The " Urban Simplex" and the ordinary buyer

Source: Pixelshot

This month (March 2024) the legislation implementing the package of measures approved in January of this year to simplify urban planning procedures was published. This legislative package is commonly referred to as the "Urban Simplex". This legislative package introduces a number of significant changes in the field of urban planning procedures, making changes to structural legal diplomas in this area.  

In addition to revoking the obligation to present certain urban planning documents when transferring ownership of urban buildings - which will be the main topic of this article - the ""Urban Simplex" also produced significant changes to the Legal Regime for Urbanization and Building ("RJUE"), the Legal Regime for Territorial Management Instruments ("RJIGT") and the Civil Code itself, as well as completely revoking the General Regulation for Urban Building, which will be replaced, as of June 1, 2026, by a brand new Construction Code. 

As an introductory note, we would highlight, with special focus on the typical buyer, the amendment to the Civil Code, whereby it is now possible, without the prior consent of the condominium meeting, to change the use of units whenever it is intended that they will be used for residential purposes. In this regard, it is important to note that although the authorization of the condominium is not required, a change of use for residential purposes can only be made when the rules, regulations and municipality plans ("PDM") applicable to the urban building so allow. 

Still from the administrative procedure perspective, the simplification of procedures is reflected in many other fundamental changes made through the approval of this legislative package, such as (in the "RJUE") the adoption of prior communication procedures with no need for prior control by the competent authorities, with control taking place afterwards or during the course of the urban planning activity, or (in the "RJIGT") the simplification of the procedure for the construction or conversion of buildings for residential purposes. 

Thus, by analyzing the changes outlined here and all the remaining specificities that we have chosen not to include in this article, we can clearly conclude that the main purpose of the "Urban Simplex" package is to promote an acceleration in the number of new housing units, both through new construction and the conversion of existing buildings. 

Among the measures approved, we highlight, with enormous relevance for the most common types of real estate purchase and sale contracts, the exemption from submitting construction licenses, use licenses and the Housing Technical File when transferring ownership of urban buildings under construction (in the case of the construction license) or already built. 

The merits of this specific change have been questioned by registrars, notaries, lawyers and solicitors - the professionals usually responsible for the different stages of property transfer processes - since, in these professionals' view, this exemption could result in the buyer neglecting or relaxing the verification of compliance with urban planning requirements for the use of the property purchased. 

In fact, it will be very difficult for the buyer to reverse the effects of the deed of transfer of ownership, making them responsible, from the moment they become the owner, for restoring the legality of the property. This restoration of the legality of the property may mean, when possible, that the owner will have to request, before the competent public authorities, the issuance of the urban planning titles legally required for the use of the property they have acquired, thus having to initiate a bureaucratic procedure that can take time and money. However, the consequences can be even more drastic and painful for the new owner, who may, in extreme cases, be forced to demolish the property and/or incur administrative infraction proceedings. 

Therefore, it is important to note that, although some urban planning documents are no longer required by the professionals who prepare the public deed or authenticate the private document of purchase and sale (two possible ways of concluding the contract for the purchase and sale of real estate) and by those who subsequently register the transfer of ownership from the seller to the buyer (the registrars), it becomes even more essential to carry out a careful and thorough verification of the property's urban planning documents or to prevent this situation in the contracts entered into. 

In short, with regard to this matter, it is necessary to warn the ordinary buyer that although the legislative package approved in January 2024 has effectively simplified various urban planning procedures, with repercussions on private contractual acts - as is the case with the instruments for transferring property mentioned above (i.e. public deed and notarized private document) - this "simplex" does not mean that the legal situation of the property does not need to be verified, in particular in order to ascertain, prior to signing any contract, whether it meets the requirements for use, which are no longer provided for in Portuguese legislation (usually referred to as "due diligence").  

We can therefore conclude that, on the contrary, the need to conduct a "due diligence" on the property to be acquired has become even more pressing in the current framework resulting from the "Urban Simplex".