Buying a property in Madeira is a different process than buying a property in your home country. The laws and regulations in Portugal are different, therefore we provide you the following information about the purchase procedure in Portugal to avoid risks when purchasing.
- Reservation deposit
- Enabling a lawyer
- Promissory contract of purchase and sale
- Public deed
Once you have found the ideal property and your offer has been accepted, you will be asked to leave a reservation deposit, which is normally € 5,000 Euros and will reserve the property for a stipulated time limit. This deposit is generally held by the lawyer until the “CPCV – Contrato de Promessa de Compra e Venda” (Promissory Contract) is signed, but all this may differ when buying a property from a developer.
Please keep in mind that failure to leave the deposit or not adhering to the time limit may result in the property being put back on the market.
To proceed with your purchase you will require the services of a qualified lawyer . If you need a recommendation, we will be happy to provide you with a list of reputable bilingual lawyers.
A “Procuração Pública” (Power of Attorney) is advised to give to your lawyer , saving you time and travel costs as the lawyer can sign on your behalf when having a power of attorney in place. This official document can also be created in your home country but is more time consuming and expensive as an official translation as well as the seal of a notary and an apostille stamp must be on the document.
Prior to the signing of the “CPCV – Contrato de Promessa de Compra e Venda” (Promissory Contract) your lawyer will ensure that the property you wish to purchase is free of debt, restrictive clauses and in the case of land purchase, that you are able to build on the land. It is important to ensure that any plans in the “Câmara Municipal” (Town Hall) referring to the property, agrees with the existing construction. The vendor must be up to date with the payment of all charges (such as mortgage payments and utility and tax bills) and must sell the property with vacant possession.
If you require financing for your property, an extra clause can be added into the “CPCV- Contrato de Promessa de Compra e Venda” (Promissory Contract) stating that the contract is subject to mortgage approval (if this is mutually acceptable).
Promissory Contract of purchase and sale
Once the price is agreed and the documents are in order, both parties will sign the promissory contract of purchase and sale. All the terms and conditions agreed by both parties relating to the purchase will be set out in the CPCV. This contract can then be legalised by registering it with the notary office (choice of the buyer). The buyer normally pays a deposit of between 10% to 30% to the seller at this stage. With regards to the deposit, the Portuguese law is quite clear i.e. if the buyer defaults, he will lose his deposit to the seller, BUT if the seller defaults he is obliged to return the amount of the deposit in double.
Upon signature of the promissory contract your lawyer will release the deposit to the seller(s) or the(ir) lawyer. A date, usually 3 to 12 weeks later, is agreed and mentioned in the contract for the “Escritura Pública” (Final deed of conveyance).
The final deed is the contract that transfers the title to the property from the seller(s) to the buyer(s). This final deed of conveyance is signed by both parties (or their representatives) in front of a public or private notary, who confirms that all documentation is in order before all parties place their signature. It is at this moment that the payment is completed to the seller.
The final contract is read aloud and, unless the buyer understands Portuguese, the content has to be interpreted in the buyers language.
Once the final deed has taken place, the property is legally yours, but the property still needs to be registered with the “Conservatoria do Registo Predial” (Land registry Office).
Please note: This information is for guidance only and we cannot accept responsibility for any mistakes or misinformation. We strongly recommend Legal and Fiscal Consultations at all times prior to any transaction as the laws are constantly changing.