Unfortunately the culture of real estate fraud is rife in Portugal, especially in the Algarve where properties more often sell in the millions then thousands of Euros. It seems that property developers, often using front companies designed to ultimately fail and with them any “guarantees”, sell so called luxury villas on the Algarve on the basis that the price you pay is not the price they register as the sales price, in order to defraud the tax man. The truth often is you get a contract which declares the price you pay BUT the actual registration forms that get filed with the town hall (which you do not sign) declare a much lower sales price! Did your Algarve real estate agent tell you that?!
The Portuguese government has been getting tough on such acts by giving local councils the right to buy any property which has just been sold from the buyers at the declared / registered sales price, then sell it at the true market value and keep the profit! OK, any unwitting victim should be able to argue that one out in court, but who wants the hassle? Especially as Portuguese law drags on for years, not months and does not allow you to reclaim your legal fees! With the front developer gone, lost villas / investments, long lasting headaches and expensive lawyer fees are not exactly a holiday dream.
It can get worse, if you visit my crime page and read about Portuguese Fiscal Crime. If you are none too careful / lucky, buy a villa in the Algarve which gets registered at below market value and then pay for work to be done on the villa without getting valid tax receipts, you could lose a great deal of money indeed.
This problem for villas in the Algarve and Portugal generally being registered below market value as a tax dodge for the vendor is exasperated by the fact the buyer and the seller has the same lawyer! So the lawyer, presumably appointed by the seller as they are in the Algarve already, is more inclined towards them, not the poor villa buyer! In irony, it is better to buy a villa from a foreigner who is leaving Portugal than it is from a Portuguese individual or company or resident foreigner. Why? Because someone leaving Portugal does not care about the capital gains tax laws enough to cheat on the registration document (house deeds) value! In any event, if you buy a property in Portugal you should unfortunately insist on seeing the registration document and going with the lawyer to file it.
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