Once the investor has found the property that they wish to purchase and once they have agreed upon a price with the seller, the first step that they need to make is to make a reservation and prove their intent to purchase.
This step of the process accomplishes two things in general – It prevents any other investor or party from coming in and making a higher offer for the property, thereby “snatching” it away from the initial investor. The property is instead taken off the market in this manner firstly, and secondly – this step allows the investor’s lawyer sufficient time to check the licenses relevant to the property and make sure that everything is in order.
In most cases, a reservation fee of between six thousand and twenty thousand is acceptable, and the time that the investor’s lawyer gets to complete their work is usually between fifteen and thirty days. It is worth noting, however, that both of these are negotiable at the point of sale and that nothing is set in stone at that point.
Once the investor is ready to make the reservation, there is a simple two page document that they have to sign with their lawyer, as well as the aforementioned reservation fee that they have to pay.
Once the lawyer has completed all they had to check, they will provide their client – the investor – with a report on the property.
The lawyer will also request a promissory contract from the seller of the property that must include all the important points of the sale, as well as a complete rundown of the property. The lawyer will send these documents to their client – the investor – along with their professional thoughts on the matter and the advice on whether or not their client – the investor – should seek to make any changes to the contract. Once the investor and the seller both agree on the terms and conditions of the promissory contract, the investor must then pay the second amount which is usually a percentage of the overall price of the property and this figure can vary drastically – from ten percent of the total price to sixty percent of the total price.
Once all of this takes place, the contract becomes legally registered and it is, from there on, very difficult for the seller to pull out of the sale. As a matter of fact, the law of the country of Portugal states that if the seller pulls out of a promissory contract, they have to pay double the amount that has already been paid back to the investor. This law has been put in place to provide assurance to the investors as the severity of the penalties for pulling out of the contract stop virtually everyone from doing it.
This step is a rather simple and straightforward one, as the most complicated of the work has been done in the previous step with the promissory contract.
If the property that the investor has purchased was an off plan property, then their lawyer uses this point in time to check and make sure that the property has all of the relevant licenses in place, as well as that the property is fully debt free. Once the lawyer has certified all of this, the investor will then complete their purchase and make the payment for the rest of the balance. Their lawyer will then register the property under the investor’s name and they will own the freehold of a property in the country of Portugal.
If the property that the investor is looking to purchase is ready and the investor already has all the necessary funds in place, it is even possible to skip the step two and go straight to the deeds.
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