With this in mind, we at hi-life homes took the initiative to introduce all prospective property buyers to the Legal Procedures and Purchase Costs related to buying property in Madeira.
THE LEGAL PROCEDURES
1. Portuguese Tax Number
The first step in the buying process is to be in possession of a Portuguese Tax Number. This can be obtained upon request from the local Tax Offices.
2. Purchase and Sale Agreement
Once the property has been negotiated, the terms and conditions related to the transaction are laid down in a Purchase and Sale Agreement, which both parties sign. This is a private contract that precedes and defines conditions for the actual transfer of ownership. The signing of this contract is generally accompanied by a deposit payment, usually between 10% - 30% of the purchase price. This deposit binds the parties to the extent of its value.
A typical Purchase and Sale Agreement includes:
- Full legal descriptions of the seller, the purchaser and of the property;
- Purchase price of the property and payment conditions, stating deposit amount;
- Intermediate/Stage payment amounts and dates if applicable, and final payment date;
- Completion date, i.e. date of Title Deed transfer (exchange), and conditions for hand-over of property (possession);
- Other specific clauses agreed upon by both parties
3. Title Deed
When the conditions set out in the Purchase and Sale Agreement has been met, the document of transfer of the Title Deed, the “Escritura,” is drawn up at a Public Notary Office. At this time the final payment is usually made.
The documents necessary for the Title Deed are:
- Identification documents and Portuguese tax numbers of the parties involved
- Property Docket/Booklet (Caderneta Predial) of the property
- Registration Certificate (Certidão de Registo) issued by the Property Registry Office
- License of Use (Licença de Habitabilidade) issued by the local City Council
- Proof of payment (or exemption) of the purchase taxes, issued by the respective Tax Office
4. Property Registration
The final step in the procedure is to register the purchase with the Property Registry Office (Conservatória do Registo Predial) and at the respective Tax Office (Repartição de Finanças). The registration with the Tax Office will serve to establish your annual property rates / taxes.
5. Property Documents
Registration Certificate (Certidão de Registo)
This document helps in identifying the current legal ownership and description of the property, as well as all information on any registered liens or encumbrances that may exist. This certificate is of public record and is obtained by the Property Registry Office and is indispensable for the transfer of the Title Deed at a later stage.
Property Docket/Booklet (Caderneta Predial)
A unique certificate that relates to the property’s insertion in the Property Matrix of the area. It relates to the tax office registration of the property. A copy of the same is necessary.
License for Use (Licença de Habitabilidade/Utilização)
All properties have to have a License for Use issued which effectively confirms that the authorities have approved the property for the purpose(s) that it is being used for. This license is indispensable for the title transfer to go through.
* Although all necessary care has been taken to the proof and accuracy of the information provided, the same should serve as a general guideline.
