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Ownership Right Ownership Right is the broadest and strongest title of real estate in Portugal. It grants

its titleholder full and exclusive rights of use, fruition and disposal of real estate,

unlimited in time, within the limits of the law (it is comparable to freehold title in

common law systems).

Horizontal Property Horizontal property results from the legal division of a property or building into several

units subject to separate ownership. It confers the titleholder the right to exclusive

ownership of one of the units in a building and co-ownership of common areas of that

building, in proportion to the relative value of each unit. The common areas could

include stairs, lifts, lobbies or hallways for example.

Surface Right Surface right is the right to erect and maintain a building on land which is owned by a

third party. The surface right can be temporary or perpetual. When the right is granted

on a temporary basis, the ownership of the building erected on the land shall revert to

the land owner at the end of the surface right.

Restrictions on Ownership by Foreigners Foreign investors are not subject to any limitations on the acquisition of real estate. On

the contrary, Portugal has adopted several measures to attract and encourage foreign

investment, such as the establishment of a residency permit programme (Golden Visa)

and a more favourable tax regime (Non-Habitual Residency) than other countries within

the EU. Both schemes will be discussed in detail in later sections of this investor guide.

01 Appoint A Lawyer

It is advisable to instruct a lawyer for the property conveyancing once the purchase has

been agreed in principle. The solicitor will draw up the contract and undertake full due

diligence, which will include but is not limited to:

Ensuring that there are no issues with the title of the property

Conducting local searches to check there is nothing that would adversely affect the

property and its value

Ensuring the property has the relevant planning consents

The terms of the contract are fair and reasonable

Many of the law firms in Portugal can also act as a fiscal representative, helping with obtaining a fiscal number, which is a must for acquiring properties in the country by non-residents. The fiscal representative will be legally responsible for receiving all tax assessments on your property and making the corresponding tax payments in time,

such as IMI, income tax on rental income and capital gains.

It is advisable that you sign a Power of Attorney (POA) allowing your lawyer to

undertake certain actions (such as signing documents) on your behalf, so you don t

have the expense and inconvenience of having to authorize every arrangement

separately or travel to the country whenever something needs to be done in person. For

example, a POA for the purchase of property will often be used to allow the lawyer to

operate a bank account on your behalf, arrange utilities, pay taxes, submit forms to the

relevant authorities and deal with any completion or post completion matters on your

behalf.

The POA can be signed either locally at a notary or be sent to your home jurisdiction to

be signed, it will then require the necessary stamps from the Portuguese Embassy.

02 Promissory Contract

Once the due diligence is complete and the solicitor is satisfied, the exchange of the promissory contract between the developer and the buyer takes place. The contract

sets out the terms of the transaction, such as property details, purchase price, method

of payments, completion date, warranties, penalties, etc. Usually, the contract is signed

within 30 days of the date of reservation. At this stage, the purchaser would normally

be expected to pay a deposit (usually between 10% and 30% of the purchase price).

In Portugal, the parties become legally bound with the signature of the Promissory

Contract. Upon signing the Contract both parties are committed to transact the

property and should the buyer subsequently pull out of the purchase, the deposit will

be forfeited.

OWNERSHIP OF REAL ESTATE

Under Portuguese law, builders are responsible for minor defects for

one year after completion and structural defects for five years. After completion, it is highly recommended that a structural surveyor be

instructed to check the building and provide a fully detailed report on

the detection of any problem or building defects.

BUILDING WARRANTIES

EXCHANGE AND COMPLETION PROCESS