Hidden charges and overriding interests
The theme of hidden charges in Portuguese law lends itself to a wide discussion, which hinders their analysis in a simplified and clear way, as intended on this occasion. Thus, the information bellow does not prevent the use of legal practitioners (lawyers, solicitors, notaries and registrars) for the analysis of a specific case. Our intention is only to provide general guidance in these matters.
Portuguese land register gives publicity to the large majority of right in rem admitted by Portuguese law. However some private or public rights can be considered to be hidden charges.
1. PRIVATE RIGHTS WHICH BURDEN THE PROPERTY
In general, private rights over the land must be inscribed at the land register.
Rights such as usufructs, servitudes, rights of family members arising from the death of a previous owner and the insolvency of the owner are subject to mandatory land register and cannot be considered as hidden charges.
The lease is not considered a right in rem by Portuguese law. But, nevertheless, a lease for more than six years must be inscribed in the land register.
Although it is not clear, according to the Portuguese law, if the financial leasing (the lease with buying option) is a right in rem, it is subject to mandatory land register so it cannot be considered an hidden charge.
Trusts do not exist in Portuguese law and only right are admitted in the tax free zone of Madeira.
The adverse possession can give place to an acquisition inscription in the land register in a special procedure performed before a notary or a registrar, always with the right to appeal to a court of law, in which the registered owner of the land (if it exists) must take part.
In matters of private law, it can be considered to be hidden charges the existence of preferential creditors, because its priority results from the law and it is not inscribed in land registry.
According to the article 748 of the Civil Code, the State and the municipalities are privileged creditors over immovable property, in claims over credits on property tax, transfer tax and inheritance tax.
In matters of private rights that may be considered hidden charges on property, we also must highlight the legal pre-emption rights (see table 1)
Table 1
| Most frequent Pre-emption rights (of municipalities, tax administration and neighbouring landowners). | How a buyer can discover it | A way that the property can be freed from them |
|---|---|---|
| Pre-emption right of adjoining propertiesIn the benefit of owners of adjoining properties on the transfer of agricultural land included in the National Agricultural Reserve (Article 1380º Civil Code and National Agricultural Reserve – see below Table 2 – Decree-law No. 73/2009). | Information on the areas subject to National Agricultural Reserve may be obtained from the Direction-General for Agriculture and Rural Development www.dgadr.pt the municipalities and regional directions of agriculture. | The owner must notify the beneficiary of the Pre-emption right off his intention to sell. This beneficiary shall indicate whether it intends to exercise its right or not. |
| Pre-emption right of the lesseePursuant to paragraph 1 al. a) of Article 1091 of the Civil Code: The lessee has legal pre-emption right: a) purchase and sale or accord and satisfaction of the rented premises for more than three years. | Only the lease of more than 6 years is subject to mandatory land registry. Information on the existence of a lease term of less than 6 years must be obtained from the previous owner. | The owner must notify the beneficiary of the Pre-emption right off his intention to sell. This beneficiary shall indicate whether it intends to exercise its right or not. |
| Pre-emption right on the sale of properties in the area of protection of classified buildings
Decree-law n. º 309/2009 In the areas of protection of properties classified the co-owners, the state and municipalities enjoy right of first refusal in case of sale or payment in kind (Article 36. And 37. º) |
Information can be obtained from IGESPAR Instituto de Gestão do Património Arquitectónico e Arqueológico (Institute of Architectural Heritage Management and Archaeological) at www.igespar.pt/en/ and from each municipality. | The owner must notify the beneficiary of the Pre-emption right off his intention to sell. This beneficiary shall indicate whether it intends to exercise its right or not. |
| Pre-emption right in case of error or simulation of the sale price
For inaccurate indication of the price, or simulation thereof, the State, local authorities and other legal persons governed by public law, have pre-emption right on the sale, in accordance with Article 55. Of the Code of Tax on onerous transfer of property (CIMT). |
*** not applicable *** | To avoid this pre-emption right the real price of sale must be informed to tax administration for the payment of taxes |
| There are other pre-emption rights determined by the location of buildings in the military areas, near airports or railroads, etc. | Information must be obtained locally, from the seller and can be check with the authorities (municipalities or others) | The owner must notify the beneficiary of the Pre-emption right off his intention to sell. This beneficiary shall indicate whether it intends to exercise its right or not. |
2. PUBLIC RESTRICTIONS AND EASEMENTS WHICH BURDEN THE PROPERTY
State or Public bodies can have private rights over land which shall be inscribed in the land registry as the ones of anyone else.
However some immovable properties are part of the public domain (reserved for public purposes established by law – ex. roads or railways – article 84 of Portuguese Constitution). This immovable property is not subject to land registry and cannot be traded unless withdrawn from the public domain.
On the other hand, there are public restrictions and easements that burden the land and which mostly are not subject to registration and can therefore be considered hidden charges.
Nevertheless, some public restrictions for the use the land are subject to registry such as:
- The works of hydro-agricultural use (which affect the owners of the land required for execution of the work – Article 94. º Decree-Law No. 269/82).
- The classification of buildings, because of their cultural interest, pursuant to Law n. º 309/2009, is endorsed in the land registration.
- The creation of easements for water supply, pursuant to Decree-Law n. º 34,021, November 11, 1944.
- The creation of easements for the passage of oil and gas pipelines, pursuant to Decree-Law n. º 11/94
In the field of public law, it is difficult to list the hidden charges, but we will try to indicate below the most important ones (see table 2).
Table 2
|
Public easements and restrictions to use the land ( not registered) |
How a buyer can discover it | Way that the property can be freed from them |
|---|---|---|
| Public Waters DomainLaw No. 54/2005 of 29 November, No. 58/2005 of 29 November, Decree of law No. 226-A/2007 and No. 115/2010.The public waters domain includes the rivers, riverbeds, lakes and the sea. It is approved by resolution of the council of ministers (Portuguese Government). The adjacent areas to the banks and the seacoast can be private property if detached from public domain by a government decision. Nevertheless the use of these areas is subject to public easements and restrictions of public order (e.g.: to give access to the waters to the public). Related to this matter are other restrictions those relating to public water reservoirs (Law n. 107/2009 of 15 May), to the system of water abstraction for public water supply (Decree-Law n. º 382/99 of 22 September), or the possibility of creation of easements relating to spring waters on the grounds of public interest (Decree-law n. º 90/90 and 84/90 of 16 March). |
Information can be obtained at the Waters Institute (Instituto da Água, I.P.) which keeps a public registry of the waters public domain- www.inag.pt | There is no way to be freed from public restrictions. |
| National Agricultural Reserve (RAN)Decree-Law n. º 73/2009 of 31 March.
The National Agricultural Reserve corresponds to the set of areas which have greater aptitude for farming. The National Agricultural Reserve is a restriction of public policy which prevents land use for activities that reduce or destroy its agricultural potential (e.g. prevents subdivisions of the land and limits new constructions). |
Information on the areas subject to National Agricultural Reserve may be obtained from the Direction-General for Agriculture and Rural Development www.dgadr.pt the municipalities and regional directions of agriculture. | There is no way to be freed from public restrictions. |
| National Ecological Reserve (REN)Decree-law n. º 166/2008 of 18 November.
REN is a restriction of public policy that affects the occupation, use and processing of soil due to the protection of the environment. The location of land in the REN can determine the banning of conducting operations subdivision, urbanization, construction or expansion, roads, etc. |
Information about the REN can be obtained from the Commission for Coordination and Regional Development or at the Municipality. The restrictions are, normally, included in the municipal plan for territorial ordnance. | The Commission for Coordination and Regional Development or the Municipality can give permits to construction or other uses of the land. |
| Restrictions of public policy in areas at risk of fire
Decree-Law n. º 124/2006 It is forbidden to build on the land included in the area of fire risk in the municipal plans for forest protection and fire control (Article 16. º n. 3). |
Information can be obtained at each Municipality. | Permit for construction can be obtained at the Municipality. |
| Protected areas for biodiversity
Law no. 142/2008 A protected area that includes one or more ecosystems little altered by humans. These areas include representative natural regions and natural humanized landscapes, sites of geomorphologic importance, and habitats and flora and fauna of ecological, scientific and educational interest. |
Information can be obtained at «Instituto de conservação da natureza e da floresta» in www.icnf.pt/ICNPortal/vEN2007 | There is no way to be freed from public restrictions. |
| Natura 2000 Network
Law No. 49/2005 and Directive 79/409/CEE The Natura 2000 composed of areas of community importance for the conservation of habitats and species, in which human activities must be compatible with the preservation of those natural values. The management of such areas must be ecological, economical and socially sustainable. The Natura 2000 Network is composed of sites classified as Special Protected Areas (SPA), by the Council Directive 79/409/EEC of 2 April 1979 on the conservation of wild birds, including the migratory species and the habitats where they occur. Sites of Community Importance (SCI) classified according to the Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and wild fauna and flora which are considered threatened in the EU. |
Information can be obtained at Instituto de conservação da natureza e da flotesta in www.icnf.pt/ICNPortal/vEN2007 | There is no way to be freed from public restrictions. |
| Public easements to protect military installations
Decree-Law no. 2,078 of July 11, 1955, and Decree-Law n. º 45,986, October 22, 1964. These easements prevent certain actions, such as construction, without permission of the military authorities. |
Information can be obtained at the municipalities | Permit can be obtained before the military authorities. |
| National Road Network
Decree-Law nos. 13/94, 222/98 and 182/2003 Imposing restrictions of public order, such as the prohibition of constructing the range of 50 m on each side of the axis of the road. |
Information can be obtained at Estradas de Portugal, E.P. www.estradasdeportugal.pt |
Permit can be obtained before the Estradas de Portugal, E.P |
| Railroad network
Decree-Law No. 276/2003 Imposition of restrictions on public order to the owners of the buildings adjoining the railway. |
Information can be obtained at Institute of transportation www.imtt.pt and at national railroad enterprise www.refer.pt |
Permit can be obtained before those authorities |
| Easements areas of airports and aerodromes
Decree Law no. 45987 of October 22, 1964 Prohibition of construction or alteration on buildings without permission from aviation authorities. |
Information can be obtained at National Institute of Civil Aviation www.inac.pt or ANA, S.A.www.ana.pt | Permit can be obtained before those authorities |
3. CREDITS GUARANTEED BY MORTGAGE
The mortgage gives the creditor the right to be paid for the value of certain property, or similar, belonging to the debtor or the third, with preference over other creditors who do not enjoy special privileges or priority registration (Article 686 paragraph 1 of the Civil Code).
The law establishes special privileges over immovable property in favour of the state and municipalities for tax credit (among others, less frequent, referred to in article 747. º of the Civil Code) which take precedence over any rights of third parties, even prior to its constitution, including mortgage (Articles 749, 750 and 751 paragraph 1 of the Civil Code).
To prevent the existence of tax debts that may encumber a property with a special privilege the buyer should ask the seller a statement on the absence of debt to tax administration.
