how I came to buy my house in portugal

I didn’t come to Portugal looking for a house, but I think the houses came looking for me.

I liked Portugal right away. The people are so laid back and unpretentious, the coffee and pastries are to die for, and the architecture is amazing. Lisbon and Porto, and many of the smaller towns are extraordinarily grand but so many of the richly decorated buildings are neglected and falling down. Passing through the countryside in the train or bus, I’d see hundreds of gorgeous old houses and stone buildings in ruins. And everywhere: for sale signs. Mostly old and crappy hand written ones that are also saying “no one wants me”. I was intrigued.

The idea of living here for a while was really appealing.

So I got on the internet to have a look at prices. Very affordable, I thought. Not as cheap as Bulgaria, the property hotspot in 2007, but it had far better re-sale potential. I researched building costs, the cost of living and I looked at my own budget. (To come – How I Finance My Freedom) I could make it work if I could renovate it, doing a lot of the work myself, and then sell before running out of money. But I also saw it as a slow-build, during which I would be living the village life and learning Portuguese.

Then I explored foreign ownership, the buying process, capital gains rules, and looked for any restrictions on DIY renovations (as exist in France and Italy). It’s all out there on the web. And there was my residency visa situation. As an Australian citizen without an EU passport, I have no automatic rights to stay or work anywhere (except New Zealand). So this was another obstacle to overcome.

After three weeks of going back and forth from my tiny old hotel room across Avenida Liberdade in Lisbon to an internet café in an enormous 18th century dance hall, I felt like I had a fair grasp of the situation. It was all possible. Not easy, but possible.

finding a property

The two major real estate agents, REMAX and ERA both have nationally-based websites where you can search according to region and price and more. A price-based search from €10k – €50k resulted in properties from the Lisbon area to the far north, with particular concentrations of properties around Castelo Branco (centre-east) and the Minho. In general terms, the Algarve and the coast are more expensive than the north and the interior. The south is more “blue and white” in architecture and there is very little stone on the coast. There was nothing in this price range in the Algarve or lower Alentejo, the most southern regions. I’m not saying that there are no bargains to be found there: all it takes is one agent to take an interest in rustic properties in a particular area to generate a market. I’m sure you could choose a region and drive around visiting the local agencies and investigating ‘for sale’ signs. You’ll need to speak Portuguese for this. But there are also English- speaking independent agents (and smaller agencies) on the net who focus on rustic properties.

But I was after properties in bulk and I didn’t have a particular area in mind. I wanted to see everything.

Using a phrasebook to patch together emails to agents, I zig-zagged all over the country looking at anything in the price range. But when I arrived in the Minho I recognised what I was looking for: Stone. All over the Minho are small granite ruins, in stunning countryside. I saw one-bedroom-and-kitchenette-type potential for around €15k; larger ruins on 2000m2 with beautiful views for €20k. It got me excited. The potential of these places was obvious; these stone ruins already had so much character and charm. Sometime in this early stage, I saw the house I would eventually buy and it was not in the Minho but in the Beiras (centre), south of Coimbra. It would remain my favourite for the rest of the search. But there were problems.

the trouble with rustic-rural deeds

The advice from the internet was to make sure the deeds, ‘artigo’ (article) in Portuguese, for the property are correct. That is; what is on paper describes what you are looking at. You may have several articles for one property. In my area the land is divided into tiny 25m2 parcels, for example. Most of these rustic/rural properties have not changed hands for many years, if ever. Many will have been inherited, many will have been added on to without official permission, bits of land may have been swapped with a neighbour or other pieces given away; perhaps informally, without updating the records in the council, the lands office or the tax department.

As a result the deeds, which describe the size of the land, the buildings, who the neighbours are and the history of the building, can be out of date.

The original deeds may have never been correct in the first place. In order to pay less tax, people often underestimated the size or standard of their property. There many reasons why the records may have not been kept accurate. I imagine that during 40 years of dictatorship (prior to 1974) people were less inclined to deal with officials and tried to keep to themselves; during the last century Portugal had a very low level of literacy and your average country farmer had little money to spend on lawyers and notories. The idea of a property ‘market’, and the house as a temporary asset, is only a new concept. The family house was to be inherited by the kids (actually, yes, the oldest male) who would also live there for eternity. But mostly there’s the ‘if I want to build a nice stone shed for the goats it’s really none of anyone’s business’ and I agree! But as time goes on, it becomes more and more complicated and more expensive to make the corrections.

My guess is that a Portuguese ruin-buyer might know the people involved, can talk to the neighbours to verify any details, is more familiar with why discrepancies exist and might be less worried about being ripped off the way a foreigner might be. However, as a foreigner, you’re sailing blind, you don’t know who to trust, you don’t speak the lingo and all the advice says “BEWARE”!

This was the problem with my house. The deeds were wildly inaccurate and the estate agent was useless. He neither understood why it was important to me nor had any inclination to find a solution. It was already obvious that agents in Portugal don’t work the same way as other agents I knew. ‘Work’ might be an overstatement. In Australia, real estate agents tend to be highly motivated people unnaturally focused upon material possessions and success. In Portugal they are different. My impression was that they were not prepared to do anything much at all to sell a house. For example: I make an appointment at their office with a week’s notice to see the documents for a house. I get there, no papers. They are trying to sell a house and the client hasn’t given them the piece of paper that says they own it?!? When eventually some papers appear they make no sense. The house has, at-a-glance, 100m2, and the agent is insisting that what we saw together was 25m2 because that’s what’s on the papers. Huh?!? One agent actually told me not to ask questions. Huh?!? One agent told me that my husband must trust me very much to let me see properties all alone. Uh-Huh?!?

I understand that these old places are not worth much in commission, but I was a keen buyer saying please sell me a house! The other curious business about Portuguese agents, male variety, is it seems to be almost obligatory to crack onto your potential buyer. I had begun to feel like a supermodel for the all the passes coming my way… Such a pity the “unprofessional” vibe wasn’t a turn on… Anyway, I had to give up on my favourite house for the time being as it was too complicated. So I looked at another 25.

locating ‘the magic’

Yes, another 25 more houses! I was looking for ‘the magic’ of the favourite but I also had boxes to tick. I could see now that the house that I was buying would most likely become a “casa do campo”, a country holiday house. I had come across a very useful brochure published by a lender which analysed the Portuguese market and, in particular, the profile of the “2nd home” house buyer. It told me that the ‘casa do campo’ market was alive and well and was in fact predominantly made up of Portuguese buyers and not foreigners. The brochure outlined the average price (€150k) the median price I.E., the price more people are willing to pay (€115) and what they want for their money: the usual light/ space/ aspect/ ambience factors but specifically: 3-4 bedrooms, a garage, a usable garden, etc, and in what order these things were important. How important was having shops/café/bars nearby? Not as important as having an open fireplace..

Therefore, my ruin needed to have this potential if it was to do well, once it was finished, in the Portuguese marketplace. My own instinct was, if the house was going to be a useful as a weekender, it should be no more than three hours from Lisbon or Porto, where the people were making their money. This also suited the foreign buyer; no more than three hours travel from the closest airport.

three strikes

I attempted to buy three out of the last 25, but they all fell through. Two were fantastic bargains and were snapped up by someone who either didn’t care what the deeds said or was given privileged access to them before me. Or perhaps they put down a deposit in good faith and checked out the problems later – who knows. The third property had restrictions on extending the size of the house.

More important than the details written on the deeds, is how the land is ‘zoned’. You need to know whether the property is a on a rustic title (land only) or urban title (buildings) and what the local council’s rules are governing these. The rules govern whether any new buildings can be constructed and how big they can be, whether the existing buildings are legal and can be retained and whether anything existing can be extended and by how much.

I was coming to the end of three months in Portugal, which is all Australians are permitted (actually it’s three months in the whole of Europe to be precise, but that’s another story). I’d seen 33 houses, and I didn’t have a house to buy. I was still thinking about my favourite one. I explained the situation to another agent from the same franchise, someone bilingual, with more experience. He agreed to help.

The plan was to request that the owner make a rectification on the property; IE update the records, thereby confirming exactly what it was that he was selling. We saw the house again and negotiated with the owner. I was very impressed when the helpful agent talked the owner €3500 off the price.

I briefed a local lawyer (who spoke some English) on a promissory contract. The contract would include the rectification request but as well the submission of my building project plans to the council. I’d only be committed to buying the place if the plans were approved. This ensured that if there was anything dodgy about the legality of the existing buildings I would not be stuck with a dream-house dud.

berlin

Then I left Portugal and went to live in Berlin. I had to do this to apply for Portuguese residency. It took a few weeks for the contracto promessa de compra e venda (promissory contract) to be written, but by end January 2007 it was signed by the owner. In the meantime I found a builder and architect through an English guy I met on the plane, who was also building a house there. I made a quick trip back to Portugal to sign the contract, put down the deposit and to brief the builder & his architect on the house. They said it would take about two weeks to do the plans. They lied.

In the contract, the owner had 60 days to make the rectifications to the deed. March comes: nothing. I’m sending emails and calling my lawyer frantically about the seller breaking the contract. The lawyer gives them two more weeks. Nothing happens. I rant and rave some more but then realise that it’s not doing any good and I give up and focus on getting the project plans finished. “Two weeks” had become two months. For more on that saga you’ll have to see Building (to come).

Mid-April: we get an update from the agent who has been trying to sort things out. Unfortunately by this stage I’m not interested in the complicated alternatives that he’s come up with nor hearing about the problems he’s encountering: I see this is as the owner’s problem and his obligation is to honour the contract. I have problems of my own (see Visas – to come). All the while, I am in constant contact with the council explaining my situation and trying to find ways to circumvent or speed up the process. The problem is that I need the rectification to legalise the existing buildings so that they can be included in the project. This tiny little council (pop. 3000) has a bilingual ‘international relations’ person and he is awesome, ferrying questions to and from the decision-making engineer.

June comes along and I receive an email from the agent saying that everything is ready. After a moment of joy I ask to see the rectification papers and THEY ARE WRONG! One of the buildings on the property has mysteriously not been included in the rectification. Emails fly in all directions, reasons are given, excuses are made. I want to speak to the owner directly but the agent says that his wife is sick in hospital and won’t give me his number. My Portuguese teacher and I look him up via yellow pages and his wife cheerfully answers the phone. After telling me off, the owner says hasn’t seen the rectification papers and is speechless when we tell him about the missing building.

I come to the conclusion that after six months of lawyers and agents I’ve got to find a solution myself. I go back to the council. To work out an alternative we need the final plans from the architect. “Two weeks” has now become six months. The bilingual-builder-go-between has done a disappearing act. So we call the architect direct. My daily Portuguese lessons have now become problem-solving workshops as my feisty Brazilian teacher and I take on the recalcitrant men of Portugal. Now, apparently, the architect hasn’t given me the plans because the builder hasn’t paid him. But I’ve asked the builder repeatedly, in writing, for an invoice or some account details so I can send payment. The architect had been told a variety of elaborate stories about me. Now I’m feeling like I’m part of some convoluted conspiracy and Portugal is some Twilight Zone full of mad people. Things have become so weird it’s funny.

But I get the plans. I send them to the council. We find a solution. The plans show a house that is a bit less than 200m2 and that’s the limit for that area and my parcel of land. I pack up my life in Berlin and book flights.

back in portugal

I go straight from the airport to the architect’s office without stopping once for a coffee & pastel da nata. I take the project from the architect and deliver it to the council myself. Naturally as it’s August, all the right people are on holidays including the owner who needs to sign something to allow me to submit the project…. but I’m used to the whole obstacle course thing now and eventually the project gets submitted. It takes three months, but it gets approved. Hooray.

Meantime I’ve hired an all-new crew: New spunky-chic lawyers who are charging a quarter of the usual foreigner rip-off rate. Superb new spunky-chic architect and her engineer who also charges one quarter of the usual foreigner rip-off rate. He says the project will take two weeks. Somehow I doubt that, especially as it’s exactly seven times the size of the first project. It could take years. It takes two weeks.

Just as I was thinking things were going to run smoothly from now on, the shit hit the fan again.

november

The day before we are set to sign the deeds, my clever-spunky lawyers discover a problem. Their manicured hand shook as they reached for their ciggies. I try to supress a smirk. After everything I’d been through, one more disaster will not upset me. Perhaps also I am so damaged from the process that I enjoy watching other people suffer.

A moment passes, the ladies exhale. The rectification, they say, (using the one word I never wanted to hear again) is not, in fact, a Rectification. It is a Fabrication! Instead of updating the old deeds, someone created a brand new article as though the house and land never existed before. Considering the exhaustive proofs required to create a new deed (affidavits from all the neighbours for instance) my lawyers cannot imagine how this was achieved…

Anyway, the upshot was that the original articles for the property still existed independently of the new one, and therefore the owner would be at liberty to sell a piece, or the whole thing, to someone else without me even knowing! Scandalous! Oddly enough, I wasn’t harbouring bad thoughts about the owner or the agent, despite myself. I accepted that we had tortured each other equally. And as I told the lawyers, deep down in my soul I didn’t believe that they were trying to diddle me. We came to the same conclusion: that I buy all the old articles as well as the new one. If the owner was acting in bad faith, he wouldn’t go for it. But he did. It would cost me a lot more in taxes, but all the deeds, in all their imperfection, would be mine, in just a few more days’ time.

the celebration of the escritura

That’s what they call it. That’s the time when one signs papers and hands over cheques and there are handshakes and best wishes, a time that one might be tempted to call it ‘a celebration’; one might be tempted to think that the nighmare is over and at last the ‘dream’ is realised… but no, no, no! It’s never over until the fat lady sings…

Earlier in the day the owner had shown us all a bag of antique keys for the house and how he had labelled each one for me. After the signing, he left with the bag, neither agent nor lawyers, nor I catching him in time. When I get to the house in the afternoon, I discover that it’s still full of their stuff; family photos, crockery, doilies… things I had expected them to have taken away. After all, they have had AN ENTIRE YEAR to do so. I was told that the owner intended to come back in a few days, let himself in with his own keys, and collect the rest of his and his wife’s belongings.

At first I let it mingle with all the repressed indignation of the well behaved foreigner I’d become. But after a quiet night’s rest in my sweet hotel bed (again), I decided enough was enough. Using my old film producer’s voice I told the lawyers THAT THE SITUATION WAS COMPLETELY UNACCEPTABLE, that I was CHANGING THE LOCKS and THROWING THEIR SHIT OUT ON THE STREET.

My lawyers had to go beyond the call of duty. Apparently it took an entire day of negotiation, but the owners came at six the next morning and removed themselves from my life. And then I popped the champagne.

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