Your own attorney should draw up the draft purchase contract (contracto promessa de compra e venda). Your estate agent can help you find one. The attorney checks if the ownership papers, licenses and other documents of the fixed property, are well in order for the sale.
The attorney will then draw up a draft purchase contract. You could have, where necessary and if it is important to you, conditions precedent included in the contract. It is important to know that the attorney here works for you and therefore looks after your interests.
You pay a deposit to the owner with the draft purchase contract. Normally, this would be between 10% and 20% of the agreed price. Both the conditions precedent and the size of the deposit are things the buyer and seller have to agree upon mutually.
The contracted is drawn up in Portuguese. It is convenient to choose an attorney who speaks English, or another language you understand, if you do not understand any Portuguese. You can also consider having the contract translated into Dutch by an official translator.
Except for the property registration, it is good to get clarity, on the following matters, from the attorney:
- Has the owner paid all taxes on the property?
- Do other people have rights to your land? For example a right of way or rights to water usage, or there are agreements with the local shepherd on grazing his flock on your land.
- Is the surface area of the fixed property well in accordance with what has been registered?
- Are there neighbours with the first right to purchase?
- Does the house have a residence permit?
- Can you do what you had planned with the fixed property? Is it possible to open a camping site on the land? May you rebuild the house without a license? Etcetera.
If there are still unresolved matters, these can be solved in the term between the draft and the final contract. You can arrange the matters, which are important to include as conditions precedent, with your attorney. The draft purchase contract states the date prior to which the final purchase contract will be signed.
An extra security that you can build into the draft purchase contract is the ´recognition of signatures´.
The purchaser and seller sign the draft purchase contract. At that time the purchaser also pays the deposit to the seller.
You can give someone power of attorney, to finalise matters for you, if you cannot personally attend the formal procedures. It may be the attorney.
Deposit
The procedure of rights and obligations concerning the deposit is recorded in the Portuguese Act.
It basically means that if you change your mind about the purchase, the seller will retain the deposit amount. If the seller changes his mind about the sale, the amount must be doubled and refunded to the buyer.
Any possible exceptions to this rule may be recorded as suspensive conditions in the draft sales agreement. For example, you could include a condition that the contract is only valid if you receive a document, before the final purchase date, where the municipality confirms that you may build on the land. If the municipality’s response is that you may not build on the land, the contract is dissolved and the seller has to refund your deposit.
If the buyer or seller withdraws from the transaction due to a reason that was not included in the contract, either party has, in accordance with the Portuguese Act, the right to bind the other party to the arrangement via a legal procedure.
