Portuguese inheritance law real estate: Unlocking undivided properties and sales

Portugal is currently facing a substantial number of properties held within undivided inheritances, many of which remain vacant or economically underutilised due to a lack of consensus among heirs.

This situation contributes to the deterioration of real estate assets, limits the availability of properties on the housing market, and generates multiple problems with any zoning and urban management that the State needs to implement (fire protection for example).

The new legislative proposal introduces a special procedure for the sale of real estate assets forming part of undivided inheritances, allowing any heir to request the sale of a property belonging to the estate, even without the unanimous agreement of the remaining heirs, whenever the inheritance has remained undivided for more than two years owing to a lack of agreement among the heirs.

Nevertheless, the other heirs retain the right to participate in the proceedings and to exercise their rights and positions, including rights of preference. Beyond its implications for inheritance law, the reform may also have significant effects on the real estate sector by facilitating the release of assets that have remained tied up for years in situations of undivided inheritance.

In this context, the proposal may prove particularly relevant for both domestic and international investors interested in rehabilitation projects, asset acquisitions, or the restructuring of real estate portfolios, at a time when property availability continues to be one of the main challenges facing the Portuguese market.

There are two main areas of caution.

1. In Portugal ownership can be acquired by “usucapião” (adverse possession) – an original form of acquisition that, under the Land Registry Code, is enforceable against third parties even without registration, and which the courts have consistently held to prevail over the registry. As a result, the person recorded as owner is not necessarily the true owner: a third party may have acquired the land through long-standing possession. Careful due diligence on the chain of title, the declarations of heirs and the actual possession of the land therefore remains essential.
2. The presumption of ownership arising from the land registry covers the existence of the right, but Portuguese courts have long held that it does not extend to a property’s area, boundaries or physical limits. In the many areas without a cadastral survey, those limits were never formally established, so a property may be duly registered although its exact extent on the ground remains uncertain or contested – giving rise to overlaps, demarcation actions and, at times, protracted litigation. For rural land in particular, confirming where a property actually begins and ends can be as important as confirming who owns it.