Buying Process

The Buying Process in Portugal

Once you have selected the property you wish to invest on and Luxury Properties successfully negotiates the deal with the vendor, the process will move forward according with the following steps:

  1. Reservation Form

This document intends to assure the agreement on the deal between buyer and vendor. It outlines the details of the sale and purchase, including the price, agreed date of exchange and completion of contract. It should be dully signed by the buyer and the vendor and a deposit of 10.000€ should be made by buyer to vendor’s lawyer account. 

You should be represented by a local lawyer of your choice; we can also recommend one of our preferred providers if required.

  1. Representation and documents

You should provide the lawyer your personal details such Passport, address… and fill in a KYC Form* (Know Your Client) which is a mandatory form. 

  1. The Promissory Contract (Contrato Promessa de Compra e Venda)

It is a legally binding contract and is signed in the presence of a notary. At exchange of contracts, the buyer pays at least 10% of the agreed sale price, which is transferred via the lawyer’s client account to the vendor. Under Portuguese law, if the vendor does not fulfil their obligations laid down in the contract, they are liable to pay back the amount paid in double to the purchaser. If the purchaser does not fulfil the contract, their money is non-refundable. The Promissory Contract will confirm buyers and vendors, title of ownership, completion date and payments.

  1. Final Deed (Escritura)

The Final Deed is signed by both parties at a notary’s office, effecting the transfer of property ownership to the buyer. Should either party be unable to attend, they can grant power of attorney to their legal representative. The remaining balance of the purchase price, along with associated taxes is settled, finalizing the transaction. Subsequently, the new owners’ details are registered in the Land Registry by their legal representative, and utility bills are transferred into their name.

  1. Buying Costs

Legal Expenses: depending on the purchase price and complexity of the transaction these are normally between 1% and 2% of the purchase price.

IMT: depending on the purchase price and property qualification as follows:

      a) Rustic land – 5% of the purchase price.
      b) Plots of land for construction, industrial, commercial or services properties – 6.5% of the purchase price.
      c) Habitational properties – depending on the purchase price. From €633.453,00 up to €1,102,920.00 it will be 6%. Above €1,102,920.00 it will be 7.5%.

Stamp Duty: 0.8% of the purchase price.

Notary & Registration Fees around €2,000 – €2,500.

(* Know Your Customer (KYC)

KYC standards serve to safeguard financial institutions against various risks, including fraud, corruption, money laundering, and terrorist financing. KYC procedures involve several steps: verifying customer identity, understanding the nature of their activities, and confirming the legitimacy of the funds’ source. When engaging with property agents, local lawyers, or banks during property transactions, you will likely be required to complete forms containing standard questions. These inquiries aim to ascertain how the funds for property purchase was acquired and whether you, your close relatives, or other beneficial owners have any political exposure.

This practice has become standard procedure, so it’s essential to anticipate and comply with it Accordingly)