The last year(s) I am confronted, in my capacity as estate agent, more and more with properties asked to promote to sell, which after having studied the paperwork turn out not to be 100% legal or having all the necessary licenses in place.
In general the amount of outbuildings on a property are not in line what the paperwork shows or after checking what has been approved by the local Town councils certain parts a license was never applied for.
In fact the following situations may occur:
- Either, although full planning consent was obtained from the local Authorities, the building license was never taken out and consequently the alterations were not registered with the local Tax department and not in the Conservatory. This means that the local Authorities have not received the correct amount of rates.
- Or, although full planning consent was obtained from the local Authorities and a proper building license was taken out, one has failed to register these changes with the local Tax department and consequently also not in the Conservatory. This means that the local Authorities have not received the correct amount of rates.
- It is also possible that the paperwork shows more outbuildings than officially was approved. In this case rates are paid correctly but part of the house is build illegal or without building consent.
- But more often there was not applied for a license to do an extension or building of a pool and consequently it was never declared in tax department and registration office.
It is for most people hard to understand how the Portuguese system works now and how it worked or did not work properly in the past.
In the past, there was no exchange whatsoever between the various entities (listed below), which are involved in a property purchase:
- The Notary – Notário
- The local town council – Camâra
- The tax department – Finanças
- The land registration – Conservatório
With the introduction of computers and databases, all systems are now linked to each other and there is automatic exchange of facts and figures between the various databases and entities.
The last couple of years the authorities, especially tax department and town councils, have started actively to find illegal constructed buildings.
Both have the same aim….. that is to increase income for the local town council as they heavily rely and are depending on income through these sources to get their budget right.
Building police (fiscais de obras) are driving around to see what is going on. Besides that, the mentality of the people has changed and one no longer hesitates to inform the authorities if they feel any construction in an area is jeopardizing them or people do not comply with informing the public by means of a signs (Aviso) what is happening and finally yet importantly, the Authorities have taken a more active approach using all means of modern technology.
With aerial photography, it was easy to find out if for example properties have a pool or not. The latest is that they can stay in their office and through a program like Google Earth; they can zoom in on properties and take photographs as proof. Hard to believe maybe but it is true and factual.
If an infraction has been discovered the owners will receive a letter from the local town council that a procedure against them has been initiated. This is what is called a “processo de contra-ordenação”.
Most likely you will receive a notification from the police, where you will be invited for a hearing. You may need an official translator.
Denying the fact does normally not help, despite the fact that it could have been previous owners who committed the contravention.
Most likely, you will be invited to pay voluntarily the minimum fine (Coima) for illegal building, which is in the order of € 250.
Although some people have been given the impression that with paying the fine the case is over and settled, this is not true!
Normally you will receive a letter from the town council whereby you will be given 30 days to submit a legalisation project for the illegally build parts. In addition, it will state that in case you do not submit it, you will be summoned to demolish the illegal building and if you will not do it yourself, it will be done for you, of course at your expense.
To make things worse you cannot even demolish the illegal build parts without taking out a demolition license! (Licença de demolisão)
The legalisation procedure follows the same procedure of a normal project and should comply with all legislation in effect. However some people may be in for a shock as it could be that legalisation is difficult or in the worst case impossible as your property stands in a protected zoning RAN (agriculture reserved) or REN (ecologically reserved).
I will now shortlist the steps that have to be undertaken to legalise:
- To find an Architect
- After you have appointed one, he or she will normally first have a meeting with the local Town Architect to discuss what the best way is to solve the problem.
- A project has to be drawn up.
- Not impossible that a topographical survey of the land is necessary. Cost could vary from € 250 to a € 1.000 depending on the size of the land and work involved.
- Submission of the initial project
- Approving of the project first phase (Architectural)
- Depending on the situation you will be asked to submit additional projects (projectos de especialidades)
- After these being approved, you can take out the building license for the project, despite the fact that the building already exists.
- Furthermore you will have to find a builder who is willing to do this as it only can be done by a qualified builder.
- As part of the procedure you will have to take out Insurance (for the workers).
- Depending on the situation and case, you will have to pay a fine as the fee for the license can be increased with at least 50%. Certain town councils make the fine variable depending on the age of the violation. If it was done 20 years ago the fine will be less opposed to an illegal building done 1 year ago.
- The next step is that you (the Architect or the person who represents you or your company) have to submit the final drawings (telas finais) and at that stage you have to apply for the property to be inspected by the Authorities (Vistoría).
- If all OK you will receive a new or additional Habitation license (licença de Habitação or Utilização)
- When you make the application you should also find an Engineer who is willing to sign that the property is build according to the rules and regulations and is sound and save (by putting his signature he is responsible if something goes wrong!)
- Consequently we have to participate the new building in the tax department.
- This will trigger of a new valuation of the property under the new valuation laws, which came into effect some 2 years ago. This will mean that the rateable value of the house will increase substantially which could result in higher yearly rates (I.M.I.)
- In certain cases, you will also be asked to pay additional rates over the years the illegal building was in existence. However, they will not go back more than 5 years.
- A new Caderneta Predial can be applied for.
- Finally, we have to participate the alterations in the land registration.
Your property should be now 100% legal and correct to sell.
No doubt and it is clear that there will be substantial cost involved in legalising your property and the procedures as described above involved. After you have managed to find an Architect may take 6 – 12 months to sort out.
Of course, you can sit back, wait, and see what happens, but please be aware that one day if you wish to sell not having legalised your property it could block or substantially delay a potential sale, as lawyers acting on behalf of the buyers will now check everything.
If they find discrepancies, they most likely will advise their client not to go ahead with the purchase.
Not nice to think about maybe, but in case of your demise you will put the problem on the plate of your heir(s).
The first person who could alert you of an existing problem should be the estate agent when you invite him to sell your property.
The estate agent also will not be pleased as if discrepancies are discovered it will mean he cannot sell your property straight away.
The problems described above will normally occur much more often with older properties. To end on a positive note, if you have purchased the property many years ago, it should also have gone up substantially in value; however, it still means that you have to invest first before you can take your gain.
Might you still have questions about this subject please do not hesitate to contact me, arrange a meeting in our office or at your property.
If required we can guide and assist you through the whole procedure and in most cases, it is better to start the procedure voluntary before you are caught by the Authorities.
Estate Agent with license AMI-1206
Tel: 282 768 821 or 917 566 931