CPCV in Portugal: What Buyers Should Check Before Signing

A CPCV is not a harmless reservation form.

The Contrato-Promessa de Compra e Venda is the contract that usually commits the buyer and seller to complete the property transaction later. Once signed, it can create serious financial consequences.

The safest time to negotiate buyer protection is before the CPCV is signed and before the main deposit is transferred.

What should the contract cover?

The buyer should understand who the parties are, exactly which property is being sold, purchase price, deposit, payment schedule, completion mechanism, conditions and consequences if either side fails to perform.

Check the seller and property first

Before signing, confirm seller authority and review the property documents, including the Land Registry, tax record, condominium information, charges, mortgages and relevant building records.

Read: Buying Property Due Diligence

Deposit and financing

A CPCV commonly includes a sinal, or deposit.

Do not focus only on the percentage. The important question is what happens to that money if the transaction does not complete.

If you need a mortgage, the CPCV should deal expressly with financing risk. Do not assume that buying with a mortgage automatically gives you the right to cancel if the bank refuses the loan.

A financing condition can define the required loan amount, approval deadline, evidence of refusal, low-valuation risk and what happens to the deposit.

Read:

• Property Deposit in Portugal
• Buying With a Mortgage

Bank valuation

Mortgage approval and bank valuation are different issues.

A bank can approve you as a borrower but value the property below the purchase price. That can reduce the amount it is willing to lend.

For example, if a €500,000 purchase assumes a €400,000 loan but the valuation supports only €350,000, the buyer has a €50,000 funding gap.

Without properly drafted protection, that gap may remain the buyer's problem.

Due diligence condition

Sometimes the buyer needs to sign before every check can be completed.

The CPCV can make the buyer's obligation dependent on specified due diligence being satisfactory.

A vague phrase such as "subject to due diligence" may not be enough. The contract should make clear what is still being checked, the deadline, what problems trigger the condition, whether the seller can cure them and what happens to the deposit.

Completion and seller mortgage

The CPCV should say when and how the final sale will take place.

A property can be sold while subject to a seller's mortgage, but the discharge should be organised for completion.

Property condition

The CPCV should make clear what the buyer is acquiring, including material furniture, parking, storage, promised repairs, unfinished works, vacant possession or tenants where relevant.

If something matters, do not rely only on an estate agent's message.

If one party does not complete

Portuguese law can give the non-defaulting party deposit remedies and, in qualifying cases, the possibility of seeking specific performance.

The buyer can face loss of the deposit where failure is legally attributable to them and no contractual protection applies.

A buyer's CPCV checklist

• [ ] seller authority;
• [ ] property identification;
• [ ] due diligence completed or protected;
• [ ] purchase price and payment schedule;
• [ ] deposit consequences;
• [ ] mortgage and valuation protection;
• [ ] completion mechanism;
• [ ] seller mortgage discharge;
• [ ] property condition;
• [ ] condominium position;
• [ ] default consequences.

How THE-Ö can help

Our CPCV Review service is buyer-side.

We can review the property documents and contract before you sign, identify the main risks and negotiate clauses that match your actual transaction.

Have a draft CPCV and want it checked before you transfer the deposit?

Send us the contract and the seller documents you have received.