Purchasing a new home in Portugal can present challenges. Building a new one can be the start of a daunting and complex process. Whether acquiring a property for personal use or as an investment, prospective buyers must consider several key legal and practical aspects, particularly those related to consumer protections and post-sale warranties. The structure under which a purchase is made—whether as an individual or through a commercial entity—plays a critical role in determining the rights and remedies available in the event of construction defects or disputes with the seller or contractor.

Individual vs. Professional Buyers: Legal Implications

One of the first decisions a buyer must make concerns the legal identity under which the property will be acquired. Purchasing a home as an individual rather than through a company or other commercial entity affords significant legal advantages. This distinction defines whether one is treated as a consumer or a professional, a difference that has substantial consequences under Portuguese and European Union law.

For houses acquired after January 1st 2022, the buyer benefits from the protective framework established by Directive (EU) 2019/771 on contracts for the sale of goods and Directive (EU) 2019/770 on digital content and services. These directives have been transposed into Portuguese law through Law-Decree No. 84/2021 of October 18th, which ensures a comprehensive level of consumer protection across member states of the European Union.

The new directives do not apply to acquisitions of properties before the aforementioned date. They will fall under legal frameworks that have stricter rules and tighter deadlines.

Therefore, individuals purchasing property for personal use outside the context of commercial activity fall within the protective scope of consumer law. Conversely, purchasers acting in a professional capacity—such as through a business, fund, or Special Purpose Vehicle (SPV)—are subject to the general provisions of the Portuguese Civil Code, which offer significantly less protection.

Warranty Periods for Construction Defects Law-Decree No. 84/2021

Portuguese law stipulates that the seller must deliver the product (the property) in compliance with the purchase and sale agreement. The property must possess characteristics of quality, safety, habitability, environmental protection, and functionality to ensure its suitability for the intended use over a reasonable and useful life period.

Real-estate property will be deemed non-compliant under the following four circumstances:

- The property does not correspond to the description or sample provided by the seller sample or model;

- The property isn’t suitable for the specific use intended by the consumer;

- The property isn’t suitable for the purposes for which goods of the same type are typically used;

- The property does not present the qualities and performance normally expected of goods of the same type;

This means that if a buyer is confronted with any of the scenarios, provided that they are verified within the warranty period— which will depend on the structural or non-structural nature of the defect—the consumer is entitled to claim reparations from the seller. The breadth and scope of reparations will depend on the nature of the defect.

An essential area where these legal distinctions have a practical impact is in the warranty periods for construction defects.

Under Portuguese law:

- A 10-year warranty covers structural defects.

- Non-structural defects carry a 5-year warranty.

Distinguishing between structural and non-structural components is often a source of confusion. Examples of what constitutes structural elements include:

- Foundations (e.g., footings, foundation beams, raft foundations, piles)

- Retaining structures (e.g., diaphragm walls, retaining walls)

- Superstructures (e.g., columns, slabs, beams, load-bearing walls)

- Prestressed concrete systems

- Roof structures (e.g., purlins, crossbeams)

All other components fall under the non-structural category and are, therefore, subject to the five-year warranty.

Credits: Supplied Image; Author: Client;

Exercising Your Rights: Procedures and Deadlines

When a defect becomes apparent, consumers have several legal remedies, including the repair or replacement of the affected element, a price reduction, or, in severe cases, contract termination. The chosen remedy must be proportionate to the defect in question. For example, minor cosmetic flaws do not typically justify full contract resolution.

Importantly, the law does not prescribe a strict deadline for completing repairs. Instead, repairs must be conducted within a reasonable timeframe, considering the severity of the defect and the potential hardship it may cause to the buyer.

The most crucial step in preserving legal rights is a prompt notification to the seller. This must occur within the applicable warranty period, which is either five or ten years. Although the law does not mandate a specific method of notification, it is strongly recommended to use verifiable means such as registered mail or email with acknowledgement. Giving notice is a crucial matter, as initiating legal action must occur within three years of the seller receiving the notification.

Moreover, this three-year period is suspended during ongoing repairs or if the parties enter mediation or judicial proceedings.

Commercial Purchases: Reduced Protections

For those acquiring property through a company or other commercial structure, the legal protections are significantly narrower.

In such cases:

  • The buyer must notify the seller of defects within 30 days of discovery.
  • Legal action must be filed within one year of this notification.

Failure to meet either deadline results in the forfeiture of the right to claim reparations, even if the initial notification was issued correctly. Unfortunately, many buyers only seek legal advice when deadlines are near or have already expired, considerably limiting their options.

For this reason, it is advisable to consult a lawyer no later than six months after notifying the seller, particularly if no remedial action has been taken within that timeframe.

Conclusion

Buying or building a house in Portugal entails more than choosing the correct location or negotiating a fair price. Understanding the legal structure of the transaction and the associated consumer rights is essential to protecting one’s investment. Whether purchasing as a private individual or through a commercial entity, being aware of the applicable warranty periods, notification deadlines, and legal remedies can prevent costly surprises and ensure that the buyer is fully equipped to act if defects arise. When in doubt, timely legal advice makes all the difference.

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