Portugal Forum

The Alagarve has also become a popular residential area for expatriates and the affluent of Portugal. If you have fallen in love with the beautiful beaches and the rest and recreation offerings of the area, here are some tips you should know before purchasing property in the Alagarve region of Portugal.

1. Visit the area. You need to see the place for yourself. No picture or image cannot do justice to the beauty of the Alagarve. Once you actually put your feet in the sand and soak in the sun, you can feel the beauty of the area.
2. Check property listings online. After seeing the Alagarve and feeling its allure, you can now go into the formalities of finding the best piece of property in the area for your purposes. There are many listings online for properties and agents. You can even arrange your vacation around viewing the properties in the area. Find the site offerings in English so you can be assured that you can easily communicate with your agent as to the fine print of the sale.
3. Check your finances. The Alagarve property prices are quite high, some even higher than comparable properties in Spain. Also, tourist season is all year round so the price of properties is high regardless of the season. You can check properties within your price range but your budget should include the expenses for the fees concerning the purchase.

The Process of Purchasing Property in the Alagarve

The purchase of property in the Alagarve is a simple transaction. There have been a number of changes in the process of the year that have made purchasing a piece of property in the Alagarve easier and more cost effective as of late.

• You need to engage a lawyer. The lawyer would serve as your representative as to the governmental as well as local paperwork and requirements for your property purchase. There are many experts that offer their services online or you can engage one upon the recommendation of others.
• You need to execute a Power of Attorney. You would need this document to imbue your lawyer in Portugal the authority and the power to act for and on your behalf. The power grants your lawyer the capacity to apply for the necessitated paperwork towards the purchase of your property in the Alagarve. Having a representative with due authority can quickly address issues that may come up in the processing of paperwork for the ownership of property.
• Review Pre-Contract Enquiries. Before paying out any money or signing any piece of paper, have your representative conduct a thorough background investigation of the property. The first thing to be reviewed is the complete set of title deeds as proof of ownership. Also, the property should be what is indicated in the title deeds being offered for sale. Another item that needs to be presented is a habitation license from the local government to show proof that the construction was duly approved. Other details that need to be proofed are land registration certificates, existence of mortgages and encumbrances over the property and if third parties have interest over the property. Also, your lawyer should be able to provide you the schedule of fees for all the charges related to the purchase.
• The Caderneta Predial. The Caderneta Predial is the official taxation identification certification over the property. This document also provides the ratable valuation that is the basis if the tax rates applicable to the property.
• The Habitation License. As per legal statute since 1951, the property must have a Habitation License that shows that the Camara Municipal, the local authority has approved the construction. The license also shows that the building has complied with planning and code regulations of the area.
• The Numero de Contribuinte. This shows that you have become or will become a taxable resident of the country. All you need to do, through your lawyer, is complete the application form and attaching a photo static copy of your passport as proof of citizenship.
• The Survey Report. Though this is not a legal requirement, it is good to have this especially if you are purchasing older properties. The survey report would show the general condition of the property. This survey is rather costly, usually priced at €500.
• The Promissory Contract. Locally known as the contracto promessa de compra e venda, this document is to be signed by both buyer and seller. The details included in this document are the property details, the purchase price, the payment schedule, completion dates and other accessory agreements that have been decided upon by the parties.  Included in the promissory contract is a down payment of an amount anywhere from 10% to 20% of the purchase price. This binds the parties to the agreement and any deviation or non-compliance with the provisions of the contract mean penalties for either party. The common penalty provisions include:

1. If the seller in the contract seeks changes in the contract or fails in the performance of any provision, you as the purchaser have the right to receive compensation twice the value of the amount received.
2. If you the buyer fails to comply with the promissory contract provisions, you lose the deposit made.

• The Final Deeds or the Escritura. These final deeds are to be written and confirmed at the local notary public’s office. Upon the signing, the transaction is then entered into the official records of the locality. Then, a copy of the final deeds is to be provided the official copies of the property deeds.
• Other matters for consideration. With your power of attorney, your lawyer can sign the promissory contract and the final deeds for you or you can do these acts yourself.
• The period of time for the whole transaction may vary according to the decisions of the purchaser and seller but a transaction can be finalized between thirty to sixty days.
• The Registo Predial.  After entry by the notary public into the public record of the sale, the copy of the deed of sale must then be registered with the land registration authorities in Alagarve. With this, there is formal notification of the assumption of ownership by the purchaser over the property. 

The Fees in the Sale

There are a number of fees that need be paid for the purchase of the property. Basing the transaction to be done on the discussion above, here are the fees and payables you would need to include in your budget in buying property in the Alagarve.

• The Purchase Price. This can be agreed upon after examination of the property and seeing all the property’s documents are in order.
• The Lawyer’s Fees. This is dependent on the amount of work to be done or can be done at a billable rate per hour. The standard rate is pegged at 1.5% of the purchase price of the property.
• The Imposto Municipal Sober as Transmissoes. This is the new property transfer tax imposed. The current rate is at 6% for properties at a declared value of €500,000 and above. Comparably, declared values below the floor amount would avail of IMT tax discounts.
• Notarial and Registration Fees. The general rule is that the fees are priced at 1 to 2% of the purchase price. This fee though does not apply if an offshore company owns the property.

As you can see, the process of buying property in the Alagarve is a simple transaction. All you need to do is have the financial resources to let the process start and soon thereafter you can enjoy to sunrises by the beach and sunsets in the best place in Portugal.