The Property Banks Buyers Guide to Madeira
Stage 1 - Are you ready to buy?
If you are REALLY ready to buy, this means that if you find your
ideal property, you will be able to nominate a lawyer of your choice
and have funds available to pay the required deposit on your chosen
property. This does not have to be done while you are visiting the
island, but can be postponed until you return home and have
appointed lawyers to verify the documentation.
Stage 2 - Promissory Agreement
Having chosen your property and agreed a purchase price with the
vendor, it is customary for a 'Promissory Agreement' to be drawn up
and agreed upon by lawyers acting for both vendor and purchaser.
This agreement obligates the vendor to sell the property at the
agreed price, and the purchaser to buy. Under Portuguese law, if the
vendor cancels their decision to sell they must compensate the
purchaser twice the value of the deposit paid. If the purchaser
cancels their decision to buy, they will forfeit the deposit paid.
The amount of the deposit (typically 30%) and date by which the
balance must be paid, are open to negotiation between both parties.
NOTE: It is possible for the purchase of a property to be completed
in as little as two weeks if both parties elect to bypass the
'promissory agreement' and go directly to the 'escritura' stage.
Stage 3 - Pay the Deposit
Normally paid by bank transfer according to negotiated terms within
the promissory agreement.
Stage 4 - Escritura
To officially conclude the sale and purchase of the property, the
transfer of the Title Deed occurs at the 'Escritura' act which is
officiated by a Public Notary. The date of this act is subject to
the terms of the Promissory Agreement. It is at this point that the
balance of the funds are paid and the 'keys' of the property will be
handed over.
Stage 5 - Caderneta Predial
Your lawyer will complete the property registration process by
notifying the land registry department (Certidão Registro Predial)
of the 'escritura' details and that you are now the legal owner.
This allows the local government to record you as the person
responsible for paying annual 'rates' on the property by way of a
document known as the 'Caderneta Predial'.
Additional expenses to consider
You should budget an additional 5% over the purchase price of your
property to cover the costs of lawyers fees, notary fees and
government taxes. It can be less than this but we generally advise
to err on the side of caution.