Dead Neighbors & the Portuguese Double – Inadvertently Buying 10 Properties in Portugal (Part 2)

Days after signing the promissory note, I still couldn’t wrap my head around the realization I was actually buying ten properties in Portugal.

To help me visualize this, my Portuguese realtor emailed me an aerial view with the pieces I was in the process of buying shaded in purples, greens and golds.

From the drone’s perspective, it looked like a patchwork and festive elf’s stocking. Only it was a rather moth-eaten stocking, as the heel belonged to someone else and was not part of the deal. Neither was the yellow tip of the stocking, nor what might be considered the orange arch support or stirrup area. The parts I was buying here were highlighted in light green and purple.

My efforts to buy the stocking full of properties soon morphed from Monopoly into a slightly surreal game of Whack-A-Mole.

I’m not a first time buyer. Over the years, I have bought and sold seven homes in different states in the US, so I thought I more or less knew my way around the process. But Portugal has yet to create a national database of properties, like the MLS system in the US. And there is also nothing like Zillow, where you can look up properties for sale by zipcode, see their sales histories and check comps.

And in Portugal, the moment one problem was resolved, several more cropped up unexpectedly in different locations.

Portuguese real estate law requires that once the promissory note – CPCV – is signed, the buyer then wires 10% of the sales price directly into the seller's bank account!

Unlike the American concept of an escrow account, the realtor explained, in Portugal they have what they call, "the double." Should I back out of the agreement, I would forfeit the 10% I'd given the sellers.

Should the sellers back out, however, they are obligated by law to refund the 10% – plus another 10% for not going through with the deal. Should that happen, I would make a great profit, but have no house.

And there is the 'preference right.” Understanding this gives you a little insight into both the Portuguese mind and Portuguese bureaucracy.

As it was explained to me, once the CPCV, or promissory agreement, is signed, it is now time – at least in rural areas – to let the neighbors know someone is about to purchase a property near them.

By law in Portugal, contiguous neighbors get the courtesy of the first right of refusal. Even though I already had a signed contract and had given the owners what felt like a lot of money, the property I was buying now had to be offered to the neighbors before I could actually buy it.

That is, if you can find them.

The adjoining neighbors need to be contacted by certified mail, a notice in the newspaper, and/or a knock on their door. They then have a certain amount of days to ponder whether or not they would like to buy the property for the same price I have agreed to purchase it for. If so, they get it! The ten percent deposit is refunded to me, and I'm left to start the process all over again somewhere else.

About a week after the signing of the CPCV by both parties, the realtor phoned with the good news that he had tracked down the owner of the little orange stirrup of land in between the purple gardens and the green heel.

"It belongs to a man in France," he told me. He said the man did not want to buy the package of ten properties I was in the process of acquiring, but wanted to know, would I like to buy his property?

No.

More news followed. The realtor had discovered the property on the far side of the purple gardens – the yellow toe – was owned by ‘a woman.’

“Great!” I said.

“But she died 50 years ago,” he said.

Another week passed by while the realtor investigated who got it next. And then, one morning, he phoned again.

"Before that old woman died,” he told me, “she gave it to a man. But then he also died. So now we will try to find out who the heirs are and contact them and see whether or not they would like to buy your properties."

Ten little properties, less than an acre altogether, with neighbors both living and deceased all around the edges.

And me watching and waiting from across the ocean, holding my breath and hoping that somehow, it would all work out.

Coming up next … Inadvertently buying 10 Properties in Portugal (Part 3) – The Silly Season