The buying process in Portugal is straightforward and has 3 main steps, Reservation, Promissory and Deeds.
STEP ONE “RESERVATION”
Once you have found your property and agreed a price with the seller the first step is to make a reservation and show your intent to purchase, this does 2 things in general, it stops any other party from coming and making a higher offer as the property is taken from the market and secondly it allows your lawyer time to check the properties licences and make sure everything is in order, usually a reservation fee of between 6,000 to 20,000 is acceptable and the time allowed for your lawyer to complete their works is between 15 and 30 days, again both are negotiable at the point of sale, nothing is set in stone at this point. Once you’re ready to do a reservation there is a simple 2- page document to sign with your lawyer along with the reservation fee to pay.
STEP TWO “PROMISSORY”
Once your lawyer has completed all their checks they will give you a report on the property, they will also request a promissory contract from the seller which will include all the important points of the sale and a complete rundown of the property, they will send you this along with their thoughts and if they feel you should make any alterations to the contract.
Once both you and the seller agree on the promissory contract you pay a second amount that is usually a percentage of the sale price and can vary dramatically from 10% to 60% of the final sale price, at this point the contract is legally registered and it is very difficult for the seller to pull out of the sale, in fact Portuguese law states that if a seller pulls out of a promissory contract then they have to pay double to amount already paid back to the buyer, this gives assurances to the buyer as the penalties to pull out are very severe and virtually stops anybody from doing it.
STEP THREE “DEEDS”
This is a fairly straight forward process as a large amount of the work has been done at promissory. If the property you purchased was off plan then the lawyer at this point will check that all of the licences are in place and that the property is free from debt, once this is all certified you will then complete your purchase along with payment of the balance, your lawyer will then register the property under your name and you will own the freehold of a property in Portugal.
If the property you are looking to purchase is ready and you have the funds in place it is possible to skip step 2 and go straight to deeds, however not many people have the full amount available in 15-30 days which is why there is a Promissory contract signed in around 90% of property purchases.