Completing your property purchase in Portugal
Your long journey to owning a property in Portugal is nearly over. Offer accepted, preliminary contract signed, now all that’s left is to dot the i’s and cross the t’s with the notary.
However, there are still crucial stages to conclude the process, and there are inherent risks from moving exchange rates.
Understand how to navigate the final stages of acquiring your Portuguese property. Learn key steps to finalise the contract, protect your budget, make the payments and take possession of your property.
Preparing to complete your property purchase in Portugal
The story so far… when your offer was accepted, the first document signed was the promissory contract, known locally as the contrato de promessa de compra e venda. This contract legally binds both the buyer and seller and involves paying a deposit.
The final step to complete your Portuguese property purchase usually comes two to three months after signing the promissory contract when your lawyer has completed due diligence.
Engaging a notary is a legal requirement. They will oversee the transaction and ensure it is all legal. Your estate agent or property lawyer will usually organise this. Bear in mind that the notary is not your lawyer. To protect your interests, it is advisable to engage your own lawyer when first making an offer.
Before completion you should also arrange for the connection or transfer of utilities, such as water, gas, electrics and internet. Your estate agent may be able to assist with this.
Finalising the contract
The final sales deed, ‘Escritura Pública’ must be signed in the presence of a notary in Portugal. Both the buyer and seller must be present, but you may appoint a legal representative via power of attorney.
The notary must explain the entire contents of the contract to all present making sure that you understand the contents and legal effects. If you aren’t fluent in Portugal, a translator must assist in translating the entire document and also read it through with you alongside the notary. Once read, the contract must be signed by everyone in front of the notary, and then signed by the notary.
Granting power of attorney is simpler if you can do it while in Portugal at the notary’s office. If in your home country, for example the UK, things are more complicated.
Following the transfer of funds and the signing of documents, the transfer tax (IMT) is paid to the notary. Once completed, you will receive the keys to your new property.
The property is officially yours, but there remains one more step. You will need to register the property in your name with the assistance of your lawyer to ensure your ownership is properly documented in the eyes of the law.
It can be advisable to get a will made up as soon as you are a Portuguese property owner, especially if you want inheritance to follow UK estate planning.
Payment and financial transactions
The payment to the seller is usually by either a banker’s draft or a bank transfer.
If your money is held in another currency (pounds or dollars, say) to ensure you have enough euros on completion day it is advisable to protect your property budget from unpredictable exchange rate fluctuations. If the exchange moved against you between agreeing a price in euros and paying on completion day you might have to find thousands more to complete.
You can avoid that with a forward contract, whereby you agree to buy the required euros at today’s exchange rate.