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Algarve Master Developers
Simpson & Runge Intl Lda
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Detailed Guide to Buying

Non-Residents and Fiscal Representation.
You will need to apply for a fiscal number (número de contribuinte) from the local Tax Office (Finanças). This is a tax number, in the form of a card, and is required to open a bank account and pay the rates and utilities on the property. Under current Portuguese legislation, it is mandatory in most instances for non-residents with income arising in Portugal to have fiscal representation. The Fiscal Representative is obliged to see that the non-resident meets compulsory compliance commitments. As the liaison between the taxpayer and the Tax Office, the Fiscal Representative can also help guide the non-resident through Portuguese bureaucracy

Reservation Deal.
Once you have chosen a property and the purchase price has been agreed, we would ask you to sign a Reservation Deal, which simply confirms that you are a serious buyer and the seller will then take the property off the market. At this stage, we would ask for a deposit (“sinal”) which is usually €5000. The deposit is made payable to the seller, but remains in our office and is not presented for payment until all parties are ready to sign the Promissory Contract – usually up to 30 days after the reservation is signed.

Documentation.
At this stage your lawyer will get involved in the transaction, and you can give him Power of Attorney to sign the documents on your behalf, if you would prefer. He will obtain the following documents from the seller:

  • Certidão de Teor confirms that the seller has title to the property, and advises whether there are any outstanding mortgages on the property.
  • Caderneta Predial is held by the tax office and confirms the size of the property, its location and boundaries.
  • Licença de Utilização is issued by the town council confirming that the description of the property is in accordance with the property you are buying.
  • Plantas seller will provide plans of both the property you are buying and sometimes the whole development too. These allow both you and your surveyor (if instructed) to identify all parts of the property as planned and registered by the town council.
  • Ficha Tecnica de Habitação a new document and applies to all properties built from 1st January 2004. This gives all the information about the property such as the builders’ details, the materials used and who supplied them.
  • Seller identification is the identification document of the seller and will be provided to your lawyer along with his tax number.

Promissory Contract.
Once all documents are available (and normally these documents have already been obtained from the seller when the property was put on the market and listed in our books) both parties will sign a Promissory Contract. This is a legally binding contract between sellers and buyers and signed before a Notary. It is prepared by a lawyer and all agreed items will be specified clearly in the document to avoid future problems. It will include the following:

  • The identification of the parties, and their representatives (if applicable).
  • The identification of the property, its registration number, description, details of its Construction Licence and confirmation that there is clear title.
  • The price agreed for the sale, including the form of payment.
  • The amount of the deposit to be paid before the Final Deed is signed.
  • The deadline for execution of the Final Deed (Escritura) and any conditions that the parties must meet before then.
  • Usage of the property by the parties before the Final Deed is signed and whether the buyer may build on the property in the interim period.
  • Whether interest is payable if there are any delays to the completion of the sale and the conditions in the event of default on the contract.

Upon execution of the Promissory Contract the deposit cheque is passed on to the seller and it will be presented for payment. At this stage, should the buyer default on the Contract, the deposit monies will normally remain with the seller, but if the seller defaults, he is required to refund the buyer twice the amount of the deposit.

Property Transfer Tax.
Prior to the Final Deed, the property transfer tax (IMT) must be paid at the local Tax Office. This tax can constitute a major cost for the buyer, to get an idea of the values involved please check the following page.

This tax has to be paid at least three days prior to the signing of the Final Deed once the original proof of payment has to be presented to the Notary during the act of signing the final deed.

Final Deed.
The Final Deed is also prepared by a lawyer and contains similar details to the Promissory Contract. Both parties attend at the Notary’s office for the public reading and signing of the document (which will of course be translated into English by us on your behalf) and the balance of the purchase price is then paid to the seller

Stamp duty and registration.
Stamp Duty must paid at this time.
Finally, the property is registered in the name of the new owner at the local Land Registry. At this stage, you should contact the various utility companies and also the Tax Office in relation to the payment of general rates (IMI). The latter must be registered in your name within 60 days of the Final Deed, but we are happy to assist you in this regard.