The Mortgage

General information

There are three types of mortgages: The contractual mortgage, the statutory mortgage and the judicial mortgage.

The mortgage becomes valid with the registration in the land register. The time of registration determines the order of priority. The mortgage is held by a obligee as a security of a debt, usually a loan of money.

The contractual mortgage (hipoteca voluntária) is based on a contract between the parties. The contractual mortgage has to be notarially verified in order to be valid.

The state and local authorities can have the right to record a mortgage. This happens when the owner does not pay properly the the annual property taxes. The statutory mortgage (hipoteca legal) does not depend on any declaration of intent by the parties, but only on the legal existence of the claim.

The judicial mortgage (hipoteca judicial) is based on a judicial verdict. It has to be recorded in the land register. The recording can also be enforced based on a title of a foreign court.

Scope of Mortgage

The mortgage can comprise agricultural and urban properties. It can also comprise certain goods which can be be mortgaged, for example motor vehicles and ships.

Extinction

The mortgage extinguishes with the expiration of the secured claim. The mortgagee can also renounce the mortgage.

After redemption of two thirds of the debt the mortgagor can claim for reduction of the mortgage. The mortgagor can enforce the reduction through a court.

Previous Claims

Portuguese law declares certain debts as prior to the mortgage regardless of the order of priority. Prior debts are certain tax debts, such as the land transfer tax and the real estate tax.

The right of retention is antecedent as well. A prior registration of a mortgage does therefore not effect the right of retention. Legal costs and certain labour claims also have priority.