The first important step is after you have done your choice about a property and negotiated a good deal, is to receive from your agent a “Letter of Intent”. The LOI put the base of all conditions agreed during the negotiations. After your approval on this LOI, this one is sent to the lawyers of the vendor and the buyer. At this point, it will be the vendor’s lawyer who will then forward all the property documentation to the buyer’s lawyer. It will be his function to perform his due diligence on the documentation.
Once the buyer’s lawyer has performed his due diligence procedure, he will prepare the draft of the Promissory contract which will be sent for review to the vendor’s lawyer. The promissory contract has to be signed by the vendor and the buyer or by the persons having a Power of Attorney (POA) to do it.
At the same time, the promissory contract is signed, the buyer will normally pay a 10% deposit to the vendor, generally via the lawyer’s client account. This amount of 10% can be changed following the decision mentioned in the LOI.
The Final deed is the transfer of the ownership of the property to the buyer and it will be signed on a date defined in the LOI and at the notary office. They can also give a POA to their legal representative or to the persons of their choice.
The purchase balance is then paid with the associated taxes and the notary records the transaction officially. The buyer’s lawyer will register the new owner in the Land register and take care usually also of the changes of the utility bills into the new owner’s name.
To buy a Property which is held in a Corporate Structure
The main difference, after the LOI, is the fact that the buyer’s lawyer has to carry out the legal searches on the property buy mainly to make the due diligence on the Corporate structure i.e representation, history, bookkeeping, warranties…
Instead of a promissory contract, a shear Purchase Agreement will then be prepared by the buyer’s lawyer and upon the signature by both parties, the usual 105 deposit will be paid to the vendor.
It’s important that this transaction takes place under the jurisdiction of the company’s domicile but also under the Portuguese one and take care to safeguard the formalities applicable to the transfer of the shares in the jurisdiction of the company’s domicile
The process is completed by both parties fulfilling simply the terms described in the Share Purchase Agreement and of course, the buyer will transfer the balance of the purchase price to the vendors
Buying costs for a privately owned property
Legal expenses : generally 1%
IMT : variable but up to 6,5% and 7,5% for the properties with a value above €1M
Stamp duty : 0.8% of the purchase price
Notary and registration fees: usually between €800 and €1500
Buying costs for a property corporate owned
Legal expense : generally 1 to 2%
IMT : not applicable in a corporate ownership
Stamp duty : not applicable
Notary and registration fees: not applicable
Management company fees : usually between €1000-2000 /annum