The promissory contract of sale (CPCV) is an essential legal figure in the Portuguese property context. It is a bilateral agreement between two parties, one of whom undertakes to sell a property and the other to buy it, on the condition that the transaction is carried out at a future date by signing the definitive contract. In this article, we will look at the main aspects of the CPCV according to Portuguese law, to provide a clearer and more comprehensive understanding of the subject.
What is the Promissory Contract of Purchase and Sale?
The Contrato de Promessa de Compra e Venda is a preliminary agreement that establishes the commitment between buyer and seller about a future property transaction. Although it is not yet the definitive contract, the CPCV has legal and binding force for both parties, guaranteeing legal certainty and protection for their interests. The CPCV is generally used when the immediate formalization of the deed of sale is not possible, whether due to bureaucratic or financial reasons or other issues related to the process.
Essential elements of the CPCV
For the CPCV to be valid and effective, it must contain some essential elements:
- Identification of the Parties: Full names, identification numbers, and other data that allow the parties involved in the contract to be identified.
- Description of the Property: This should contain a detailed description of the property that will be the subject of the transaction, such as its location, areas, characteristics, and other elements that identify it.
- Price and Payment Terms: The amount agreed for the sale of the property and the payment terms, including any down payment and how the remaining amount will be paid.
- Terms and Conditions: You must stipulate the deadline for concluding the definitive sale and purchase agreement, as well as any suspensive conditions that may affect the completion of the transaction.
- Other clauses: Specific clauses may be included to cater to the particularities of the negotiation, as long as they comply with current legislation.
Signature and Termination of Contract
Within the scope of the CPCV, it is common to require a down payment as a guarantee that the transaction will go ahead. The down payment is a sum of money paid by the buyer to the seller when the contract is signed. If the buyer fails to fulfill their part in concluding the definitive contract, they may lose the down payment. On the other hand, if the seller is at fault, he must return double the amount of the down payment.
Rights and Duties of the Parties
During the period between the signing of the CPCV and the formalization of the definitive contract, both parties must act in good faith and fulfill the commitments they have made. The seller must keep the property free of any liens or encumbrances that have not been previously agreed upon, while the buyer must endeavor to obtain financing (if applicable) and comply with the agreed conditions.
Conclusion of the Final Contract
Once the conditions stipulated in the CPCV have been met, the parties can sign the definitive contract of sale, also known as the “deed”. This stage takes place at the Notary’s Office and aims to formalize the transaction, effectively transferring ownership of the property to the buyer.
In short, the Contrato de Promessa de Compra e Venda is a fundamental stage in the process of buying a property in Portugal. It is a safe way to guarantee that both parties are committed to the transaction, safeguarding their rights and duties until the final contract is formalized. However, it is always recommended that the parties involved enlist the help of qualified professionals, such as lawyers and property consultants, to ensure that all aspects of the CPCV comply with the legislation and the specific needs of the negotiation.
