Sales, Operation & Exit

Bulk property sale

The entire property or a defined part of the development may be sold to one investor.

A bulk sale can simplify completion and accelerate the return of capital, but the buyer may expect:

• a pricing discount;
• extensive due diligence;
• representations and warranties;
• rent or income support;
• completion conditions;
• and protection against development, construction or operational risks.

Sale of the project company

Instead of selling the property directly, the investors may sell the shares or quotas in the company that owns the project.

The company continues to own the property, contracts, licences, liabilities and operational history. A share sale therefore requires due diligence covering the complete company, not only the real estate.

Hold and lease

The project company may retain the property and lease it to residential or commercial occupiers.

This route requires:

• an appropriate leasing strategy;
• compliant lease documentation;
• tenant due diligence;
• building management;
• operating budgets;
• service-charge arrangements;
• maintenance;
• insurance;
• and long-term asset management.

Owner-operated asset

Hotels, serviced accommodation, healthcare, student housing, senior living, flexible offices and other operational assets may be operated by the owner or an affiliated company.

The project return then depends on business performance as well as property value.

Third-party operation

The owner may appoint a specialist operator under a:

• lease;
• management agreement;
• franchise;
• concession;
• service agreement;
• or another operating structure.

The commercial and legal effect of each model is different.

Refinancing and retention

A stabilised asset may be refinanced and retained. Refinancing can repay development debt and return part of the invested capital while preserving ownership of the asset.

It is not equivalent to an exit if the investors remain exposed to:

• operating performance;
• interest rates;
• refinancing maturity;
• capital expenditure;
• tenant risk;
• and future market value.

Mixed strategy

A project may combine several routes. For example:

• some units may be pre-sold;
• others may be sold after completion;
• retail space may be leased;
• and the remaining income-producing asset may be refinanced or sold.

The legal structure, property-horizontal title, lender documentation and tax model must support the selected combination.

Do not market unapproved characteristics as certain

Avoid presenting as final:

• unit layouts that remain subject to approval;
• a use that has not been confirmed;
• a tourist classification not yet obtained;
• common facilities dependent on a later phase;
• areas that have not been verified;
• or completion dates that the programme cannot support.

Public statements may affect conformity

For residential property sold by a professional to a consumer, public statements about the property's characteristics can be relevant when determining whether the property conforms to the sale contract.

Marketing, samples and model units must therefore be coordinated with the contractual specification and completed works, under the consumer conformity regime for residential property (Decree-Law 84/2021).

Energy certification

Where the energy-certification regime applies:

• the energy class must be included in transaction advertising;
• the relevant certificate information must be supplied before the contract-promise;
• and the certificate must be available for the final transaction.

The obligations extend to property owners, mediators and advertising platforms in the circumstances defined by Decree-Law 101-D/2020.

Loteamento information

Where the units are built on land subject to a loteamento operation, confirm the statutory information that must appear in advertising and transaction documents. The applicable planning title, date and validity should be checked before the campaign launches.

Property identification

Identify:

• land-registry description and tax registration;
• building, unit and floor;
• plans;
• parking, storage and terraces;
• exclusive-use areas and common facilities;
• and the intended autonomous fraction.

If the property-horizontal title has not yet been registered, explain how the future unit will be identified.

Planning and construction status

State accurately the planning procedure, construction status, expected completion, permitted use, outstanding approvals, infrastructure status and any conditions that must be satisfied before the final sale.

Do not imply that a reservation or CPCV confirms planning legality.

Price and payments

Define:

• total price and VAT treatment where relevant;
• reservation credit and deposit;
• staged payments and payment dates;
• payment accounts and documentary evidence;
• interest on late payment;
• final balance and permitted deductions.

Amounts delivered under the CPCV may constitute a "sinal" with statutory consequences, depending on the wording and circumstances. The parties should understand the consequences of loss of the deposit, repayment in double, specific performance, other remedies and any contractually agreed limitations.

Conditions precedent

Possible conditions include satisfactory title, property-horizontal registration, planning or use status, construction completion, infrastructure completion, lender release, mortgage cancellation, approval of a design amendment, buyer KYC, buyer finance or delivery of defined documents. For each, identify:

• who controls the condition;
• evidence required;
• deadline;
• extension rights;
• waiver rights;
• and consequences if it is not satisfied.

Completion date

Distinguish between:

• target completion;
• anticipated readiness;
• contractual completion window;
• longstop date;
• force-majeure extension;
• buyer-notice period;
• and the date of the final transaction.

A construction programme is not automatically an unconditional contractual promise.

Design, specification and area changes

The CPCV should define which plans and specification apply, permissible substitutions, equivalent materials, authority-required changes, technical changes, buyer-requested variations, area tolerances, material-change thresholds, price adjustments, buyer termination rights and the document hierarchy. On areas, state:

• the contractual area definition;
• source of measurement;
• treatment of balconies and terraces;
• permitted tolerance;
• remedy for material difference;
• and whether the purchase price changes.

A clause allowing any change at the developer's discretion may create enforceability and consumer-law risk, and an area tolerance should not be used to conceal a predictable or already known difference.

Assignment and resale

Define whether the buyer may assign the CPCV, nominate another purchaser, sell the contractual position, add or remove a co-purchaser or transfer to a connected company. Consider:

• developer consent;
• KYC;
• lender requirements;
• commission and tax;
• administrative fee;
• and continuing liability of the original buyer.

Buyer finance

If the transaction is conditional on buyer financing, define required evidence, application deadline, lender refusal, maximum or minimum loan, valuation shortfall and refund consequences.

If it is not finance-conditional, the buyer should understand that inability to obtain finance may not excuse completion.

Default and remedies

Address seller default, buyer default, failure to attend completion, failure to deliver documents, late payment, notice to remedy, termination, deposit consequences, specific performance, interest and recovery of costs.

The remedies must be coordinated with mandatory law and any consumer protections.

Language and interpretation

For international buyers, determine the governing version, translation, interpreter requirements, notices, governing law, courts or arbitration and service of proceedings.

A translation should not be allowed to create different commercial obligations.

Ownership versus exclusive use

A space may be:

• part of an autonomous unit;
• a common part;
• a common part allocated to the exclusive use of one unit;
• or subject to another legal arrangement.

Marketing should not describe exclusive use as ownership unless that is legally correct.

Condominium regulations

The title or separate regulations may address use of common areas, permitted activities, noise, pets, signage, alterations, short-term accommodation, parking, security, waste, maintenance, insurance, service contracts and cost allocation.

Restrictions must be legally valid and consistent with the intended use and title.

Initial condominium budget

Prepare a realistic budget covering cleaning, lifts, security, electricity, water, landscaping, pools, fire systems, maintenance, insurance, management, reserve requirements and major equipment.

Artificially low service-charge estimates can create disputes after handover.

Developer-controlled period

While units remain unsold, define:

• developer voting rights;
• contributions for unsold units;
• appointment of the administrator;
• handover of documents;
• transfer of service contracts;
• treatment of defects;
• and transition to owner control.

The developer should not use the condominium structure to shift its own construction or warranty liabilities to purchasers.

Property documentation

The completion file may include:

• current land-registry certificate;
• tax record;
• cadastral or boundary information;
• property-horizontal title and unit description;
• planning title;
• completion or use documentation;
• energy certificate;
• technical building documentation;
• condominium documents;
• infrastructure evidence;
• lender release;
• and evidence concerning encumbrances.

The exact documents depend on the property, date, municipality, planning history and transaction route.

Buyer documentation

Confirm identity, Portuguese tax number, marital information, representation, corporate authority, beneficial ownership, KYC clearance, payment source, tax assessment and financing documents.

Tax and completion statement

Prepare a statement showing price, amounts already paid, final balance, interest, agreed credits, upgrades, taxes, commissions, lender repayment, retention and the net amount payable to the seller.

Public deed or authenticated document

The final transfer may be completed through the legally permitted form, including the applicable registration procedure. Portugal's Casa Pronta service can coordinate property contracts, mortgages, property-horizontal acts and registration in a single service.

The chosen route should be agreed early enough to coordinate parties, documents, payments, bank representatives, mortgage cancellation, registration and interpreter requirements.

Pre-completion inspection

A buyer inspection may identify incomplete or defective items. Use a written inspection record containing unit, date, attendees, item, location, photograph, responsibility, target completion and status, distinguishing between:

• a minor defect that does not prevent completion;
• an incomplete contractual obligation;
• a safety or habitability issue;
• and a dispute concerning the specification.

Keys, access and handover information

Record delivery of keys, access cards, remote controls, parking devices, alarm codes, mailbox keys and digital-access credentials, and provide as applicable:

• appliance manuals and equipment warranties;
• maintenance instructions and finish schedules;
• emergency contacts and utility information;
• energy certificate;
• condominium contacts and house rules;
• defect-reporting procedure;
• and restrictions affecting alterations.

Utilities and meters

Confirm meter references, readings, transfer process, temporary supplies, common supplies and responsibility for charges before and after handover.

Handover of common areas

The common parts should be transferred to the condominium or building-management structure through a documented process. The file may include:

• as-built drawings;
• equipment schedules;
• maintenance contracts;
• inspection records;
• warranties;
• statutory certificates;
• access credentials;
• operating manuals;
• and outstanding-defect lists.

Responsibility

Determine whether the item concerns the developer, main contractor, subcontractor, consultant, supplier, condominium, utility provider, operator or owner.

The buyer should not be required to coordinate the developer's supply chain.

Access and evidence

Record date notified, inspections, diagnosis, access attempts, remedial work, completion, buyer confirmation and recurrence.

Common defects

Coordinate defects affecting façades, roofs, waterproofing, lifts, fire systems, drainage, mechanical systems, landscaping, garages and other common areas with the condominium or building manager.

Financial provision

The project close-out budget should retain sufficient funding for:

• aftercare staff;
• inspections;
• urgent works;
• unresolved claims;
• contractor insolvency;
• common-area defects;
• and professional fees.

Releasing all project cash at completion can leave the seller unable to meet continuing obligations.

Commercial leasing

Commercial lease negotiations may address permitted use, lease term, break rights, rent-free period, fit-out, turnover rent, indexation, bank guarantee, service charge, repairs, insurance, signage, assignment, subletting, reinstatement, opening obligations and landlord works.

Planning and use

A lease does not cure an unlawful or unauthorised use.

Confirm that:

• the unit can lawfully be used for the proposed activity;
• any fit-out is permitted;
• building and condominium rules allow the activity;
• and any sector-specific approvals can be obtained.

Lease documents

Portuguese urban leases are governed by the Civil Code, the NRAU and related legislation. The documentation should be reviewed against the current rules applicable to:

• residential or non-residential use;
• duration, renewal and termination;
• formalities;
• deposits and guarantees;
• rent updates;
• tax reporting;
• and dispute procedures.

Operating lease

The operator leases the property and pays fixed, indexed or turnover rent, or a combination. The lease should allocate:

• maintenance;
• replacement expenditure;
• insurance;
• statutory compliance;
• licences;
• brand standards;
• and return condition.

Management agreement

The operator manages the business for the owner. The owner generally retains the operating risk and funds payroll, operating costs, working capital, furniture and equipment and capital expenditure. The agreement may include:

• base fee and incentive fee;
• performance test;
• budget approval;
• owner priority;
• operator system charges;
• termination rights;
• and handover obligations.

Franchise

A franchise permits use of a brand, systems and distribution platform while the business is operated by the owner or another operator. The franchise agreement should be coordinated with management, technical services, design approval, opening standards, marketing, reservation systems and brand-mandated capital expenditure.

Operator selection

Assess track record, local capability, financial strength, brand, distribution, operating forecasts, pre-opening team, technical services, proposed fees, owner protections and exit flexibility.

A recognised brand does not eliminate the need to test the operator's financial assumptions.

Physical readiness

• furniture, fixtures and equipment;
• operating supplies and spare parts;
• testing and commissioning;
• maintenance systems;
• cleaning, security and waste;
• landscaping;
• and snagging.

People and systems

• organisational structure, recruitment and training;
• payroll, uniforms and policies;
• health and safety and emergency procedures;
• property-management system and point of sale;
• reservations and access control;
• accounting, procurement and CRM;
• cybersecurity, data protection and reporting.

Commercial and financial readiness

• branding, photography and website;
• distribution, pricing and opening offers;
• contracts, deposits and cancellation policy;
• customer communications;
• working capital and pre-opening budget;
• operating accounts, payment systems and cash controls;
• insurance, tax registration and approval authorities.

Opening delays and early operating losses should be included in the project financial model.

Planning and construction

• PIP, licences and communications;
• approved project, amendments and responsibility statements;
• municipal correspondence and sector approvals;
• completion or use documentation;
• building contract and consultant appointments;
• programme, payment records and variations;
• completion certificates, warranties, guarantees and insurance;
• defects, claims and as-built information.

Sales, leasing and operation

• sales schedule, reservations, CPCVs and deeds;
• deposits, commissions and buyer claims;
• leases, guarantees, arrears and tenant correspondence;
• operator and franchise agreements;
• licences, registrations and budgets;
• management accounts and performance reports;
• employee information, supplier contracts and capital-expenditure plans.

Finance, tax, disputes and compliance

• facility agreements, security and guarantees;
• lender consents, covenant reports, hedging and repayment statements;
• tax returns, assessments and clearance information;
• VAT records, transfer-pricing documentation, tax losses and audits;
• litigation, arbitration, complaints and regulatory matters;
• AML procedures, data protection, environmental matters and insurance claims.

Information should be complete, current, indexed, internally consistent, appropriately redacted and supported by a disclosure process.

Buyer taxes

The buyer may be responsible for IMT and Stamp Duty on a direct property acquisition, subject to the property, value, use, buyer and any applicable exemption. The sales team should not provide definitive tax calculations without an approved and current methodology.

Share sale

The seller and buyer should review capital-gains taxation, participation exemptions, withholding, investor jurisdiction, real-estate-rich company rules, transfer pricing and possible IMT consequences.

Net proceeds

The investment return should be calculated after:

• debt repayment and break costs;
• tax;
• commissions and legal fees;
• retentions and warranty security;
• project close-out;
• and remaining liabilities.

Gross sale price is not the investor distribution.