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Discussion Starter · #1 ·
Looking to buy a property in Portugal and I just wondered if there are any general pitfalls encountered by people who have bought a property. For instance, is it tricky buying land? Of course, you have to ensure that you can actually build a house on the land, but is there a time limit as there is in England? Is it less or the same?

Does buying a ruin on land make it more difficult to build, either renovating or building a new house? Some properties I note are in great need of renovation, is it a fairly easy process?

I'm wondering what beaurocracy is involved as I'm sure it's a completely different process to the one I'm used to in England.
 

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One pitfall is the real estate market itself. Home sale prices are kept hidden from the public, and a very large number of homes here are priced well above market value. This means that it takes a long time for a buyer to build an understanding of the true market value in any given area. The only way I that I found to do this (and I have been buying, renovating, and selling homes for 20+ years overseas for a living) is to be patient and watch the market for a long time. When homes go pending or the ads are removed within a couple of weeks of being listed then that particular home was likely to have been near true market value. There are a lot of sellers fishing for idiots here so try not to feed them. If a home is listed by several agencies at once it is likely someone gaming the "secretive system" looking to take advantage of an inexperienced buyer.

There are some other resources that can help you too, you need to try to be a detective and investigate online how long someone has been trying to sell a house. You want to know if a house has been on the market for years (per a "date targeted" google search, a listing on OLX that shows the initial ad date, a google maps street view showing real estate sale signs at the time they drove through the area, etc). Once you know a house has been on the market for "years" you know the price is way too high and negotiations should start well below 80% of the asking price. A lot of these houses listed for years through many agencies are priced at double their market value, so buyer beware!

Also be careful with advertised living space, the numbers are all over the place and are seldom correct. This makes market value research extremely difficult. My suggestion is to use the pictures as a basis for determining internal house area. You can try to locate the house using landmarks, odd shapes of nearby structures, train tracks, highways, etc, then use google earth pro (free download) to ascertain the square meters of the roof area. Unfortunately because of the poorly designed real estate market here most ads will hide the true address from you, so you must become a detective...

The market here is very negotiable considering everything I mentioned above. I negotiated for a home on the market for less than a year and I was able to get the seller to reduce the price almost 20% below the asking price. I had another one negotiate down 10% but they decided to continue fishing for idiots rather than sell (I offered 20% below asking price and the house has been up for sale for 2.5 years with no price drops for at least a year).

From what I have been told the older homes can be renovated inside without requiring permission, but any exterior changes may require permission from the municipality. These are the homes built before a certain year (I think 1951?) and they must already have a certificate of habitation on file with the municipality. I am not sure about the newer homes but I believe they have very different rules and restrictions.

I would love to build a house here from scratch but I am afraid of the bureaucracy. I prefer stick built homes (wood studs with plywood sheathing and drywall inside) over masonry or stone, but there are very few of those here. Perhaps someday I will attempt it but for now I am looking for either a move in ready home or an older home that needs renovations but is "grandfathered" as habitable and can be renovated without permits.

I am sure some people with experience actually buying homes will make some suggestions but hopefully my experience here so far is helpful. Good luck!
 

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Many thanks for your reply, which is very helpful. One thing I did notice when looking at properties when on holiday acoupl eof years ago is that, as you say, homes can be on the market for ages and the seller seems to refuse to budge on the price. Another reason for this I've been told, is that there could be family disagreements on inheritance, though that can't count for most of them. We are gong to rent first then buy at leisure so we don't feel rushed into anything.
 

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If you search this site for information there is loads and loads on buying and associated problems/pitfalls in Portugal, including a lot from someone who bought, built a house then opened/ran estate agency. You may also find that a loan can be taken against a property and this loan debt goes with the property to subsequent owners so two identical places but priced at 100k and 10k you can find the 100k one is cheaper if the 10k one has a 95k loan on it (numbers for illustration only) BUT if you are using outdated paperwork the loan does not show.
 

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If you search this site for information there is loads and loads on buying and associated problems/pitfalls in Portugal, including a lot from someone who bought, built a house then opened/ran estate agency. You may also find that a loan can be taken against a property and this loan debt goes with the property to subsequent owners so two identical places but priced at 100k and 10k you can find the 100k one is cheaper if the 10k one has a 95k loan on it (numbers for illustration only) BUT if you are using outdated paperwork the loan does not show.
What are you saying? Does Portugal not have a modern electronic registry for title searches (showing ALL loans and liens on all homes and land)? All loans, liens, etc should be registered and in a computer database that can be searched by owner or address, and the search results should be able to be accessed in real time. This is referred to as a title search. And citizen should be able to go to a county registry office and type a name or address into the mainframe computers and print a list of debt, loans, and liens / encumbrances on any particular property at any time.

It is also crazy that loan debt is transferred to a new buyer. The loan debt SHOULD be paid off at the closing from the sale proceeds, and if the buyer requires a loan then they should apply for a new loan. This is how it has been done for the past 100+ years in other countries.
 

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This is Portugal - praise be to Allah - and is NOT the US of A and if you cannot accept how the present Portuguese nation runs their own country maybe this is not the place for you. If you really want to try and understand Portugal then read some Portugese history particularly about the Salazar era. Additionally there are reasons why a debt can be tired to peoperty.
 

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This is Portugal - praise be to Allah - and is NOT the US of A and if you cannot accept how the present Portuguese nation runs their own country maybe this is not the place for you. If you really want to try and understand Portugal then read some Portugese history particularly about the Salazar era. Additionally there are reasons why a debt can be tired to peoperty.
I do not concern myself too much with the past, it is much more efficient to adapt for the future. Consumer protections for purchases, especially land and homes, must be done in such a way to build trust and faith in the system. Otherwise it is going to fail miserably. All liens, loans, and encumbrances must be registered in a way that is easy and quick to access, otherwise there is too much potential for fraud. There is no reason not to maintain an electronic database now with regards to land title. This is not new technology, this has been done for almost 50 years in other places.

Debt is not tied to property, it is tied to an individual or a company that obtained the loan. A house or a piece of land cannot repay a loan, it can only be used as collateral. If you buy a sandwich with a credit card is the debt tied to the ham and cheese and bread? No, it is tied to the purchaser. If the purchaser cannot pay then perhaps they will allow them to give back the sandwich, but what if they already ate the sandwich? What if a home is destroyed, or rendered worthless due to acts of nature, then what happens to the debt? The debt is the responsibility of the purchaser, and when a home is sold the new buyer should never be tied to whatever contract (loan agreement) that the original purchaser made. This way of doing things makes fraud very, very easy, and it makes everything way more complicated and subject to litigation. People fishing for scams can make fraudulent loans and try to pass that on to a new purchaser of a home without them ever signing a contract.

The year is now 2021, if Portugal wants more money injected into it's economy then it needs to make purchases here safe by adopting methods used in other modern countries to PROTECT investment and INSTILL trust. The realtors here know and understand this very well, it is a shame no one is listening to them...
 

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As before.
This is Portugal - praise be to Allah - and if you cannot accept how the present Portuguese nation runs their own country maybe this is not the place for you. Additionally there are reasons why a debt can be tired to property.
I am not saying it's right or wrong but just how it is.
A quote about land ownership in the US of A.........."The power of Congress to extinguish aboriginal title—by purchase or conquest" though that may be the past you don't want to confront.
 

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As before.
This is Portugal - praise be to Allah - and if you cannot accept how the present Portuguese nation runs their own country maybe this is not the place for you. Additionally there are reasons why a debt can be tired to property.
I am not saying it's right or wrong but just how it is.
A quote about land ownership in the US of A.........."The power of Congress to extinguish aboriginal title—by purchase or conquest" though that may be the past you don't want to confront.
As a resident of Portugal I have a right to speak my mind just as you. And I am not alone, a majority of the real estate community appears to agree with me. Perhaps you should ask some real estate professionals about their opinion of the real estate market here. I have found overwhelming support to adopt the American real estate system here, and for good reasons.

In America they cannot take your land except by eminent domain or excessive debt (and in some areas a primary residence is protected against bankruptcy and creditors. In the case of eminent domain the government entity taking your property must pay you fair market value for it. My family actually lost a home to the government so they could build a highway, but they were paid for it.

Of course in the past land was stolen in America. THE ENTIRE COUNTRY was forcibly taken from the indigenous people by people that left Europe, UK, etc. Why don't we go back and take a look at the Crusades, maybe they will teach us a way to make real estate a safe investment instilling public trust? Perhaps the Neanderthals knew a better way to buy and sell homes safely and fairly, maybe we should study them?

THAT IS MY POINT, this is not the past it is the present and it is time to follow tested and proven examples of how to run a successful and safe real estate market that is FAIR for everyone. I don't think Portugal should take land by wars and do unfair things, I think they need to make real estate purchases transparent and fair and open for the general public.

I should make something clear. I do not like America, that is why I left. I do not like what they do, I do not like the hypocrisy, I do not like the destruction of nature, I do not like the corporations and the drug and chemical companies. There is very little about America that I think works, the real estate market is one of the few things that I believe they have got better than most.

Actually there is a new trend starting there, where realtors do not get paid in commission but rather they get paid a salary that is dictated by their customer service satisfaction reviews. Redfin uses this business model and it has made their realtors care more about their client's happiness and less about how many sales they make.
 

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Looking to buy a property in Portugal and I just wondered if there are any general pitfalls encountered by people who have bought a property. For instance, is it tricky buying land? Of course, you have to ensure that you can actually build a house on the land, but is there a time limit as there is in England? Is it less or the same?

Does buying a ruin on land make it more difficult to build, either renovating or building a new house? Some properties I note are in great need of renovation, is it a fairly easy process?

I'm wondering what beaurocracy is involved as I'm sure it's a completely different process to the one I'm used to in England.
Try search for posts by omostra06 on this here Portuguese part of the Forums.
like this one
 

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If you search this site for information there is loads and loads on buying and associated problems/pitfalls in Portugal, including a lot from someone who bought, built a house then opened/ran estate agency. You may also find that a loan can be taken against a property and this loan debt goes with the property to subsequent owners so two identical places but priced at 100k and 10k you can find the 100k one is cheaper if the 10k one has a 95k loan on it (numbers for illustration only) BUT if you are using outdated paperwork the loan does not show.
I don't know where you got these ideas, but they are very distorted. I've been a real estate agent since 2002 and I've been working in the Cascais area with remax since 2004 and so everything I tell you I know from experience and I can easily prove it. These are not rumours: It is not possible to transfer a property in Portugal with liens or charges, and this includes (obviously) loans or mortgages. before spreading these lies you should talk to professional and qualified real estate agents who work at certified agencies. Did you know that real estate agencies are required to have civil liability insurance to compensate clients in the event of an error? The market in Portugal is very regulated and I would say that if you are accompanied by an agent, you will hardly be fooled.
 

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One pitfall is the real estate market itself. Home sale prices are kept hidden from the public, and a very large number of homes here are priced well above market value. This means that it takes a long time for a buyer to build an understanding of the true market value in any given area. The only way I that I found to do this (and I have been buying, renovating, and selling homes for 20+ years overseas for a living) is to be patient and watch the market for a long time. When homes go pending or the ads are removed within a couple of weeks of being listed then that particular home was likely to have been near true market value. There are a lot of sellers fishing for idiots here so try not to feed them. If a home is listed by several agencies at once it is likely someone gaming the "secretive system" looking to take advantage of an inexperienced buyer.

There are some other resources that can help you too, you need to try to be a detective and investigate online how long someone has been trying to sell a house. You want to know if a house has been on the market for years (per a "date targeted" google search, a listing on OLX that shows the initial ad date, a google maps street view showing real estate sale signs at the time they drove through the area, etc). Once you know a house has been on the market for "years" you know the price is way too high and negotiations should start well below 80% of the asking price. A lot of these houses listed for years through many agencies are priced at double their market value, so buyer beware!

Also be careful with advertised living space, the numbers are all over the place and are seldom correct. This makes market value research extremely difficult. My suggestion is to use the pictures as a basis for determining internal house area. You can try to locate the house using landmarks, odd shapes of nearby structures, train tracks, highways, etc, then use google earth pro (free download) to ascertain the square meters of the roof area. Unfortunately because of the poorly designed real estate market here most ads will hide the true address from you, so you must become a detective...

The market here is very negotiable considering everything I mentioned above. I negotiated for a home on the market for less than a year and I was able to get the seller to reduce the price almost 20% below the asking price. I had another one negotiate down 10% but they decided to continue fishing for idiots rather than sell (I offered 20% below asking price and the house has been up for sale for 2.5 years with no price drops for at least a year).

From what I have been told the older homes can be renovated inside without requiring permission, but any exterior changes may require permission from the municipality. These are the homes built before a certain year (I think 1951?) and they must already have a certificate of habitation on file with the municipality. I am not sure about the newer homes but I believe they have very different rules and restrictions.

I would love to build a house here from scratch but I am afraid of the bureaucracy. I prefer stick built homes (wood studs with plywood sheathing and drywall inside) over masonry or stone, but there are very few of those here. Perhaps someday I will attempt it but for now I am looking for either a move in ready home or an older home that needs renovations but is "grandfathered" as habitable and can be renovated without permits.

I am sure some people with experience actually buying homes will make some suggestions but hopefully my experience here so far is helpful. Good luck!
John is absolutely correct when you say that prices are hidden from the public. But it's not just for the public because we professionals have only recently had access to tools that give us sales values and even that with 3 months of delay. But it's better than nothing! Any buyer agent can do a search on their professional software and know by zip code the average selling prices and lots of other information.

The market can have large discount margins and of course this has to do with the work of the listing agent but essentially with the owner's urgency to sell. There are and always will be speculators, but there are also many properties for sale at market prices.

As for the renovations, in general, anything that is interior remodeling that does not affect the structure of the houses can be done without authorization, and everything that is exterior or facade alterations must have a project submited to the "Camara Municipal".

I hope I have helped to clarify some doubts, and if you need anything related to real estate, ask a professional. We are glad to help. Cheers
 

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If you search this site for information there is loads and loads on buying and associated problems/pitfalls in Portugal, including a lot from someone who bought, built a house then opened/ran estate agency. You may also find that a loan can be taken against a property and this loan debt goes with the property to subsequent owners so two identical places but priced at 100k and 10k you can find the 100k one is cheaper if the 10k one has a 95k loan on it (numbers for illustration only) BUT if you are using outdated paperwork the loan does not show.
This is normal practice in most countries - loans taken against a property are secured by the property - normally referred to as a mortgage. However, in Portugal, as far as I am aware, if a property has a mortgage, a transfer may not be made without the lender's consent (or payment of the outstanding loan), and this is not normal practice in Portugal ie Properties to be transacted with a mortgage - a new application generally has to be made. If there is a loan against a property it will be registered against the title of the property - off course ancient documents have no use except as a starting point (references in obtaining up to date certificates, habitation licences) - it is not even relevant in establishing who are the current owners, as these may have altered several times.
 

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This is normal practice in most countries - loans taken against a property are secured by the property - normally referred to as a mortgage. However, in Portugal, as far as I am aware, if a property has a mortgage, a transfer may not be made without the lender's consent (or payment of the outstanding loan), and this is not normal practice in Portugal ie Properties to be transacted with a mortgage - a new application generally has to be made. If there is a loan against a property it will be registered against the title of the property - off course ancient documents have no use except as a starting point (references in obtaining up to date certificates, habitation licences) - it is not even relevant in establishing who are the current owners, as these may have altered several times.
You are correct Tony. Selling a property with a mortgage transfer is not a common practice and involves the approval of the lender (bank) and a full credit check of the buyer, property appraisal and, of course, buyer acceptance. An example is divorce shares. To say that there is a risk of someone buying a property in Portugal and "gain as gift" a mortgage loan is false and mere speculation.
 

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I don't know where you got these ideas, but they are very distorted. I've been a real estate agent since 2002 and I've been working in the Cascais area with remax since 2004 and so everything I tell you I know from experience and I can easily prove it. These are not rumours: It is not possible to transfer a property in Portugal with liens or charges, and this includes (obviously) loans or mortgages. before spreading these lies you should talk to professional and qualified real estate agents who work at certified agencies. Did you know that real estate agencies are required to have civil liability insurance to compensate clients in the event of an error? The market in Portugal is very regulated and I would say that if you are accompanied by an agent, you will hardly be fooled.
Nuno,
May I disagree with you? i am from Portugal and I certainly know of many cases when property has been sold maintaining the buyers mortgage, wich I believe is a prety common procedure also in the US or UK. with regards to the property registry in state authorities , everybody can access that information, and in case relevant information was not registrated then it will not produce any effects to a third partie, such as new buyer. I believe Portugal has as stringent requierments as the US or UK with regards to buyer protection.

Carlos
 

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Nuno,
May I disagree with you? i am from Portugal and I certainly know of many cases when property has been sold maintaining the buyers mortgage, wich I believe is a prety common procedure also in the US or UK. with regards to the property registry in state authorities , everybody can access that information, and in case relevant information was not registrated then it will not produce any effects to a third partie, such as new buyer. I believe Portugal has as stringent requierments as the US or UK with regards to buyer protection.

Carlos
Hi Carlos, of course you can disagree, but that doesn't prove you're right. ;) It is possible to transfer, yes, and I even gave the example of divorce situations where one party assumes the debt of the other, but... and here lies the valuable part of the message, this cannot be done without the full knowledge and acceptance of the buyer and the creditor. What has been communicated on this forum in the past is that there was a risk of buying a property and accidentally inheriting debt with it, and that notion is wrong. Portugal is a safe country for real estate transactions, as long as you are careful not to fall into scams. In portugal it is said "if the alms are great the poor suspects", in real estate is the same if the price is too attractive, be careful something might be wrong.
 

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Hi Carlos, of course you can disagree, but that doesn't prove you're right. ;) It is possible to transfer, yes, and I even gave the example of divorce situations where one party assumes the debt of the other, but... and here lies the valuable part of the message, this cannot be done without the full knowledge and acceptance of the buyer and the creditor. What has been communicated on this forum in the past is that there was a risk of buying a property and accidentally inheriting debt with it, and that notion is wrong. Portugal is a safe country for real estate transactions, as long as you are careful not to fall into scams. In portugal it is said "if the alms are great the poor suspects", in real estate is the same if the price is too attractive, be careful something might be wrong.

I agree with you, on the following :
Someone buying a property and unwillingly have to pay the previous mortgage, sounds fishy. One assumes that before buying a house you have to check if there are pending mortgages, seizures, rental agreements, or other potentialy dangerous situations .
That is all stated in the property certificate, besides during the deed the notary, in case there is a pending mortgage, will adress specificaly the buyer and asks if he has knowledge that an unpaid loan still exists on that property


I do not agree on this one:
( pls note that the notary will not ask if the bank was notified , for the simple reason that there is no such legal requirment, to inform the lender that the property is going to be sold)

the lender will not have diminished the value of the colateral , and the borrower is still responsable, for the mortgage payment.

Despite the fact that a due on sale clause exists in mortgage contracts, that clause does not mention the obligation from the lender to inform the bank , it just mentions the right the bank has to terminate the contract if that circumstance ocurrs , wich they never do . NO bank will terminate the contract if the lender does not default. they are in the business of lending money to solvent costumers.

There is only one reason i believe the bank would call a loan not in default, and that is when a fixed interest rate was negociated, and inflation rises about that level considerably.
Instead of losing money on that loan they would trigger that clause. Besides that I would say 0% chance, and no obligation from the lender to inform the bank.

So, in a nutshell, pensioners from the UK, dont buy property, pay it with a mortgage in a son´s name , inmediately transfer property to yourself, you pay monthly to the bank , your son will eventualy inherit the house. Every body is happy. After all the montlhy mortgage payment for a 150.000 euros loan is about 350 euros, if you rent it you may pay over 1000 euros.
 

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I agree with you, on the following :
Someone buying a property and unwillingly have to pay the previous mortgage, sounds fishy. One assumes that before buying a house you have to check if there are pending mortgages, seizures, rental agreements, or other potentialy dangerous situations .
That is all stated in the property certificate, besides during the deed the notary, in case there is a pending mortgage, will adress specificaly the buyer and asks if he has knowledge that an unpaid loan still exists on that property


I do not agree on this one:
( pls note that the notary will not ask if the bank was notified , for the simple reason that there is no such legal requirment, to inform the lender that the property is going to be sold)

the lender will not have diminished the value of the colateral , and the borrower is still responsable, for the mortgage payment.

Despite the fact that a due on sale clause exists in mortgage contracts, that clause does not mention the obligation from the lender to inform the bank , it just mentions the right the bank has to terminate the contract if that circumstance ocurrs , wich they never do . NO bank will terminate the contract if the lender does not default. they are in the business of lending money to solvent costumers.

There is only one reason i believe the bank would call a loan not in default, and that is when a fixed interest rate was negociated, and inflation rises about that level considerably.
Instead of losing money on that loan they would trigger that clause. Besides that I would say 0% chance, and no obligation from the lender to inform the bank.

So, in a nutshell, pensioners from the UK, dont buy property, pay it with a mortgage in a son´s name , inmediately transfer property to yourself, you pay monthly to the bank , your son will eventualy inherit the house. Every body is happy. After all the montlhy mortgage payment for a 150.000 euros loan is about 350 euros, if you rent it you may pay over 1000 euros.
Dear Carlos you are giving wrong information.

Properties are sold without liability or charge, except when buyers want to take on the same encumbrances.
The mortgage lender is traditionally the bank.
The bank analyzes the credit according to the financial capacity of the borrower and not just the value of the property.
Any change of debtor implies a new risk analysis and it is clear that the bank must be involved.

No serious notary makes a deed on an outstanding bank mortgage. I can't even understand how can anyone claim otherwise.

All types of more or less dubious business and schemes are possible in Portugal as in every other country in the world, and buyers must have some prudence to safeguard themselves, but for me the essence of the question is: Portugal is a safe country to buy real estate.

Continuing with this discussion is to feed a wrong and unfounded idea that I will no longer give force to, so I withdraw. My knowledge on this matter can be confirmed on my personal page and I will be happy to explain this and other questions by email to interested parties. www.nmcteam.pt
 

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Dear Carlos you are giving wrong information.

Properties are sold without liability or charge, except when buyers want to take on the same encumbrances.
The mortgage lender is traditionally the bank.
The bank analyzes the credit according to the financial capacity of the borrower and not just the value of the property.
Any change of debtor implies a new risk analysis and it is clear that the bank must be involved.

No serious notary makes a deed on an outstanding bank mortgage. I can't even understand how can anyone claim otherwise.

All types of more or less dubious business and schemes are possible in Portugal as in every other country in the world, and buyers must have some prudence to safeguard themselves, but for me the essence of the question is: Portugal is a safe country to buy real estate.

Continuing with this discussion is to feed a wrong and unfounded idea that I will no longer give force to, so I withdraw. My knowledge on this matter can be confirmed on my personal page and I will be happy to explain this and other questions by email to interested parties. www.nmcteam.pt
Huge gap between perception and reality. you are so convinced of your own "truth" , that you dont even consider you might be wrong.

Quoting you : "Any change of debtor implies a new risk analysis"

it would be like that if this was a Transfer of Contractual Position contract wich is not.(3 parts involved)
in this case There is no debtor change, just the ownership

If you really are willing to provide our portuguese expats with accurate information, I suggest you pass by a notary and ask, if you can change ownership of property with ongoing loan, to another person with out notifying the bank. I guess you will be surprised the answer.
 
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