[BUYING AND SELLING REAL ESTATE IN PORTUGAL]
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IV.1. INDIVIDUAL (DIRECT ACQUISITION) The formalization of a real estate acquisition requires the compliance of some important steps, as follows:
IV.1.2. SALE AND PURCHASE PROMISSORY AGREEMENT Before the formalization of the real estate sale, it is common practice to celebrate a promissory agreement (or pre-contract agreement) as an immediate binding document, in which case the signing of the definitive sale agreement is usually conditional upon the parties compliance with several obligations. The parties can also agree with a deposit and down payment of the property price. In the case of default by the promissory seller, the promissory purchaser may receive twice the amount paid; if the default is caused by the promissory purchaser, the promissory seller can keep the amounts he has already received. IV.1.3. SALE AND PURCHASE AGREEMENT The real estate sale is formalized either in a deed, signed before a notary, or by a certified private document, which can be signed in the presence of a lawyer. Altogether with the deed, or certified private document, there is the Land Registry Office record, which is one of the main instruments of a real estate deal, destined to make public the property’s actual legal status. Due to the principle of the priority of registration, the first registered right is effective before third parties and prevails over their incompatible rights even if those rights have been established before the date of registration. Accordingly, together with the sale and purchase agreement, the registry of the property acquisition is vital to assure the protection of the purchaser before third parties.
IV.1.1. INVESTIGATION Investigating the property intended to be acquired by checking its commercial, legal, tax, environmental and urban status is essential for a clean and structured execution of the sale and purchase agreement. Usually, it is done by commissioning due diligence procedures, which should ensure and guarantee that the property in question is not subject to any encumbrance, costs, or limitations (registered with the respective Land Registry Office), or that any impediments have been extinguished before or after the sale. If the intention is to acquire a plot of land, the buyer should also verify, with the competent entities, the urban planning in all its different forms, as well as any restrictions and licenses. On the other hand, if the intention is to acquire a building, or building unit, the buyer should also verify the use permit license which defines the purpose of the property.
ILN Real Estate Group – Buying and Selling Real Estate Series
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