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Promessa de Compra e Venda Contract in Portugal
literally translated means 'a promise to buy and sell'.
In Portugal when you have found the property you wish to
purchase it is customary to sign a Promessa Contract,
which secures the property and effectively takes it off
the market.
The promessa
contract means
the seller promises to sell the property and the buyer
promises to buy the property for an agreed amount within
a given timeframe. A promessa contract is usually drawn
up by a lawyer (Advogada)
and it not only
identifies all parties involved - the buyer and the
seller - but also the property itself. In addition to
this the promessa contract regulates the terms of
conditions of the agreed sale including the sale price,
date of completion and any other clauses either the
buyer or the seller wishes to include.
The
promessa contract is signed by all parties, then the
lawyer will register this online or at the Notary's
office to ensure it is official and legally binding.
At the
point a promessa contract is signed a deposit is
required to be handed over by the buyer. Generally this
amount is around 5% to 10% of the overall purchase
price, however this can vary. It is advisable the amount
should never exceed 50%.
Within
the promessa contract there are several standard
clauses, though one in particular gives a certain amount
of power to the buyer. The breach clause stipulates
should the sell pull out of the sale, the buyer is
legally entitled to either demand compensation equal to
twice the amount of the deposit paid or force the seller
to continue to complete the sale. The second option does
require taking out legal proceedings against the seller
in court and can be quite lengthy and costly.
The
breach clause also states if the buyer no longer wishes
to continue with the purchase, the deposit is forfeited.
It is
pertinent to note, in order for a Promessa Contract to
be legally binding in Portugal, it must be written in
Portuguese. While this can leave you wondering what you
are signing, a good lawyer will ensure the contract is
also written in English to ensure you understand all
details you are signing. |
