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Comparative real estate guide guide

Comparative real estate guide guide

Comparative real estate guide guide

In Portugal, the legal system regarding real estate is a combination of administrative and private law. The key regulatory acts governing real estate include: the Constitution of the Portuguese Republic; the Civil Code; the Regulation on New Urban Lease; the Land Code; the Notarial Act; the Law on Urban Planning and Construction; the General Regulation on Urban Planning; the Property Tax Code and the Municipal Property Transfer Tax Code; and the Decree on the Horizontal Property Regime.

Portuguese legislation distinguishes between land plots/agricultural land and urban plots. The classification of a plot as land or an urban plot depends on its use by the owner and the policies of land management and urban planning. Policies that determine whether a land plot can be converted into an urban plot are particularly important. Plots can also be mixed-use. Therefore, when assessing a plot, it is necessary to consider not only its geographical location and size but also, above all, the use of the land plot and urban planning.

Property rights (or joint ownership) include the rights to use, enjoy, and dispose of property. The Civil Code also provides for other property rights related to real estate: ownership of a land plot includes the rights to use, enjoy, and manage it for a specified period or indefinitely, allowing for construction or planting; the right of use allows for the construction and maintenance of a building on a land plot that is partially or fully owned by third parties, and can be temporary or established permanently; the property right of use allows third parties to collect fruits for a specified period; the property right of permanent residence enables a person to use the property of a third party for the duration of their life; the property right of time-sharing is provided for tourist facilities.

Residential properties are traditionally owned by individuals, serving as either a primary residence or a second home. Large commercial properties are often owned by companies and used as investment assets or for business activities. When developing commercial real estate, a company often creates a special structural division for each project. Collective investment schemes, such as funds, are also increasing in number and volume. Fiduciary structures, such as trust relationships, are not recognized by Portuguese law. However, fiduciary ownership is recognized in the Madeira Free Trade Zone.

There are no restrictions on property ownership in Portugal.

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Special restrictions apply to undeveloped areas to protect agricultural sectors, coastlines, forests, and other natural resources.

Property ownership includes the land, the airspace above its surface, and rights to the property below the ground. However, it is possible to agree on the establishment of a property right to a land plot.

The most effective means of securing debt repayment applicable in Portugal is the pledge of an asset, such as a mortgage, which remains in effect in the event of a sale without prior cancellation. In the case of a judicial sale of property, the mortgage allows the secured creditor to recover their claim (related to or secured by the property), provided there is no stronger or preferential security. In other judicial debt recovery procedures, pledges are also widely used to prevent the sale of property to third parties during the legal proceedings. In the event of a sale, the creditor will be paid shortly after the mortgage holder. Mortgages must be registered in the Land Registry to be valid. Under certain conditions, the registration of a promissory sale with erga omnes effect is possible. According to the principle of priority of registration, if multiple incompatible rights have been registered, the older registered right will prevail. Mortgages registered second are subordinate to the first. Other types of guarantees and securities include: assignment of income; pledge of shares/stakes; assignment of claims as security; pledge of bank accounts; and guarantees. Operational, security, and financial conditions can also be agreed upon, but they are not guarantees of property rights.

In the event of a breach of obligations by the borrower or the pledgor, the mortgage holder will have priority over other creditors whose claims do not have preferential or registered priority. In the case of forced sale of the property, the assets are transferred free of any encumbrances and other property rights that were not formalized prior to the seizure, pledge, or guarantee.

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