A property belongs to several heirs, one of them wants to sell, and the others cannot reach an agreement. This is a fairly common situation, and one that can leave properties in limbo for several years.
A reform currently being prepared aims to significantly change this scenario.
The Portuguese Parliament has approved a legislative authorization allowing the Government to create a new special process for the sale of property that is part of an undivided estate, as well as to introduce various changes to inheritance law.
The goal would be to make it easier to resolve conflicts and deadlocks over estates that remain undivided for long periods.
In Summary
The changes still need to be put into effect by the Government, but the approved legislative authorization already sets out the direction of the reform in considerable detail.
Among the main changes planned are:
- allowing a single heir to initiate a process for the sale of an estate property, even without the agreement of the others;
- creating a special, urgent judicial process for that sale;
- allowing, as a general rule, use of the new process after two years have passed since the estate was opened;
- establishing mechanisms to determine the price judicially when there is no agreement;
- providing, preferably, for sale through electronic auction;
- granting heirs a right allowing them to keep the property for the price reached in the sale;
- offering special protection for the family home;
- reducing the deadline to accept an inheritance from 10 to 2 years;
- making it easier to change who administers an estate;
- creating the role of executor with powers to divide the estate;
- allowing, under certain conditions, arbitration of inheritance disputes.
The approved legislative authorization has a duration of 180 days, during which the Government may approve the decree-law that will put the new regime into effect.
What Was Approved?
The Portuguese Parliament approved Decree of the Assembly of the Republic No. 104/XVII, which authorizes the Government to approve the Legal Regime for the Special Process for the Sale of Real Property that is Part of an Undivided Estate, to create an inheritance-arbitration regime, and to introduce various changes to the Civil Code and the Code of Civil Procedure.
The decree has also already been promulgated by the President of the Republic.
It is important, however, to distinguish between two things.
The legislative authorization is not yet the new regime for the sale of property.
Parliament is authorizing the Government to legislate within the limits and according to the rules that have been approved. The next step will be for the Government to approve the decree-law that will put these changes into effect.
For that reason, what is currently known makes it possible to understand fairly precisely what is intended to change, but it will be necessary to wait for the Government’s decree to know the final wording of the new regime.
What Could Change?
The planned changes are significant and are not limited to the sale of property. The legislative authorization covers several aspects of inheritance law.
1. Sale of Estate Property at the Initiative of a Single Heir
A single heir will be able to judicially trigger the sale of a property that is part of an undivided estate, even without the initial agreement of the others.
The following may request the sale:
- any heir;
- the surviving spouse with a share in the marital assets (cônjuge meeiro);
- the executor with powers to divide the estate.
For this purpose, a special, urgent judicial process will be created.
This does not mean that an heir can simply sign a sale deed alone. What they will be able to do is initiate a judicial process aimed at unblocking the sale despite the lack of unanimous agreement.
2. Deadline to Trigger the Sale
When there is no inventory proceeding, the new mechanism could, in principle, be used after two years have passed since the estate was opened.
If an inventory proceeding has already been requested, it is planned that the special sale process could be started without needing to wait the two years.
3. Rights of the Other Heirs
One heir’s initiative will not automatically result in the sale.
The other heirs will be able to oppose the request and take part in the process, under terms yet to be defined.
They may also request that other properties from the same estate be included in the sale.
There is also provision for the possibility of suspending the process to allow the heirs to reach an agreement on dividing the estate, or to sell the property through a private sale.
4. Setting the Price and Method of Sale
When there is no agreement on the base price, it could be set judicially based on objective appraisals.
The sale should preferably take place through electronic auction, though other methods may be used where there are reasons that justify it.
If the auctions do not produce a result, a reduction of the base price may also be provided for.
5. Possibility for an Heir to Keep the Property
Heirs and the surviving spouse with a share in the marital assets should benefit from a right of redemption, allowing them to acquire the property for the price at which it is sold.
Thus, starting the sale process does not necessarily mean the property has to leave the family’s estate.
If one of the heirs wants to keep the property and is willing to pay the price reached in the sale, they will be able to do so under terms yet to be defined.
6. Protection of the Family Home
The legislative authorization expressly provides for safeguards regarding the family home.
The new mechanism should not allow the specially protected rights of the surviving spouse, or other legally recognized housing rights, to be disregarded.
Limits on the use of the new process in these situations are therefore planned.
7. Reduction of the Deadline to Accept an Inheritance
One of the most significant changes is the reduction of the expiry period for the right to accept an inheritance from 10 to 2 years.
This change will require successors to decide whether to accept an inheritance within a considerably shorter period.
8. Administration of the Estate and the “Head of the Estate” (Cabeça-de-Casal)
The intention is to allow, in certain situations, a simple majority of the heirs to be sufficient to hand administration of the estate and the role of cabeça-de-casal (the person responsible for managing the estate) to someone else.
A review of the powers of the cabeça-de-casal is also planned, along with the creation of a duty to move the estate toward division within a certain period when there is no agreement to keep it undivided.
9. Executor with Powers to Divide the Estate
The creation of the role of executor with powers to divide the estate is planned, to whom the person leaving the inheritance may grant broader powers to administer, liquidate, and divide the estate.
In certain circumstances, this executor could even promote the sale of indivisible properties that are preventing the division of the estate from being carried out.
10. Greater Freedom to Organize Succession
The reform also aims to allow the person making the will to bindingly determine which assets should make up a particular heir’s legally reserved share.
It is also planned that, through a prenuptial agreement, future spouses could mutually renounce their status as legal heirs, covering both intestate succession and the legally reserved portion.
11. Inheritance Arbitration
Another new feature will be the possibility for the person leaving the inheritance to determine, by will, that certain property disputes related to the succession be resolved through arbitration.
The inventory proceeding will, however, remain available whenever it is necessary to carry out the division of the estate.
What About Estates That Are Already Open?
This could be one of the most significant consequences of the reform.
The authorization provides, as a general rule, for the Government to apply the new rules to estates that are already open but not yet divided when the new regime comes into force.
The reform was not, therefore, designed only for future successions.
An estate that has been open for several years and remains undivided could, in principle, benefit from the new mechanisms.
It will, however, be necessary to confirm the final solution in the decree-law that puts the legislative authorization into effect.
Why Is This Particularly Relevant in the Algarve?
In the Algarve, it is common for properties to remain part of undivided estates for many years, sometimes with several heirs living in different countries.
The inability to reach unanimous agreement can prevent the sale, renovation, or economically efficient use of such properties.
The creation of a process through which a single heir can trigger a sale could, therefore, have a significant impact both on resolving inheritance disputes and on freeing up properties that are currently stuck.
Frequently Asked Questions
Is an inventory proceeding required to use the new mechanism?
No. The special process could be used even if there is no inventory proceeding. In that case, however, it will, in principle, be necessary for two years to have passed since the estate was opened.
If an inventory proceeding is already pending, it is planned that this waiting period will not apply.
Does the process necessarily have to end with the sale of the property?
No. There is provision for the process to be suspended to allow the heirs to reach an agreement, either on dividing the estate or on selling the property through a private sale.
Thus, one heir’s own initiative could serve as a way to unblock a situation that had previously remained unresolved.
If one of the heirs wants to keep the property, will they be able to?
In principle, yes. The reform provides for a right of redemption in favor of the heirs and the surviving spouse with a share in the marital assets, allowing them to acquire the property for the price at which it is sold.
Are these changes already in force?
No. The legislative authorization defining the direction and scope of the reform has been approved, but the Government still has to approve the decree-law that will put the new regime into effect. The legislative authorization has a duration of 180 days.
How We Can Help
URB Law Services provides support in inheritance and real estate matters, including:
- settling and dividing estates;
- analyzing undivided inheritance situations;
- selling property that is part of an estate;
- representing heirs in conflict situations;
- inventory proceedings;
- succession planning and drafting solutions designed to prevent future conflicts;
- legal and tax support for inherited property in Portugal.
With an office in Almancil, in the Algarve, and representation in Lisbon, URB Law Services supports resident and non-resident clients in inheritance and real estate matters in Portugal.
The reform being prepared could significantly change how undivided estates are resolved, particularly situations where a lack of agreement among heirs has, for years, prevented the sale of a property.
Contact us to find out more.
