When structuring a financing operation for the acquisition or development of real estate investors are required to create security in favour of lenders to assure performance of the principal obligations.
There are different types of security, tailored in accordance with the specific risks of each project, including without limitation:
Last modified 17 Mar 2026
Under the Portuguese Civil Code real estate is defined as an immovable asset. In addition to real estate, there are also other types of assets which are subject to the creation of rights which are not based on personal relationships, such as aeroplanes, ships and auto-vehicles.
Only those real estate assets and rights described in the Portuguese Civil Code can be encumbered as real security, subject to public register with the relevant Land Registry Office. These rights include:
The most common types of real security created over the rights listed above include:
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Trusts, as a property right held by one party for the use of another, are not recognized under Portuguese law. However, there are other methods which can establish appropriate management of security interests.
Last modified 17 Mar 2026
In general, lenders do not trade debt, but when they do it is often through transfer of their secured debt by selling distressed or performing secured debt to securitization companies or funds by assigning credit or novation agreements.
In addition, it is usual for lenders (generally banks) to subject the secured debts in their portfolio to a financial pledge granted for the benefit of the central bank or the European Central Bank in order to collateralize their own loans contracted with the interbank market. This financial pledge does not depend on any registration or, in some cases, notification to the debtor and prevails over any other security over the same rights, even if previously registered or notified.
Last modified 17 Mar 2026
Foreign lenders are not subject to any kind of restrictions or legal barriers concerning the creation of security over real estate property located in Portugal in favour of the same.
Last modified 17 Mar 2026
Yes. Stamp tax, registration fees and notaries’ fees (whenever public notary services may be required) are usually associated with granting and enforcement of security over real estate.
Stamp tax is levied in respect of any security (regardless of nature or form), unless such security is materially ancillary to another agreement specifically subject to stamp tax and provided simultaneously with the secured obligation. Stamp tax applies on the value of the secured obligation and the stamp tax rate is determined based on the term of the security, as follows:
Last modified 17 Mar 2026
In Portugal, a company is not allowed to finance another company or to provide its assets, such as real estate, as a guarantee, unless it has a direct interest in the transaction or in cases where the debtor is part of the same group of companies.
The law also provides for the prohibition of financial assistance, which means that a company cannot grant loans or create any type of security over its assets to or in favour of third-parties to finance or pay for the subscription or acquisition of shares in its share capital.
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There are no restrictions to payments made to foreign lenders under security documents or under loan agreements.
Last modified 17 Mar 2026
In Portugal, lenders and borrowers do not have the right to postpone an existing secured debt due to a newly created debt. There are, however, cases of priority of real security in respect of legal expenses incurred directly for the benefit of the relevant creditors, and also those arising from tax debts directly related to the real estate.
The priority of a financial pledge granted for the benefit of the Central Bank or the European Central Bank by a lender in order to collateralize the loans it has contracted with the interbank market does not depend on any registration or notification to the debtor and prevails over any other security over the same rights, even if previously registered or notified.
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As a general principle the physical location of the property determines the applicable law. However, for those matters not directly related to real estate, but rather with lenders/borrowers rights and obligations under finance agreements and security documents, a foreign law may be recognized and applied by Portuguese courts, provided that certain conditions are met, including:
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Mandatory formal requirements under Portuguese law, including registry with the relevant Land Registry Office, must be satisfied in relation to a security document for it to be valid and enforceable. A creditor holding a non-registered security, such as a mortgage, against an insolvent debtor will be treated as an ordinary unsecured creditor.
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Under Portuguese environmental law, a lender holding or enforcing security over real estate in its country has no liability if the lender did not cause any pollution or environmental damage to the property, does not hold possession of the real estate and does not manage the asset. Consequently, the holder of security cannot and could not control or prevent the material cause of any damage or environmental breach.
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As a first step, and depending on the relevant contractual arrangements, the lender must undertake a court procedure to enforce the security on the basis of the borrower’s default. Thus, in order to avoid judicial procedures, lenders often try to sell the real estate to a third party with the agreement of the borrowers, under accord and satisfaction agreements.
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A possibility is the Special Procedure for Recuperation (PER), which involves a judicial liquidator appointed by a court who must propose the plan, the scope, the conditions and the duration of the proposed restructuring, which must then be approved by the creditors and by the insolvency court. Additionally, if the debtor is subjected to a PER, the approved plan binds all creditors even if they did not enter the negotiations. Consequently, lenders, even when holding a secured debt, may be subjected to the debtors' restructuring plan which, if approved by the creditors and by the insolvency court, prevents the immediate execution of any security. Security can only be enforced if the debtor fails to perform its obligations under the approved plan.
Last modified 17 Mar 2026
The creation of real security such as mortgages may be cancelled if the registration occurred less than six months prior to the start of the insolvency proceedings. Other mortgages can also be cancelled if the registration is not accomplished on the date of the relevant insolvency ruling.
It should be noted that the registration of mortgages with the relevant Land Registry Office is essential for the recognition of the guarantee’s existence and effectiveness.
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In cases of insolvency the creditors with privileged credits such as workers’ salaries (and taxes and social security contributions) and also debts towards the Treasury and the State benefit from first ranking.
Furthermore, it should be noted that if a lender finances the debtor restructuring process within the PER, its credits do benefit from a privileged ranking regarding other third parties’ credits, though ranking after the privileged credits of workers, Treasury and Social Security.
Mortgages are next to be repaid. If there is more than one mortgagee holding a mortgage over the same property, the first mortgagee that is registered will be paid first and the remaining mortgagees will be paid according to their respective dates of registration.
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Is secured debt traded between lenders? If so, how is a transfer of the debt to another lender effected?
In general, lenders do not trade debt, but when they do it is often through transfer of their secured debt by selling distressed or performing secured debt to securitization companies or funds by assigning credit or novation agreements.
In addition, it is usual for lenders (generally banks) to subject the secured debts in their portfolio to a financial pledge granted for the benefit of the central bank or the European Central Bank in order to collateralize their own loans contracted with the interbank market. This financial pledge does not depend on any registration or, in some cases, notification to the debtor and prevails over any other security over the same rights, even if previously registered or notified.
Last modified 17 Mar 2026