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New Regime Governing the Exercise of Pre-Emptive Rights by Tenants Is Now in Force

8 November 2018

The most recent amendment to the Civil Code allows tenants to exercise their pre-emptive right over the home in which they reside at the time of a sale, even if it is not a  horizontally-owned property.

The Portuguese government published Law 64/2018, of October 29, in the Diário da República. The new law covers the exercise of pre-emptive rights by tenants when their flats area sold, even when the building as a whole is sold.

The controversial amendment was initially vetoed by the President of the Republic, who sent the decree back to the Portuguese parliament requesting clarification. After reconsideration and a subsequent re-approval by Parliament, the President of the Republic signed the decree, which was then published in Diário da República, coming into force on October 30.

Tenant must have lived in the property for at least two years to gain the right to pre-emption, down from three years previously. The property owners must inform any tenants of the respective sale and their right to pre-emption by registered mail with acknowledgement of receipt. The tenant will then have 30 days from the receipt of the letter to respond and exercise their right, a substantially longer period than had been previously allowed (eight days).

In the case of renting for housing, tenants will be able to exercise their pre-emptive right over their flats even in when the entire building is being sold. In fact, in the case of a sale of the whole building, the (selling) owner must indicate “the sales price of the tenant’s flat, in addition to the sales prices of the other properties sold together,” in their notification of the sale. In other words, the seller must disclose the price of each flat sold on an individual basis. The tenant may then exercise their right of preference based on the proportional price of their flat, though the landlord may require that the right of preference cover the building as a whole, in cases where the remaining part cannot be separated without appreciable damage. When the landlord intends to exercise that prerogative, one which had already been provided for before the new regulations, the new law is, however, more demanding, stating that seller’s letter to the tenant “must demonstrate the existence of a real loss beyond citing the mere reduction in the sales price as a basis for such loss.”

The law states that tenants of non-horizontally owned buildings also “have the same pre-emptive rights as for tenants in autonomous fractions.” The right is “related to the part of the building corresponding to the tenant by the proportional value of that share in relation to the total value of the transmission,” adding that the sales prices must be communicated by the property owner to the tenant in the letter communicating the sale. In such a case, the decree states that the “the tenant exercising their right of preference gains the right to the fraction based on their exclusive use of the quota corresponding to said tenant.”

In the case of the sale of a property not subject to the horizontal property regime, that property’s tenants may also exercise their pre-emptive rights as a group,” acquiring, in proportion, the entire property in joint ownership.”

Original Story: Público

Translation: Richard Turner