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Congratulations! You have decided to purchase a home, or are thinking about buying one. You'll be joining the ranks of hundreds of families who realize that home ownership offers a number of benefits including building equity, saving for the future, and creating an environment for your family. When you own your own home, your hard-earned money contributes to your mortgage. The equity you earn is yours. Over time, your home will increase in value.
In the following short summary, you'll find the information you need to make a wise buying decision. We'll take you through the planning process step-by-step , to help you determine which home is right for you.
Please contact me if you have any questions about buying a home in Funchal or elsewhere in Madeira. |
Buying Guide
These brief notes are intended only to guide you at the initial stages of property hunting in Madeira. Your lawyer will be able to advise you of the full technicalities of property purchase, and will indeed perform these tasks on your behalf.
Stage 1 - Are you ready to buy?
If you are REALLY ready to buy, this means that if you find your ideal property with Proprifunchal, 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.