Buyers in an Alleged 15 Million Euro Palmela Housing Fraud Seek Insured Deposits: What Protects a Down Payment on an Off-Plan Home Today

Buyers caught up in an alleged off-plan housing fraud in Palmela, Setúbal district, are asking the Government and Parliament to protect deposits on new homes. The Grupo de Lesados por Burlas Imobiliárias de Palmela (Palmela Property Fraud Victims' Group) speaks for about 145 buyers and puts their losses at about 15 million euros. Its statement was carried by Lusa on Wednesday and again by ECO on Sunday. According to Lusa, the projects produced only 21 houses and a five-flat building, all unfinished.

The developer has since been declared insolvent, and the Polícia Judiciária (Judicial Police) in Setúbal is investigating the unfulfilled contracts. The case remains under investigation.

The five measures

• mandatory electronic registration of every contrato-promessa (promissory contract), with a unique number and an alert when the same home is promised twice;
• registration of ownership, the seller's powers and the planning status;
• protection of the sinal (deposit) and later top-up payments, for example through surety insurance;
• a free "BI do Imóvel" (property ID card) linking registry and council records;
• closer supervision of developers and estate agents.

The group says it sent its proposals to the President, the Prime Minister, the Prosecutor General and the Bank of Portugal, among others, and has received no concrete measures. No response from the Government or the parties had been reported by Sunday evening.

What the law protects today

Under article 441 of the Código Civil (Civil Code), any money a buyer hands over under a promissory contract is presumed to be a sinal. Article 442 sets the stakes: a buyer who walks away loses it, while a seller who fails to complete owes the buyer double. Article 830 lets the buyer ask a court for a judgment in place of the missing deed. For a building that exists, is being built or is still to be built, article 410(3) requires the signatures to be witnessed in person and the witnessing body to certify that a construction or occupancy licence exists, and article 830(3) bars the parties from excluding that court route.

Double the deposit is a claim against the seller, worth only what the seller can pay. The stronger tool is registration. Article 413 lets the parties give the promise eficácia real (effect against third parties), by express declaration in a deed or authenticated document and registration in the land registry. Articles 47(4) and 92 of the Código do Registo Predial (Land Registry Code) allow a provisional registration of the purchase based on the promissory contract, and article 6 gives the first registration priority, keeping it when the entry becomes final.

Nothing in those articles requires a developer to hold deposits in a separate account or insure them. That gap is what the group wants closed.

What a buyer can check before paying

• Order the certidão permanente (permanent land registry certificate) on Predial Online, run by the Instituto dos Registos e do Notariado (Registries and Notaries Institute). Anyone can order one; for six months it shows every registration in force, such as mortgages and seizures, and every pending request.
• Ask the council about the project's licensing. Under article 110 of the Regime Jurídico da Urbanização e Edificação (Urbanisation and Building Code), anyone with a legitimate interest can ask about the state of a planning process, and the council must answer within 15 days.
• Insist on the licence certification article 410(3) requires, and ask a lawyer or notary about registering the promise.

The sums at stake are growing: Statistics Portugal data show prices rose more than 20 percent in 135 of 303 measured municipalities in the year to June.