What are the legal responsibilities of an estate agency in Portugal?

Buying or selling a property or even renting a home can be a complex and risky process. Using a real estate agent is therefore a recommended and safe option, as they are familiar with the legal and bureaucratic procedures relating to this type of business. But what are the responsibilities of an estate agency? Who can do business in Portugal? What are the requirements and obligations of a real estate agency? We explain on legal grounds.

The real-estate brokerage business is regulated by Law 15/2013, of 8 February, in its current wording, as José Pinto Santos, Associate in SRS Legal's Real Estate Department, explains. In this article for idealista/news, the lawyer analyses the requirements and obligations for carrying out this activity in Portugal and for a company to become a real estate broker.

Under the terms of this law, real estate brokerage consists of: "The search by companies, on behalf of their clients, for recipients for the realisation of business aimed at the constitution or acquisition of rights in rem over immovable property, as well as the exchange, transfer or lease of the same or the assignment of positions in contracts related to immovable property".

A Company in this context means a natural or legal person with a domicile or registered office in a State of the European Economic Area and engaged in real estate brokerage. The activity of real estate brokerage can only be carried out in Portugal by real estate brokerage companies and under contract.

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1. Prior obligations: licensing

The company must have a valid AMI licence (i.e. for real estate brokerage activity).

The licence application must be submitted on a specific form, preferably via the digital platform provided by the Institute of Public Markets, Real Estate and Construction (IMPIC).

The commercial suitability of the company and its legal representatives must be guaranteed and maintained throughout the mediation agency's period of activity (article 6). They must take out and maintain in force civil liability insurance (or equivalent) for at least €150,000, under the conditions set out in Annex I of the same law.

2. Duties when carrying out the activity

In general terms, after obtaining the AMI licence and opening the establishment (communicated to IMPIC within 30 days), the company will be able to carry out its activity and:

1. Ensure their clients have the capacity and legitimacy for the business;
2. Ensure that the characteristics of the property provided by the clients correspond;
3. Accurately and clearly inform the recipients of the business, its characteristics, price and payment terms, so as not to mislead them;
4. Display the identification card (issued by IMPIC) when carrying out their activity;
5. Immediately inform the recipients of any fact that could jeopardise the completion of the deal;
6. Ensure that the mediation contract fulfils the formalities set out in Article 16 of the applicable legislation;
7. Return to the provider, on request, any sums deposited in their custody, by the recipients of the business mediated by them - the so-called reserve (unless otherwise agreed).

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The law also lays down a number of prohibitions, including:

• Receiving remuneration from clients and recipients in the same business;
• Intervening as an interested party in any transaction involving the property being mediated (including through a partner or legal representative, spouse, ascendant or descendant in the 1st degree);
• Entering into property brokerage contracts when the circumstances reasonably allow them to doubt the lawfulness of the deal.

Failure to fulfil these duties may result in sanctions being imposed by the IMPIC (including the payment of fines and even the closure of the establishment and prohibition of activity), as well as the obligation to reimburse customers under the terms of civil liability.

3. Duties after the deal is finalised

But be aware that your duties don't end when the deal is finalised. By way of example, there is a duty to organise and keep an up-to-date register of all mediation contracts concluded for a minimum period of 5 years.

In addition, there is also a duty to provide IMPIC with all the information, documentation and elements related to its activity, as well as to provide access to the premises, the registration and complaints books and the documentary archives mentioned above.

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4. Money laundering

To this must be added the obligations imposed by Law 83/2017 (preventive and repressive measures to combat money laundering and terrorist financing), which include, in particular:

1. Communicate to IMPIC, on a quarterly basis, the details of property transactions carried out and leases with a rental value of more than €2,500.00/month- including identification of the parties involved, the overall amount of the deal and the value of each property transacted, as well as the means of payment;
2. Appoint a person responsible for compliance with the regulations in question, with compulsory training.

Compliance with legal obligations is intended to guarantee a reliable property market, but it is still onerous to impose on private entities an almost supervisory activity that, in the final analysis, should be the responsibility of the state. In any case, these obligations exist and failure to fulfil them gives rise to liability.

• Your 5-part guide to finding a good estate agent in Portugal