New amendments to the legislation of the lease in Portugal

New amendments to the legislation of the lease in Portugal

On February 12, 2019, the Portuguese Parliament approved new changes to the leasing legislation, in order to implement some measures that balance the rental market in Portugal and, on the other hand, protect the tenant from certain abusive behavior of the landlords. We will explain some of the amendments adopted.

Term of Contract

The approval of Law no. 13/2019 of 12 February establishes that lease agreements must have a minimum duration of one year, with the exception of leases for non-permanent housing or for a special transitional purpose (namely professional reasons, education or tourism). However, this minimum obligation of validity of contract must be coordinated with the minimum terms of 3 or 5 years (according to the purpose of contract) for the landlord to prevent the renewal of the contract, which we explain below.

Contract renovation

Prior to the approval of Law no. 13/2019 of February 12, in the absence of a different contract, the lease with a certain term will automatically renew at its end for successive periods of equal duration.

With the approval of Law no. 13/2019, if the agreement does not establish different, the rental for housing is renewed for a minimum period of three years, except in the cases of leases for non-permanent housing or for special temporary purpose.

As regards leases for non-residential purposes, Law no. 13/2019 of 12 February reduces contractual freedom, in particular, prevents landlords from opposing renewal of the contract in the first five years of the contract.

That is, at the same time as Law No 13/2019 of 12 February establishes the minimum duration of one year for leases in general, with a few exceptions, the landlord can never oppose renewal of the contract before 3 years (in the case of housing leases) and 5 years (in cases of non-residential leases).

Compensation in case of delay in payment of rent

With the approval of Law no. 13/2019 of February 12, if the tenant is late in paying the rent, the compensation is reduced from 50% of the amounts owed to only 20% of that amount.

Protection of tenants over the age of 65 or handicapped by disability

Law no. 13/2019 of 12 February extended the situations of transmission by death of the lease that now includes son or stepchild (aged 65 or over) who had lived with the tenant for more than 5 years, since its income is included within the legal limits.

Law 13/2019 of 12 February limits the possibility for the landlord to oppose renewal or to denounce contracts of limited duration for housing purposes concluded after 15 November 1990 if the tenant is over 65 or has proof of incapacity for deficiency of more than 60% and has lived for 20 years in the property leased.

Creation of Injunction for the Tenant

The Rent Injunction was created, which allows the tenant to demand from the landlord the return of the amounts paid by the tenant to carry out works in the lease that, according to the law, should be executed by the landlord.

Prohibition of the landlord’s abusive behavior against the tenant

Law 12/2019 of 12 February establishes a general principle prohibiting harassment in the lease.
The landlord or his representative are prohibited from having disturbing behavior, affecting the dignity of the tenant, sub-tenant or the persons who live with them legitimately in the lease. From now on, certain behaviors are prohibited and punished that create a hostile, degrading, dangerous, intimidating, humiliating, destabilizing or offensive environment for the tenant and his / her relatives; or cause serious damage to the access and enjoyment of the property.

The information in this article does not dispense with the consultation of experienced professionals.

Lisboa, 10 de Abril de 2019

Ana Viegas Correia

Contract: Repair Warranty

Contract: Repair Warranty

Contract Law

With the development of construction activity and real estate in Portugal in recent years, often problems arise with the quality of work performed. We will focus on some important aspects of this problem.

In the contract a person or entity (contractor) has the duty to another person or entity (owner of work) to perform a certain work, with payment of a price. The contracts cover all types of building works as well as manual work, such as the arrangement of a motor vehicle or a washing machine.

What can be considered as a default?

In Portugal, the law protects the owner in what is considered to be defects that the contractor is responsible for.
The owner has the benefit of assuming the contractor’s fault, including acts carried out by their representatives, workers and employees. To remove this presumption of guilt, the contractor will have to prove that he did nothing to cause the defect, that he performed the work in accordance with the construction rules and according to what was negotiated with the owner. Only then will the contractor be liable for the defect of the work.

The contractor will have to prove that the defect in the work was due, for example, to completely abnormal climacteric phenomena (for example torrential rains, unusual winds, earthquakes) or acts done by people who integrated into the contract team (for example, a neighbor who rises and walks on the roof of a work and of a tile) or simply the defect itself is justified by the time deterioration of the materials (for example, the color paint of the walls change over the years when exposed to the south). Otherwise, the contractor will always be responsible for the defect.

Accept or refuse the work, which should make the owner?

Once the work is finished, the owner must check very carefully if the work is well executed. In case of more complicated works, the owner or contractor has the right to hire one or more experts for this verification, paying the expert’s report.

If the work is defective, the owner has the right to refuse payment and demand that the defect be repaired. Alternatively, the owner can accept the work with limitation, that is, the owner receives the work on condition that the contractor is responsible for repairing the defect within a set period.

If the developer does not verify the work, it is considered that it accepts the work without limitation, that is, that the work is correct.

What is the warranty period for the contract?

In order to activate the guarantee of the contract it is necessary to pay attention to several deadlines that are coordinated among themselves.

As for the works on goods in general (car mechanics, furniture cabinet, etc.), the warranty period is two years from the completion of the work and delivery of the goods to the owner. However, the owner is obliged to communicate the defect of the work within a maximum period of 60 days, from the day he discovered the defect of the work. This means that the law requires the owner to be aware of the defects in the work and also to promptly inform the contractor. The owner is not allowed to wait for the end of one year to inform the contractor of a work defect he discovered months earlier.

As for the works on real estate (general construction, painting of walls, etc.), the deadlines are longer. The warranty has a term of 5 years, and the owner must report the defect of work within one year after the date on which he became aware of the defect.

In all the contracts can be established, by written document, a longer term of guarantee of the work.

How to claim the contractor to repair the defect?

The responsibility of the contractor for the defects of the work always depends on the previous written communication of the defect in the periods established by the Law.

It is very important that the owner has two proofs. The first proof is that of sending the written, concrete and detailed communication of the defect of the work (preferably with photographs). The second is proof of receipt by the communication contractor, for example, receipt of the letter signed by the contractor.

Another important detail is that the owner of the work shall require to be made to repair within a certain period. The owner must indicate that he requires the repair of the defect of the work until a certain day, month and year.

And what happens if the contractor fails to repair the defect?

In case the contractor fails to correct the defect within the time limit established in the written communication, the owner must submit the case to the courts within one year of the last day of the period established in the letter.

If the owner does not submit the lawsuit against the contractor at that time, the owner will definitely lose his right to demand repair of the defect. The contractor will thus be without any obligation of repair or compensation.
The strict and timely compliance of all legal procedures and deadlines is essential for the proper resolution of the problems of defects of the work and should be advised by a lawyer experienced in the matter.

Annual Meeting of Condominium Owners

Annual Meeting of Condominium Owners

The annual meetings of the condominium owners are part of the routine of those who live or have an apartment or an independent unit in a building. However, few are those who know what the main purpose of these meetings is.

Considering the existing doubts, we have decided to describe all the important information about these types of meetings, so that the owner can carry out his duties in a conscious and responsibly way as a joint owner.

What are the purposes of this meeting?

The condominium meeting aims to bring together residents (condominium owners) to make decisions on various issues regarding the building (condominium), and it is imperative to hold it annually at least once.

list of subjects to be decided at the meeting

During the meetings of condominium owners, the Administration of the Condominium shall:

  • Present to the owners, so that they can approve, the accounts of all revenues and expenses incurred with the common parts of the building in the year that has ended;
  • present the budget for revenues and expenses for the following year;
  • Make a report with information of the year ended;
  • election or re-election of the administration for the following year;
  • Discuss other matters on the agenda sent in the notices;

Meeting Call Letter

At the beginning of each calendar year, it is necessary to hold an annual meeting of Condominium Owners to present the accounts of ended year and approve the budget for the current year. However, if the annual accounting year does not coincide with the calendar year, the meeting should be scheduled by that time (for example, an accounting year beginning on February 1, 2018 and ending on January 31, 2019, the meeting should be scheduled for February 2019).

The meeting must be scheduled by registered letter with notice of receipt sent to all the owners, at least ten days in advance or delivered personally, with a signature in a document proving the receipt of the letter. In the case of not being sent the convocation to one of the owners, the meeting of the Assembly is invalid.

If the letter of convocation for the meeting is sent to the address of the owner and he does not receive it, the meeting will remain valid, as well as the decisions taken.

What should appear on the notice of the meeting of the Assembly

The notice of the meeting of the Assembly shall include the day, time, place and specification of all matters to be appreciated by the joint owners.

Note: In legal terms, the generic mention of the subject (example: “other matters of the condominium”) has no legal value.

Meeting Day

Once on the day and time of the meeting, the joint owners must sign the list of joint owners in order to confirm the quorum of the Assembly (number of votes present), since each owner has as many votes as the percentage of his independent unit.

If there are not 50% of the votes present to start the meeting, a second call must be marked and sent, following the same process as the previous one, with the same subjects to be discussed. In this case, the Law allows the meeting to be started with only 25% of the total votes.

I can not be at the meeting, now what?

If the condominium owner can not be present, he may be represented by another person, provided that he has a letter identified and signed by the owner.

Report of the Condominium Meeting

During the meeting of the Joint Owners, a report must be written with all approved or disapproved resolutions, as well as all amounts in debt by the condominium owners, in order to be able to charge the amounts in debt at the Court. At the end, it must be signed by all those present, in order to make it valid.

Although it may seem like a simple meeting, the Annual Meeting of Owners is the way to make important decisions regarding the proper functioning of the condominium. Therefore, it is important that the owner is present and actively participates in these meetings, knowing how to use their rights and duties as an active part in the proper functioning of the condominium.

Tax Benefits – Urban Rehabilitation Works

Tax Benefits – Urban Rehabilitation Works

The Portuguese State Budget approved for 2018 extends the tax benefits of IMI (Municipal Property Tax), IMT (Municipal Tax on Real Estate Transfer) and IRS (Tax on Individual Revenue) to owners who undertake rehabilitation of real estate for housing, extending these benefits to real estate throughout the country, as long as the property has more than 30 years. Until now, these tax benefits were only attributed to the real estate that was located within the urban rehabilitation zones defined by the Municipalities.

The Portuguese State Budget for 2018 has eliminated the time limit previously set, that it is no longer mandatory that the works most be completed by December 31, 2020.

The tax benefit in IMT considers the exemption of payment of IMT on the acquisition (natural or legal persons) of a property for rehabilitation and whose works begin within three years after the purchase. In addition, a new IMT payment exemption (by reimbursement a posteriori) will be made on the first transmission of the property after the rehabilitation works, if the new purchaser assigns the house to his permanent dwelling or places it on the rental market.

With regard to the payment of IMI, the Portuguese State Budget for 2018 provides for exemption during the period of three years, from the year in which the rehabilitation works of the property finish. This exemption may be renewed for a period of five years if the property is intended for permanent private housing or is placed on the rental market (excluding local accommodation).

In the IRS, property income from real estate located in urban rehabilitation areas or rehabilitated real estate subject to a phased renewal of rent is subject to a rate of 5%, and this tax rate is applied to the capital gains generated with the first transmission of the property.

Urban rehabilitation has increased significantly in Portugal in recent years, due in large part to the dynamism of the real estate market.

Autor: Ana Viegas Correia
Senior Lawyer – Lisbon Attorneys Corp
23 Janeiro de 2018

Update of the registration of rustic buildings free for 30 months

Update of the registration of rustic buildings free for 30 months

There are new rules for non-registered agricultural and forestry land.
It was approved by the Council of Ministers the creation of a Simplified Cadastral Information System that during 30 months will have an exceptional regime of exemption from the payment of the fees and emoluments due to the updating of the land register of rustic properties.

Unregistered land owners have two years – until December 31, 2018 – to make this registration.

Beginning in 2019, land that has not been registered passes to the so-called Land Bank, which has been managed by the State for 15 years.

The Land Bank will integrate all the rustic, agricultural or forestry lands, with no known owner.

The Forest Management companies and their partners will have the obligation to benefit from tax and emolumentary incentives and exemptions, and also, it is foreseen the simplification of the process of constitution of Forest Intervention Zones. One of the main duties of these societies, which may be composed of any group of citizens, is to keep the land clean and prevent fires.

This legislative package is now awaiting discussion and voting in the Assembly of the Republic.

Government prepares new technical file for housing

Government prepares new technical file for housing

Government prepares new technical file for housing

The Government is preparing a new legislative proposal that provides for the replacement of the current Technical File of Housing by the Technical File of the property.

The new Technical File of the Property, of simpler content, should contain indicate the main characteristics of the property and must have attached the energy certificate.

This technical file will become mandatory not only for housing, but also for non-residential buildings, namely, shops or offices, garages, warehouses, among others.