Why Do Some Property Transactions Fail in Portugal?

A property transaction can fail at any stage of the process. Understanding the most common causes helps buyers anticipate risks and structure their purchase more effectively.

Reason #1: A Legal Issue Discovered After Signing the CPCV

A buyer signs the preliminary purchase agreement (CPCV) and pays a deposit, only to discover through their lawyer that the property is affected by an unresolved mortgage, a blocked co-ownership situation, or undeclared works that cannot be regularized.

If the relevant protective clauses have not been properly included in the CPCV, the buyer may risk losing their deposit. This is why legal due diligence before signing the CPCV is essential.

Reason #2: Financing Is Refused or Insufficient

The bank valuation may come in below the agreed purchase price, or the mortgage application may be rejected altogether.

Without a financing contingency clause in the CPCV, the buyer may either lose their deposit or be forced to secure additional funds within a short period of time.

Reason #3: A Disagreement Over the Property’s Condition

Between the signing of the CPCV and the final deed, a buyer may discover during the pre-handover inspection that the property is no longer in the condition in which it was originally presented.

Situations of this kind can lead to disputes between the parties and potentially delay or compromise the transaction.

Reason #4: An Unresolved Inheritance Situation

In Portugal, inherited properties are frequently involved in transactions where not all heirs have formally provided their approval.

When multiple heirs disagree or live abroad, the succession process can delay or block the transaction at any stage.

Reason #5: A Change in the Buyer's Circumstances

Personal circumstances such as separation, job loss, or a change in professional plans can lead a buyer to reconsider the purchase after signing the CPCV.

If the transaction is not protected by appropriate contingency clauses, withdrawing from the purchase may result in the loss of the deposit, which typically represents between 10% and 20% of the purchase price.