Author: Tiago Felizardo
Article published in 2010 by Quinta Properties magazine “Passion for Property”

THE BUILDING CONTRACT AND THE NEW BUILDING LAW

If you want to build, rebuild, extend or modify your property in any way in Portugal and want to avoid future misunderstandings or problems, you must regulate the construction through a building contract to safeguard your position.

A building contract must be written by a lawyer to guarantee its correct layout, contents. It must include the following:

• The contractor ́s “Alvará” number – a valid legal license required to be able to build;
• Identification of the property and its building license issued by the Town Hall. Your lawyer can help with obtaining this information;
• Technical specifications, approved projects, drawings, plans, materials specifications and any other elements agreed;
• Outline procedures and penalties if defects in the building work were to occur, equipment malfunctions, the use of low-quality materials, delays, etc...;
• A phased-time limit for the carrying out of the work should be fixed;
• A price/value for the contract (including VAT-Tax) and methods and terms of payment.

Be advised that by law:

• The contractor is obliged to carry out the building work according to contract and without any defects which may reduce its value;
• The contractor is obliged to maintain the site until it has been handed over and accepted by the owner, at the agreed date. He cannot make any change to the agreed plan without the written and signed authorization of the owner;
• The contractor is responsible for structural and building defects for a five year period from the acceptance of the work;
• The owner is obliged to pay the contractor according to the terms and conditions agreed in the building contract. If there is an issue raised with the quality of work, the owner can refuse to pay until it is solved;
• The owner must have a justified reason to cancel a contract or to use a second contractor and claim for compensation. This is a separate legal procedure;
• The contractor must allow the owner or representatives (project manager, architect, engineer, etc.) access to the site at all times;

It is also important to understand which building works require a licence and which do not. Any building or plot needs analysis to confirm what can and cannot legally be built, and which works require a licence.

• Most building or rebuilding with structural changes or the extension of a building that is not part of a project requires a Town Hall licence. Any change to what was initially licensed needs to be approved by the Town Hall;
• Maintenance or building works to the interior of existing buildings not involving any structural modifications or roof and façade changes, do not require a Town Hall licence;
• Even though some building works do not require any licence, the Town Hall still has to be made aware of all intentions prior to work commencing.

In conclusion, when you are considering doing any type of building works to your property, it is recommended to always consult a skilled legal advisor to guide you with the new building rules and the preparation of the building contract.”