Consumer Rights in the Purchase and Sale of a Property

Impact of the new consumer rights regime within the Real Estate purchase and sale contrats

Decree-Law No. 84/2021 of 18 October (hereinafter “Decree-Law”) transposed into Portuguese law the Directive (EU) 2019/771 which aims to contribute to the smooth functioning of the internal market by ensuring a high level of consumer protection and the Directive (EU) 2019/770 which aims to amend aspects related to the provision of digital content and services.

In this article, we aim to highlight the impact of the new legal regime applicable to consumer protection within the scope of the purchase and sale of real estate. So the Decree-Law will apply whenever the seller is a professional and the purchaser is a consumer in the purchase and sale of immovable property, which is defined in the Decree-Law as “urban buildings for residential purposes, which is understood to mean any building incorporated into the ground, with the land that serves as its back yard, and any movable item attached materially and permanently to the building”.

Therefore, the Decree-Law has extended the legal guarantee period to 10 (ten) years, which means the vendor/professional will be bound to the consumer concerning the defects in the structural construction elements of the property sold during that period, and keeping the 5 (five) year period unchanged for the remaining nonconformities of the property.

Regarding the burden of proof, it is up to the seller/professional to prove that the possible invocation by the buyer of a “lack of conformity” of the property within the guarantee period did not exist, otherwise it will be presumed that the lack of conformity existed at the time of delivery of the property.

By way of example, property will be presumed not to be in conformity when (i) the professionals’ description of the immovable property does not correspond to the physical reality of the property or does not have the qualities that the professional presented to the consumer as a model; and (ii) it is not fit for the purposes for which properties of the same type are habitually used.

Considering the above, the elimination of a deadline for the consumer/buyer to report a possible defect results in the Decree-Law allowing the buyer’s right to be exercised at any time as long as it is within the warranty period. Once the defect or lack of conformity of the property is invoked, the purchaser/consumer is entitled to have the property restored, free of charge, by repairing or replacing it, or by reducing the price or terminating the contract, unless this proves to be impossible or constitutes abuse of rights, under the general terms.

Notwithstanding the fact that the deadline for reporting the defect may be made at any time within the warranty period, the rights of the buyer must be exercised within a period of 3 (three) years, counted from the report of the defect, under penalty of forfeiture. The deadline is only suspended (i) during the period between the communication of the lack of conformity to the professional until the conclusion of the repair or replacement operations; and (ii) during the time period during which the attempt of out-of-court settlement of the consumer dispute opposing the consumer to the professional persists.

The matters listed above, included in the Decree-Law, are applied to contracts from January 1, 2022, the date in which the legal diploma will ente into force .