A house with an undocumented extension, a tenanted building or a plot marketed as suitable for development needs more than a viewing and a price estimate. Real estate due diligence brings together documentary checks, physical inspection and intended-use feasibility before a buyer or investor makes a binding commitment.
When a full review is justified
An initial screening may be proportionate for a recent property with consistent records and no apparent alterations. A fuller investigation is warranted where there are:
- Differences between registered, tax, approved and measured areas;
- Undocumented works, a proposed change of use or conversion;
- Tenancies, encumbrances, disputes or uncertain access rights;
- Significant defects or an investment reliant on development consent.
Asset restructuring can warrant the same scrutiny: moving a property between companies does not remove its underlying risks.
Ownership, occupation and municipal records
The land registry certificate helps establish ownership and registered burdens. The property tax record serves a fiscal purpose and does not establish planning compliance. Both should be checked against municipal records, alongside leases, easements and potential pre-emption rights.
For buildings under the Portuguese horizontal property regime, examine the constitutive deed, owners’ meeting minutes, accounts and planned common works. Relevant private rights and obligations fall under the Portuguese Civil Code and specific legislation. Legal findings should be validated by a suitably qualified adviser.
Works compliance and intended-use feasibility
The RJUE, established by Decree-Law No. 555/99, as amended, is a central reference. The review must establish which procedures apply to the works and use, taking account of dates, exemptions and transitional rules. Simplified documentation for a property transfer does not legalise unauthorised works.
Development or conversion requires checks against municipal planning rules, easements and public-interest restrictions. Road access alone does not make a plot developable. Where feasibility determines the investment, clarification should be sought from the municipality before purchase.
Building condition and site exposure
Inspection should cover the structure, roofs, façades, damp and accessible services. In Madeira, slopes, retaining walls, drainage and marine exposure deserve particular attention, without assuming that every property is affected.
Cracking or evidence of movement may warrant structural or geotechnical assessment. A visual inspection cannot rule out concealed defects: the report should state access limitations and identify any recommended testing.
Turning findings into transaction conditions
The report should separate deal-breaking issues, remediable defects and unresolved uncertainties, with responsibilities, estimated costs and timescales. Where valuation is included, EVS or IVS, as appropriate to the assignment, guide assumptions and reporting; they neither replace legal checks nor certify compliance.
Before signing a promissory purchase agreement, use the findings to negotiate the price, conditions or further investigations with legal support. Resolve any uncertainty that could prevent the intended use before accepting a binding commitment.