Promissory Contract of Sale (CPCV) in Portugal: Ultimate Guide

What is a promissory contract in Portugal?

A promissory contract (CPCV) is a legally binding agreement between the seller and the buyer. When they sign it, the seller promises to sell the property, and the buyer promises to buy it. The contract doesn’t change ownership; it creates a legal obligation for the parties to complete the transfer at a later date.

The promissory contract includes details of the buyer and seller, the property information, the sale price, the date of the public deed, and other conditions.

According to the Portuguese Civil Code, a Promissory Purchase and Sale Agreement (CPCV) needs to be put in writing and signed in the presence of a Notary, and it should also include either the property’s usage license or its construction license. Both parties may choose to skip notarization, as long as this decision is explicitly mentioned in the agreement.

Promissory note vs Portuguese promissory contract (CPCV)

When people talk about a “promissory contract” for Portuguese real estate, they mean the preliminary sales agreement, which is called Contrato de Promessa de Compra e Venda (CPCV). The CPCV is not a promissory note (a debt agreement). Instead, the CPCV is a binding promise from the buyer and seller that they will complete the property sale later on.

In Portugal, the promissory contract for property is a promise to buy and sell the house, not a promise to pay outstanding debt. The CPCV is a crucial step in the Portuguese property buying process, acting as a safeguard until the final deed (Escritura) is signed.

A promissory note is a written agreement between a lender and a borrower. It is a legally binding agreement regulated by the Commercial Code. The promissory note shows the borrower will pay back the amount they owe plus interest. The lender provides the promissory note, and the borrower signs it.

There are different types of promissory notes, such as demand promissory notes, unsecured promissory notes, secured promissory notes, master promissory note, and future-dated notes. Your monthly payment depends on the loan amount, interest rate, and repayment term.

You need a promissory note for any transaction in which money is lent by a bank, person, company, or other financial institutions. For example, you can use your original promissory note for land, construction, or equipment purchases.

The table below covers the difference between a promissory note and a contract:

When is a CPCV most important?

Portuguese law does not require a CPCV, but property experts strongly recommend it to almost all buyers, especially investors, foreigners, and retirees. Real estate agents in Portugal regularly use the CPCV because it provides legal and tax protection during the purchase process.

There are several examples where signing a promissory contract can help with the property purchase in Portugal:

• Foreign buyers can use it to take the property off the market.
• Buyers who purchase off-plan or new build properties can use it to set the rules in advance. The contract can state when the construction must be finished, the quality of the materials it should use, or even create staged payments.
• Mortgage buyers lock in the property. Banks in Portugal often ask for a CPCV before they give you the mortgage. However, it can take several weeks for a bank to approve your mortgage.
• In competitive areas such as Lisbon, Porto, or the Algarve, the CPCV puts you one step ahead. If the seller withdraws after signing, they may need to return the deposit in double.
• Buyers who need time can use the CPCV while they wait for documents or minor repairs. It gives both parties enough time to finish the paperwork.

What must be in a CPCV?

To reserve a property, both parties can enter into what is known as a Promissory Contract of Purchase and Sale (CPCV). As a future owner of a Portuguese property, the buyer must obtain a Portuguese tax identification number (NIF) from the local tax office or through a representative. Without a NIF Portugal, you cannot sign the CPCV.

The key terms in a property purchase agreement in Portugal include:

• Personal details: You need to provide your full name, marital status, address, and Portuguese tax number (NIF). The seller does the same. If a company is involved, include its legal name, registration number, registered office, and the authorized co-signer.
• Price and payment schedule: You and the seller agree on the purchase price, how much deposit you’ll pay, any installments, and the balance left for the final payment. All the parties agree to the terms to make the CPCV valid.
• Property details: Make sure the contract describes the property clearly. Include the address and land registry number. It should also mention vineyards, garages, annexes, storage rooms, or land boundaries.
• Special conditions: Certain steps may need to be completed before the sale can proceed. These are called conditions precedent. One example is securing financing. There can also be conditions subsequent, which take place after signing the agreement and may terminate the contract if not fulfilled.
• Deadlines: The contract must include when the parties are expected to sign the final deed. In most cases, the timeline for the transaction is 30 to 90 days. This can be a fixed date, a specific date, or a condition that must be met, such as obtaining mortgage approval.
• Payment of damages and fines: There must be consequences for breach of contract. For example, if the buyer doesn’t issue the final payment, they lose the deposit in favor of the vendor. If the seller breaches the contract, they must return twice the deposit amount to the buyer.

Additional legal documents for real estate transactions in Portugal

According to the Portuguese Public Service portal, you will need the following documents to start the process:

• Property description document: A document issued by the Tax and Customs Authority containing property features and details
• Title search: Issued by the Property Registry, this document includes the information on the location and composition of the property and the owners.
• User license: Depending on the property’s Municipal Authority and state law, this document serves as proof that the property has been inspected and deemed legally compliant.
• Energy certificate: The National Energy Agency issues this document after confirming the energy efficiency of the property.
• Building data sheet: A document containing the technical and functional characteristics of the property
• Declaration of non-debt: After doing background checks on the property’s history, this document will be issued stating that there are no debts left to repay on the property.

You can also consult our guide to property documentation in Portugal for more information.

How the Deposit Works in a Portuguese Promissory Contract of Sale (CPCV)

The deposit, or “sinal” in Portuguese, is often 10 to 20 percent of the property price and is one of the most important elements of a CPCV in Portugal. In some situations, such as high-demand properties or off-plan developments, the deposit may be higher to secure the sale.

Portuguese law does not set strict rules for the deposit, but it is commonly used as a commitment from the buyer. It is treated as an advance payment toward the total price of the property.

If the buyer fails to comply with the CPCV, the seller keeps the deposit. On the other hand, if the seller refuses to sign the final deed of sale or sells the property to someone else, they must return double the deposit to the buyer. The buyer has a legal claim for damages.

In a CPCV, the final down payment is the total amount the buyer must pay the seller at the public deed, minus any deposit already paid. For example, if the property costs €400,000 and the buyer paid a deposit of €40,000 (10 percent) when signing the CPCV, the final down payment at the deed will be €360,000.

How much does a CPCV cost?

There is no fixed statutory fee for preparing a CPCV. The costs vary based on the service provider and the complexity of the transaction. The common CPCV-related costs include:

• Deposit: Often 10 to 20 percent of the property price. For a €400,000 property, this would be between €40,000 and €80,000.
• Legal fees: Expenses for a lawyer or a solicitor to draft and review the contract typically range from €750 to €4,000.
• Notary fees: If you choose to have the CPCV notarized, fees tend to fall between €150 and €600.
• Registration fees: Registering the CPCV at the Land Registry costs about €50 to €250.
• Translation and certification (for foreign buyers): If documents need to be translated and certified in Portuguese, expect to pay €100 to €500.
• Power of attorney (if you are not in Portugal): If someone in Portugal, such as a property lawyer, signs the CPCV on your behalf, fees are generally €75 to €200.

Why is the promissory contract a critical part of the buying process?

The promissory contract (CPCV) is not legally mandatory in Portugal. It is an optional procedure, but highly beneficial when buying or selling property. Most people use it to make the buying process safer. The CPCV prevents the property from being sold to someone else and makes sure the deal proceeds based on the agreed-upon terms.

The CPCV matters because:

• It secures the deal quickly
• Reserves the property
• Protects your investment
• Gives you more time to prepare
• Avoids conflicts with penalties and responsibilities

Common CPCV Clauses You Should Insist On

A good promissory contract covers more than just the basic requirements. It also includes extra clauses that apply only to the property. Here are a couple of CPCV clauses that can benefit the buyer.

Financing clause to protect your mortgage

This is often referred to as a mortgage contingency clause in Portugal. A financing clause can protect your deposit if your mortgage is denied. Without this clause, you risk losing the deposit if your mortgage falls through.

Licensing clause for legal occupancy

This clause ensures the property has the right habitation license (Licença de Utilização) or, for older homes, the correct exemption or construction license (Licença de Construção). You might want to avoid buying a house you cannot legally live in. If you are planning to build a property, check our article on construction in Portugal.

Defect clause to handle property problems

If serious hidden issues arise after signing, this clause may require the seller to fix them or adjust the price. For new buildings, the builder’s warranty usually covers defects.

Furniture and fittings clause to know what stays

This clause lists the furniture, appliances, or decorations included in the sale. You avoid disputes about what stays with the property after you buy it.

How to Create a Promissory Contract: Step-by-Step Guide

To sign a promissory contract (CPCV) in Portugal, you read over the terms, agree on the price, deposit, and key conditions with the seller. For that, you will need a Portuguese fiscal number (NIF) from the local tax office and all the documents ready.

Step 1: Find and reserve your property

Research the Portugal real estate market and identify a property that’s perfect for your budget and long-term needs.

A buyer’s agent like Goldcrest can provide property search services and negotiate prices on your behalf. Our team can negotiate key conditions, such as the total costs, contingencies, furnishings, and other modern amenities you may need.

Step 2: Hire a property lawyer

Your real estate lawyer in Portugal will:

• Check the legal due diligence, such as the property’s land registry, ownership, liens, planning permissions, and licenses.
• Identify legal risks or restrictions that could affect your purchase.
• Review and negotiate contract conditions before you sign the CPCV.

The average legal fees range from €750 to €4,000, depending on how complex the property and transaction are.

Step 3: Write and review the CPCV

A legal representative can prepare the entire contract. If you want to sign the document remotely, you can appoint your representative with the Power of Attorney.

As a buyer, you need the following documents, such as:

• Portuguese tax number (NIF)
• Valid ID, passport, or a citizen card (Cartão de Cidadão)
• Proof of address
• Pre-approval for a mortgage in Portugal (if applicable)

Step 4: Sign the CPCV and pay the deposit

You and the seller sign the CPCV in person. You pay the deposit, which in most cases is 10 to 20 percent of the purchase price.

For extra reassurance, you can sign the document in front of a Notary (optional), which can cost an additional €150 to €600.

Although not mandatory, registering the CPCV at the Land Registry offers additional legal protection by making the promissory contract enforceable against third parties.

Step 5: Pay the property taxes

Before signing the final deed, you pay stamp duty (Imposto de Selo) often at 0.8 percent of the property purchase price.

Then there is the IMT (Property Transfer Tax), which comes at progressive rates based on the property type and price. For more information, check our guide on property taxes in Portugal.

Step 6: Prepare the final deed of sale

Sign the final deed (Escritura) in front of a Notary and issue the outstanding balance of the property price. Most CPCVs are valid for 30 to 90 days.

You can then register the property at the Land Registry (Conservatória do Registo Predial) in your name, which provides you with legal ownership.

File tax form Model 1 to notify the Portuguese tax authorities (Portal das Finanças) that you are now the owner.

Goldcrest: How We Can Help You 

Goldcrest is a buyer’s agent that is based in Lisbon. We provide expert, impartial advice on real estate investments and how to buy property in Portugal. From scouting out the perfect property through to property acquisition, we have you covered throughout the process.

If you are looking to purchase property in Portugal, don’t hesitate to get in touch. Our team of skilled experts is available to solve all your real estate doubts, helping you with the property search and offering insightful expertise and strategic advice.

Why choose Goldcrest?

• Local knowledge: With offices located across Portugal, our presence nationwide allows us to assist you personally across the country.
• Independent service: As an independent buying agent, we do not represent any development or project. Our service is entirely tailored toward each individual client, providing you with everything you need to secure the perfect property at the best possible price. As an impartial advisor on the market, we work solely on behalf of our client and provide a service tailored to your needs and requirements.
• Streamlined process: Our real estate agents speak English and Portuguese, and our service is completely focused on providing you with a hassle-free buying experience, saving you time.
• Experienced team: Our expert real estate team has a vast local knowledge of the Portuguese property market. We have cutting-edge technology and metasearch tools at your disposal to provide full market coverage, ensuring the best investment choices and negotiated prices.
• Network of partners: We have a close network of partners, including lawyers, property management services, builders, architects, designers, and landscape gardeners, again saving you time and hassle by providing you with trusted experts in their field of work.