Experiences with the Promissory Contract
When you’ve found a property you want to buy then you need to sign a Promissory Contract (Contrato de Promessa de Compra e Venda). This lays out the intention to buy, the details of the property, with the relevant price, stakeholders and the date that the final contract has to be signed by. It also states any other items that you as a buyer may want the owner to do before the final contract is signed. In the past I have seen this state items such as install central heating, fence off the garden etc. In our case there was nothing like that but it did say that the land had to stay as is and that none of the olive trees were to be removed (a big part of the property).
The buyer also has to pay a deposit at this point. When I first bought a property, this was 10% and I thought that was the law but it turns out not to be the case. For the property we are currently buying we have paid around 13% and we initially paid that to the estate agent (which is a big no-no if you read all the advice). The reason I did this was because that is the estate agent’s standard ‘take it off the market’ deposit. I spoke to a lawyer about this and did some research and apparently this is all OK. The estate agent is a big multinational so again I wasn’t to concerned about handing over the money before I signed the contract. Usually you would avoid doing this and make all payments through your solicitor/lawyer in case of any issues down the line.
We were then ready to sign the Promissory Contract, first time around we did that in person with our solicitor. This time we did it all by email, again something new to me! But I checked it, my lawyer checked it and we agreed it was all fine.
The next stage for us, as we are buying a rural property is then for the owners to send out letters to the neighbours to see if they wanted to purchase the property at the same price. Apparently this is for rural properties only and is only for property that literally is next door. So we have a neighbour that is separated from us by a stream and because of this we didn’t have to notify them. We had a nervous wait and then the news came through that we could go ahead with the purchase. After this point we were then able to set a date for the signing of the property transfer.
If we pull out at this stage then we forfeit our deposit and may have to pay extra (such as the estate agent’s commission). On the other hand if the buyer pulls out not only do they give you back your deposit but also compensation which is usually the same amount again.
So in my experience this part of buying a property in Portugal varies widely depending on where you are and who you are dealing with. In all cases I would suggest using a qualified lawyer or solicitor (depending on the complexity of your purchase) to help you with the process.
Have you bought a property in Portugal recently? What were your experiences of the Promissory Contract?