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4 key steps for real estate due diligence in Portugal

real estate portugal

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Conducting thorough due diligence is crucial for foreigners wanting to invest in real estate in Portugal. Not only are you dealing with properties in another country, but you must also ensure that every detail is legal to avoid potential liabilities. Undertaking comprehensive real estate due diligence provides valuable insights and minimizes risk. This article will give an overview of the critical aspects of real estate due diligence in Portugal, including the legal framework, typical due diligence procedures, and common issues to watch out for.

What is due diligence and why is it necessary in Portugal?

Due diligence in Portugal is an essential property investigation process in a real estate transaction. It clarifies whether the property is legit, whether the seller has the right to transfer it, and the property’s potential investment value.

Foreigners need to conduct real estate due diligence in Portugal for several reasons:

  1. It helps them understand the local regulations, legal framework, and specific requirements for property ownership in the country.
  2. Due diligence in Portugal allows foreigners to assess any potential risks or issues related to the property, avoiding pitfalls and protecting their investment.
  3. By conducting real estate due diligence in Portugal, foreigners can identify cultural or language barriers that may impact the transaction.

Conduct real estate due diligence in Portugal in 4 steps

There are four essential steps involved in conducting property due diligence in Portugal.

Step 1: Verify property ownership

In real estate transactions, land ownership can often become a significant issue. It is common for situations where the seller does not have the legal authority to possess the land. Therefore, it is crucial, before making any financial commitments, to personally inspect and confirm the titles registered in land offices to guarantee that you are engaging with the rightful owner in a legal capacity. You may verify ownership with the Property Registry Office and tax office. 

Step 2: Inspect the property

Remember to visit the property so that you can assess its condition. When you conduct a site visit, have an inspector with you to help you identify whether the property has any hidden defects. You can also have an appraiser with you to help determine whether it is suitable for your planned investments and whether the price you are paying for it is reasonable. 

Step 3: Certify government compliance

In this step, ensure that you have a professional real estate lawyer with you, as it involves reviewing applicable laws, zoning regulations, building codes, permits, and tax payments to ensure the legality of the upcoming property transfer. It will help you avoid liability should there be any irregularities in the property. Also, you must ensure you have complied with the requirements for foreigners buying property in Portugal

Step 4: Review Agreements

Lastly, make sure to examine the contracts repeatedly. It allows for a thorough understanding of the rights, obligations, and potential risks. It helps identify inconsistencies, hidden clauses, or contractual limitations that may impact the transaction or future business operations. It is better to have a reputable lawyer help you with this step. 

Buy property in Portugal with Own Property Abroad

Do you want to buy property in Portugal? Own Property Abroad can assist you and ensure a seamless and hassle-free property journey, whether selling or buying real estate in Portugal. Thanks to our knowledge and experience in the local market, we can help with legal requirements, finding suitable properties, negotiating the best deals, and conducting due diligence in Portugal.

With our expert team, you won’t have to navigate the complexities of the Portuguese real estate market alone. For further information on how we can assist you, kindly drop your details below or email us at [email protected]. Let’s start working on your property success story today!

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Frequently Asked Questions (FAQs)

What can happen if I don’t exercise due diligence?

Failing to exercise due diligence in a real estate transaction can have various negative consequences. It can result in unforeseen legal issues, financial losses, disputes, or even the acquisition of a property with hidden liabilities, compromising the profitability of the investment.

Do you need a lawyer to buy property in Portugal?

While it is not mandatory, we highly recommend engaging legal assistance. A lawyer can provide guidance, ensure compliance, review contracts, and safeguard your interests to minimize risk and liabilities.

Can foreigners buy property in Portugal?

Yes, foreigners are allowed to buy property in Portugal. The country has favorable policies that welcome foreign investors, allowing them to own property.

Written by Monisa Ruth Simon

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