Buying an occupied property in Portugal has legal and practical implications that crucially depend on the type of occupation (legal by lease, or illegal). The acquisition of an occupied property implies the transfer of the Right of Ownership, but the Right to Effective Possession is conditional. Here are the main points to consider:
Legal Implications
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Transfer of Lease Contract:
When a property is sold, the existing lease contract is automatically transferred to the new owner. This means that the new owner must respect the terms and conditions of the contract in force, including the duration of the lease and the rent amount. The buyer acquires the right of ownership, but the right to effective possession can only be exercised within the deadlines and forms stipulated by law (NRAU).
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Right of Preference:
If the tenant has been residing in the property for more than two years, they have the right of preference in purchasing the property. The owner must offer the tenant the opportunity to buy the property under the same conditions offered to third parties, formally notifying them and granting a 30-day period for response.
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Tenant Protection:
Portuguese legislation protects tenants, ensuring that they cannot be evicted arbitrarily. Eviction can only occur for just cause, such as non-payment or violation of contract terms, and must follow specific legal procedures. The legal route for eviction, in this case, is the Eviction Action (with grounds strictly limited by NRAU).
Practical Implications
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Immediate Income:
For investors, buying a property with tenants can be advantageous, as it provides immediate income through existing rents. However, this also means that the new owner will not be able to use the property for their own residence until the lease contract ends or is legally terminated. Additionally, the buyer assumes the risks of costs not paid by the occupant, such as condominium expenses, IMI, and potential damage to the property.
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Purchase Price:
Properties with tenants tend to be sold at lower prices than unoccupied properties. This occurs because the buyer must assume the risk and charges associated with the existing lease contract.
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Limitations on Property Use:
If the buyer’s objective is to use the property for their own residence, they must be aware of the limitations imposed by the lease contract. In some cases, it may be necessary to wait until the contract expires or negotiate an agreement with the tenant for early eviction.
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Illegal Occupation and Property Claim Action:
If the occupation does not result from a valid lease contract (e.g., illegal occupation, dispossession, or adverse possession), the legal process is distinct. In this case, the new owner must file a Property Claim Action to recover possession. This process is typically more time-consuming, complex, and involves much higher legal costs and risks.
When considering the purchase of an occupied property, it is essential to analyze the title of occupation (contract vs. absence of title). The main risk and legal implication lies in acquiring a problem (if the occupation is illegal) that can be very expensive and time-consuming to resolve. Therefore, specialized legal consultation is an essential step to mitigate risk, and the purchase price should always reflect the potential cost and waiting time until legal eviction.