engage an Estate Agent

It is always best to use the services of a government-licensed estate agent because you will be insured against any disputes, comebacks or irregularities that could arise during the process. A licence is awarded by the government according to the number of qualifications and certificates that the agents have and means that the estate agent must use government-approved forms to carry out his activities.

One of the benefits of using a government-approved estate agent is that they usually have a large database of house-hunters and can organise viewings (Marcações e Visitas). The estate agent's fee is normally around 5 percent of the sale price.

Engage a property solicitor

It is essential to engage the services of a property solicitor to act legally in the sale. The solicitor will deal with aspects such as drawing up a Procuração Publica which is signed in the Notary Office and registered. This document means that a legal representative has been authorised to deal with the sale on behalf of the client. Some international legal firms and estate agents which deal with Portuguese property sales can draw up this document in Portuguese outside Portugal, at a Portuguese consulate in a foreign country or in a public notary office in a foreign country providing the document is translated and bears both the notary seal and apostil.

Determine the market price

The easiest way to determine what the property is worth is worth is by engaging the services of an evaluation agent (Avaliador) and a surveyor (Vistoriador). An estate agent (Agente Imobiliaríos) will usually arrange this service (Avaliação Imóveis) for the client.

The price in Portugal will be determined by various factors such as: the type of property, (for example apartment or detached (Apartamento o Vivenda/Moradia)); its size (Area Útil) and number of bedrooms, designated by the letter 'T' (T1, 2, 3, 4, 5 or 6); the facilities it has (such as a pool, off-street parking, garden); its location according to district (Distrito), urban neighbourhood (Concelho) and parish (Freguesia).

Advertising the property

Generally speaking a government-accredited estate agent will know best where to place the property and this can range from their own website, local newspapers, and national newspapers in property sections, which usually come out between Fridays and Sundays (Redacção do Anuncío).

The Sale

Whenever a property is bought and sold in Portugal a document called an Escritura Pública de Compra e Venda has to be drawn up, signed by both parties in front of a public notary and lodged at the local Land Registry (Conservatoria do Registo Predial), with copies issued to the involved parties. Once a buyer has been found the solicitors will need to get this document from the Land Registry.

Contract of Sale and deposit

Once the Escritura documents have been found a Contract of Sale (Contrato de Promessa de Compra e Venda) will be drawn up by the solicitor. This is a legally binding document setting out all the conditions of the sale. It is drawn up by a Notary (Notário) and will eventually be signed by all parties and their legal representatives.

At this stage the buyer will usually pay a deposit (Entrada) of between 10 and 12 percent of the purchase price. The deposit is held by the agent until completion. The drawing up of a contract indicates a legal intention to purchase and sell. If the seller decides to withdraw from the sale they are legally obliged to repay twice the deposit paid. If the purchaser decides to drop out of the purchase they lose their deposit.

Exchange of contracts

The solicitors representing both parties will agree upon a date when contracts will be exchanged. This is usually one month after the Contract of Sale is drawn up. During this time the solicitors will make all the necessary conveyancing checks on the property to make sure that what is outlined in the contract is as stated. The seller's solicitor or estate agent will also verify that the purchaser has been able to secure the necessary funds.

Before signing the contract both parties should check:

• Details and identity of the vendor and purchaser
• Description of the property
• Surface area of property and land
• Purchase price and breakdown of fees and who pays what
• Details of the sales agent
• Fixtures and fittings included in the sale
• Details of the mortgage (start and completion)
• Let-out clauses and penalties

On the day agreed for exchange and signing of contracts both parties and their legal representatives must attend the notary's office (Notário).

The seller should take the following documents:

• Passport, Identity Card and Residency Card
• Proof of income such as two years of tax returns or pay slips
• Bank statements showing receipt of income and payment of loans
• Proof of mortgage payments

The notary will check that all the necessary documents are in order. Payment is normally handed over via cheque to the seller's legal representative. The notary will then orally go through the terms of sale before the parties and respective solicitors involved, who then sign the Escritura de Compra e Venda before the notary. The notary then records the sale in the official notary office books and certified photocopies are made of the entry as legal proof of sale.

The original photocopy will carry the Seal of the Notary (Selo de Notário) but are unlike deeds in other countries as certified official copies can be requested at any time.

Capital Gains Tax

The seller may have to pay Capital Gains Tax on the sale of the property, although there are exemptions on tax being paid if the money is going to be invested in buying another property in Portugal, in so far the property sold was designated as the residence of the seller and the reinvestment is made in a property also to be designated as the residence of the seller. Contact the local tax office to find out if any Capital Gains Tax is payable and a tax advisor can usually determine this, especially if the vendor is a foreign resident for tax purposes.

• See the Government Tax Office website for more details and to find your local tax office

Useful Terms

Prédio	Apartment block made up of various floors
Andar	A floor of a building destined to be used for habitation
Assoalhada	Room
Estudio	Also known as a T0 – a one-room studio flat
Moradia/Vivenda	House

Further Information

• General Directorate of Registries and Notaries (Direcção-Geral dos Registos e do Notariado de Portugal - DGRN
• Citizens' Shops (Lojas do Cidadão) provide information and advice on notaries
• Lisbon Land & Property Registry (Conservatória do Registo Predial de Lisboa)
  At: Rua Visconde Santarém 32, 1000-287, Lisbon
  Tel: 218 436 490

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Information provided by F.Castelo Branco & Associates 
Av. Da Liberdade 249 1º, 1250-143 Lisbon
Tel: 213 587 500 Website: www.fcb-legal.com / e-mail
Copyright © 2007 F.Castelo Branco & Associates. All Rights Reserved.