New “Urbanistic Simplex”: Goodbye to the Obligation to Display Authorization for Use in Real Estate Transactions

The month of January brought with it the promulgation and implementation of the much-anticipated Decree-Law No. 10/2024, of January 8, which institutes the so-called “Urbanistic Simplex”. This legislation aims to revolutionize and simplify the licensing processes in the scope of urban planning, land management, and industry, bringing substantial changes to urban planning and real estate legislation in Portugal.

 

Use Permit – Just a Formality or will it be essential?

One of the most significant changes worthy of highlighting is the end of the obligation to display or prove the existence of the property’s authorization for use during the transaction. This innovation reflects the legislator’s view that such formalities were mere bureaucracies without added value and an attempt to make more properties available for housing in the market.

 

Paradigm Shift in Responsibility

With the new legislation, the responsibility for ensuring the legality of the construction of the property shifts from notaries and conservators to buyers.

Previously, validation was ensured by the professionals involved in the transaction. Now, it is up to buyers to ensure that the property has the necessary urban titles to avoid potential legal issues.

 

Need for Legal Assistance from the Beginning

With this paradigm shift, the need for legal assistance from the pre-contractual phases of the deal becomes even more evident.

Buyers must now ensure the property’s compliance in terms of documentation and urban planning to avoid irreversible financial commitments.

Buying houses can become riskier, not only financially because the buyer may become responsible for illegal constructions, associated fines, and, ultimately, may have to demolish them, but also in terms of safety for families due to potential poor construction, which could lead to an increase in subsequent litigation and legal actions.

In addition to the aforementioned, another example is the signing of a promise contract and payment of a deposit, which will not be refunded to the prospective buyer if they subsequently realize that the property does not have a use permit.

 

Prevention is Better Than Cure

More than ever, prospective buyers should seek maximum information about the real estate they intend to purchase.

In most cases, buying a home involves the most valuable asset a family owns, so the decision to purchase should be made fully informed.

In most developed countries, because the decision to purchase real estate is the largest investment a family makes and often involves a commitment to bank financing, prior analysis by professionals is essential for the buyer’s sake. Often, buyers want to “save” in the initial phase but end up incurring much higher costs and entering irreversible situations during or even after the acquisition.

 

Conclusion

The new “Urbanistic Simplex” represents a significant change in the landscape of real estate transactions in Portugal. The responsibility to ensure the legality of the property’s construction now lies with the buyer. Be prepared and informed to make informed decisions at every stage of the process.

 

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Lamares, Capela & Associados is committed to protecting and respecting your privacy and we will only use your personal information to manage your account and provide the products and services you have requested. Occasionally, we would like to contact you about our products and services and also about other matters that may be of interest to you.

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