The vast majority of properties for sale in Portugal are listed by professional estate agents. In the following post we would like to offer an insight into some of the most relevant aspects of the work of these estate agents and the sale of property in Portugal.
Who pays the fee? – Very rarely does a buyer formally instruct an agent with the task of finding a property. It is usually the vendor who signs a real estate contract, and it is the vendor who owes the agent the fee in case of a successful sale.
How high is this fee? – There are no regulations in place that limit a minimum or maximum fee for real estate contracts. However, the fee is usually 5% + VAT (currently at 23%) calculated on the selling price.
When is this fee due? The fee is due once the agent has fulfilled his task, which is: to find a buyer. Most contracts have a clause which stipulates that in case of a promissory contract, half of the fee is due then. The balance is paid once the public deed has been signed. If there is no promissory, then the full amount of the fee is due on the date of the deed.
What is the difference between a promissory contract and deed? The promissory contract, called (Contrato de Promessa de Compra e Venda in Portuguese, or CPCV for short) formalizes the intention of the buyer to purchase a property. The property is still legally owned by the vendor and only at the deed will the property be registered in the name of the buyer. CPCV’s are signed for several reasons and are not mandatory. In most cases, the buyer is still awaiting release of funds from his bank. In other cases, some of the paperwork pertaining to the house may still have to be updated in order for the deed to take place. The time period between CPCV and deed is agreed between buyer and vendor and is on average 3 months.
Is a down payment due on the CPCV? Yes. The buyer usually pays a deposit of 10% of the agreed selling price. The balance is due on the deed. The deposit is usually paid directly to the vendor.
Is there a risk of loosing the deposit? Yes. It rarely happens, but in cases of non-fulfilment through buyers’ fault, the vendor is allowed to keep the down payment and put the property back on the market. Conversely, in cases of non-fulfilment through vendors fault, the buyer is entitled to get his deposit back plus the same amount additionally. These terms are included in the clauses of the CPCV.
Who is responsible for preparing the promissory contract? Usually, the buyers lawyer. Some agencies may offer templates, but real estate agents are not allowed to prepare promissory contracts. If an agency has an inhouse lawyer, they may prepare the contract. However, we advise all buyers, regardless of being Portuguese of foreign, of hiring a lawyer once the decision of buying a property has been taken. Your lawyer will represent your interests when checking the documents of the property, the form and content of the promissory and all other legal matters related to the purchase.