PORTUGAL LAW AND PRACTICE Contributed by: João Gonçalo Galvão, Carolina Cardoso Alves and Miguel Paquete, CS’Associados
2.6 Important Areas of Law for Investors Investors should be aware of the civil law govern - ing ownership and title over real estate, but also of the requirements for licensing, construction and usability. Tax aspects are also paramount, such as tax costs entailed by the acquisition and ownership of real estate, as well as the taxation applying to operation proceeds and exit. Corporate aspects should also be considered, either in the case of share deals or regarding the setting up and structuring of special purpose vehicles (SPVs). Concerning asset operation, investors should consider not only the regime applying to their lease and other forms of assigning their use or operation (particularly of commercial schemes), but also the framework applying to tourist-relat - ed assets. 2.7 Soil Pollution or Environmental Contamination Environmental responsibility rests with those persons or entities that caused or did not take the necessary steps to avoid or mitigate envi - ronmental damage. As such, acquisition of real estate in Portugal does not automatically entail any responsibility for historical environmental contamination or pollution of non-excavated contaminated soils and permanent buildings with a permanent connection to the ground. However, once contaminated soil is excavated, it will be considered as waste produced by the property owner, who will then be responsible for handling and processing it. Moreover, although responsibility for mitigation of soil contamination rests with the persons or entities that caused or failed to avoid or mitigate the contamination, these may be in practice impossible to identify or to hold accountable, especially when the contamination is remote historically, in which
cal analysis may also be made of urban planning aspects. Finally, analysis of environmental matters may be critical for certain assets in order to assess the presence of any potentially hazardous or dangerous substances. 2.5 Typical Representations and Warranties Commercial real estate transactions usually involve a wide range of representations and war - ranties, the most standard covering: • capacity and authority; • binding nature of the agreement with no con - travention; • lawful title, possession and ownership; • non-existence of charges or encumbrances, or limits to use or transferability; • suitability and validity of all licences; • compliance with applicable legal provisions; • non-existence of hazardous or dangerous substances, as well as of defects; • non-existence of pending or threatened litiga - tion or disputes; • non-existence of debts, including taxes, charges and fees; and • corporate aspects (for share deals). Post-transaction protection for the buyer is usu - ally put in place via a combination of specific indemnities and compensation for breach of the representations and warranties. The seller’s liability may be subject to time and value limita - tions (including minimum thresholds and caps), though so-called fundamental warranties are normally not subject to any limitations. It is not uncommon for W&I insurance policies to be put in place in mid to high-value deals.
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