Real Estate Contract - CMI in Portugal: Rights and Duties

The real estate market in Portugal has experienced exponential growth in recent years, attracting both national and international investors. In this context, real estate mediation plays a crucial role in facilitating transactions between buyers and sellers, landlords and tenants. A central element in this process is the Real Estate Mediation Contract (CMI), a document that defines the responsibilities and rights of the parties involved in the mediation. In this article, we will explore what a CMI is, its importance, applicable regulations, and the rights and duties of the parties involved.

What is the Real Estate Mediation Contract?

The Real Estate Mediation Contract is a formal agreement between a client (who can be the property owner, buyer, or tenant) and a real estate mediation company. The primary purpose of this contract is to regulate the provision of real estate mediation services, which involve bringing together the parties interested in a property transaction.

Purpose of the Contract

The main objective of the CMI is to ensure that the real estate transaction is conducted efficiently and transparently, with both parties aware of their rights and obligations. The contract should detail the services to be provided by the mediation agency and the conditions for the payment of the commission.

Legal Nature

The CMI is a service contract governed by the general rules of the Portuguese Civil Code regarding contracts and the specific legislation that regulates real estate mediation activities.

Regulation of Real Estate Mediation in Portugal

Real estate mediation activities in Portugal are regulated by Law No. 15/2013, of February 8th, which establishes the legal framework for real estate mediation. This law aims to ensure transparency and security in real estate transactions, protecting both consumers and mediation companies.

Requirements for Conducting the Activity

To operate legally, real estate mediation companies must be registered with the Instituto dos Mercados Públicos, do Imobiliário e da Construção (IMPIC). The requirements include:

Commercial Registration: The company must be duly registered and have a business purpose compatible with real estate mediation activities.
Liability Insurance: It is mandatory to have insurance that covers potential damages caused to clients as a result of errors or omissions in service provision.
Technical and Financial Capacity: The company must demonstrate technical and financial capacity to conduct its activities, which may include the training of its employees.
Honor and Integrity: The company’s responsible parties must have a good reputation, without records of crimes related to their professional activities.

Rights and Duties of the Parties

Client's Rights

Complete and Transparent Information: The client has the right to receive all relevant information about the property and the transaction, including prices, conditions, and any charges.
Professionalism and Diligence: The mediation company must act competently and carefully, always seeking the client's best interest.
Confidentiality: The client's personal and financial information must be kept confidential, except when disclosure is necessary for transaction completion.

Client's Duties

Collaboration: The client must provide all necessary information to the mediation company for effective service delivery.
Payment of Commission: The client is obliged to pay the agreed commission once the transaction has been successfully completed.
Exclusivity (if applicable): In exclusive mediation contracts, the client must adhere to the exclusivity clause and not engage other mediators during the contract term.

Rights of the Mediation Company

Commission: The company has the right to receive the agreed commission for the service provided, as stipulated in the contract.
Cost Recovery: If the client fails to meet obligations, the company may be entitled to recover costs or seek compensation.

Duties of the Mediation Company

Provision of Adequate Service: The company must act diligently, competently, and transparently, delivering a service that meets the client's expectations.
Disclosure of Information: All relevant information about the property and transaction must be clearly and accurately disclosed to the client.
Compliance with the Law: The company must ensure that all its activities comply with applicable legislation.

Structure of the Real Estate Mediation Contract

A well-drafted Real Estate Mediation Contract should include the following sections:

Identification of the Parties

This section should contain the personal and contact details of the client and the mediation company, including tax identification numbers.

Object of the Contract

A detailed description of the service to be provided, including the type of property transaction (sale, purchase, lease) and the property's location.

Obligations of the Parties

Clear definition of both parties' duties, including the client's obligation to pay the commission and the company's duty to provide mediation services.

Commission and Payment Terms

Specification of the commission amount, calculation method (e.g., a percentage of the transaction value), and payment terms (e.g., upon signing the purchase and sale agreement).

Term of the Contract

Indication of the period during which the contract will be in effect, including any automatic renewal or early termination clauses.

Exclusivity (if applicable)

If the contract is exclusive, this section should specify the terms and conditions of that exclusivity.

Dispute Resolution

Clause providing the method for resolving potential conflicts between the parties, which may include mediation, arbitration, or resorting to the courts.

Signatures

Space for the signatures of the parties involved, indicating the date and place of the contract signing.

Importance of the Real Estate Mediation Contract

The CMI is an essential tool to ensure the security and efficiency of real estate transactions. It provides legal protection for both parties and helps prevent conflicts by clearly defining each party's rights and obligations.

Benefits for the Client

Legal Protection: The contract provides a legal basis to claim rights and protect interests.
Transparency: Establishes a trust-based relationship between the client and the mediation company, ensuring clarity at all stages of the process.
Professional Support: The mediation company offers specialized support, helping the client make informed decisions.

Benefits for the Mediation Company

Contractual Stability: The contract guarantees the right to commission and protects the company against possible client defaults.
Professional Reputation: Fulfilling contractual obligations enhances the company’s image as a reliable and competent partner.
Legal Security: The contract minimizes litigation risk by providing mechanisms for conflict resolution.

Final Considerations

The Real Estate Mediation Contract is a central element in real estate transactions in Portugal, offering a legal and operational framework that benefits both clients and mediation companies. By understanding its components and applicable regulations, the involved parties can ensure a successful and surprise-free real estate transaction.

Recommendations

Careful Reading: Parties should carefully read all contract clauses and seek clarification in case of doubts.
Legal Advice: In case of complexity or uncertainty, it is advisable to consult a lawyer specializing in real estate law.
Clear Negotiation: Before signing the contract, both parties should ensure that all conditions have been duly negotiated and agreed upon.

With a constantly evolving real estate market, understanding the role and importance of the Real Estate Mediation Contract is essential to ensure secure and effective transactions.

*The information provided is of a general nature and is not a substitute for consulting a lawyer. Consult a lawyer and adopt a preventive approach to legal practice.