“Ownership right” is the broadest and strongest title concerning real estate in Portugal. It grants its titleholder full and exclusive rights of use, fruition, and disposal of real estate, unlimited in time, within the limits of the law (comparable to “freehold title” in common law systems).
• The most commonly used contractual arrangement for offices, logistics and high-street retail segments are standard leases executed under the Portuguese “urban lease law” (“standard commercial leases”).
• The lease of retail units in shopping centres, retail parks and other similar commercial schemes is normally carried out through “shopping centre leases”. These leases are considered as contractual arrangements not regulated by any specific legal framework, and therefore are not subject to the legal framework of the “urban lease law”, but only subject to the general legal framework applicable to contracts. These agreements tend to follow market standards of the specific segment in question.
Real Estate Transactions
• Direct transfer of rights concerning real property in Portugal (asset deal) is done either by means of a public deed by a notary, or a private document certified by a lawyer (the most commonly used form is the public deed). The transfer of title must be registered at the Land Registry office within 30 days of the transaction.
Portuguese Land Registry offices are public record offices which register information on the legal status of real estate (description of the property, ownership, charges, mortgages, encumbrances and/or other rights in rem).
• Indirect transfer of real property, through the transfer of shares of a Portuguese company owning the property (share deal), is made by means of a private document entered into by the relevant parties, which does not need to be notarized.
• There are no restrictions on foreign investment in Portugal.
However, among other formalities, foreign investors must obtain a Portuguese tax identification number and, foreign investors with tax residence outside the EU must appoint a Portuguese tax resident (individual or legal entity) as their legal representative before the Portuguese tax authorities.
Real Estate Financing
• Real estate financing in Portugal is usually secured against the property assets and/or the shares of the property owning company and/or property generated income.
• Mortgages are the most common securities provided in real estate transactions in Portugal. They consist of a right in rem that grants to the creditor, in case of breach, the right to be paid by the value of the property, with priority in relation to other creditors (provided other creditors do not benefit from special privileges, such as it would be the case, for example, of the tax authorities in respect of property taxes).
• Pledges over shares and pledges over receivables are commonly used in Portugal.