Although parallels may be drawn between the conveyancing formalities when you buy property in Portugal with those in the UK, procedures do vary.

The property seller in Portugal
Preliminary checks should be made at an early stage before you buy to ascertain whether the person purporting to sell the property in Portugal is the lawful owner. An early check will also reveal the difficulties, if any, that may lie ahead if you decide to buy the property, such as: the property being registered in the name of the seller's grandparents or the discovery of a swimming pool built without the necessary planning permission.

Contract of sale and purchase
You or a nominated solicitor should contact the seller (or the seller's agent) and carry out preliminary investigations of title and negotiate the terms and conditions of the purchase of the property before you agree to buy, which will be set out in a Promissory Contract of Sale and Purchase (Promissory Contract).

Power of attorney
Having completed your preliminary investigations of title, if using a solicitor, you need to authorise them to formally act on your behalf when you buy your property in Portugal. This is done by passing a Power of Attorney before a Notary Public in this country. You can arrange to do this in your local area and then forward the documentation to your solicitor. The Power of Attorney will enable your solicitor to sign the deed (escritura) that transfers the property, but will also normally contain additional powers autho-rising the solicitor, at your request, to sign services contracts for the supply of water, electricity and gas.

Contract exchange
At this stage in Portugal, the seller becomes bound to sell and the purchaser bound to buy the property subject to the terms of the Promissory Contract, and a deposit is payable to the seller.

Deposit
It is common practice to pay a deposit of ten to 20 per cent on exchange of contracts. The deposit is paid direct to the seller and is, usually, the measure of damages which will be payable on breach of contract by either the seller or the buyer.

Breach of contract 
The general law in Portugal (unless otherwise agreed) provides that breach of contract by the buyer entitles the seller to retain the deposit. Breach of contract by the seller entitles the buyer to twice the deposit paid.

Completion
The time set for completion of the purchase and sale of the property should be set put in the Promissory Contract, failing which, the contract should contain a mechanism which will trigger completion of the sale. For example: to coincide with the grant of a mortgage on the property or upon construction of the apartment.

The notary public
A property is transferred when the seller and the buyer sign the deed  before a Notary Public, who acts in a similar capacity to that of a Registrar. The Notary Public witnesses the deed and enters the same in her/his books of Registers. This deed is similar to a conveyance, whereby the parties agree to purchase a price and on terms and conditions agreed in the Promissory Contract. Within a short period of time after the signing of the deed, the Notary Public produces a certified copy which is then delivered to the Land Registry accompanied by the appropriate application to officially transfer the Property to you at the Land Registry. The time taken for registration of title to the property will depend on the work schedule of the particular Registry.

Costs
On any transaction there is payable Land Registry, Notary fees and legal fees. Madeira benefits from special tax breaks.

Succession
The law in Portugal respects the law of your nationality. Under normal circumstances this means that your British Will will be accepted in Portugal. It also means that the Portuguese laws of forced heirship are not applicable and you are free to leave your property to whoever you wish. However, taking up residency in Portugal is established by producing notarised and authenticated translated copies of the original Will, Grant of Probate and Death Certificate. In the event of a death where there is no Will (total or partial intestacy), due to the deceased dying intestate, the Grant of Probate will reflect this and therefore will not prevent the administration of the estate in Portugal. However, we do strongly recommend that you make a Will in Portugal dealing solely with your Portuguese property. This can save a considerable amount of time and costs to your heirs.

And finally
The above is a brief summary of the procedure involved if you decide to buy property in Portugal. It is designed for information purposes only and should not be taken as financial advice. You are strongly advised to obtain independent financial advice prior to entering into any contract, or agreeing to buy.

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For further information about property in Portugal:
Mondego Property

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Portuguese property market update

Article first published in June 2006

Photograph courtesy of Mondego Property