Housing Cooperative

What is a Housing Cooperative with Individual Ownership?

Housing cooperatives are autonomous legal entities, whose main purpose is the "development, construction, or acquisition of homes for their members' habitation."

Housing cooperatives are regulated by:
• The Cooperative Code (Law No. 119/2015, of August 31); and
• The Legal Framework for Housing and Construction Cooperatives (Decree-Law No. 502/99, of November 19)

Are There Risks?

As with all real estate development projects, there are risks that must be considered, including:

Time-related risks:

• Potential delays in obtaining permits – the developer focuses on projects with mitigated licensing risk;
• Potential delays in construction execution.

Price-related risks:

• Changes in circumstances leading to increased costs;
• Imposition of additional requirements on the project by licensing/supervisory authorities.

What is the Role of the Developer?

The developer is dedicated to the development of residential projects using a cooperative model: identifying opportunities, bringing together interested parties, and providing them with a service that includes the setup and oversight of the cooperative. This includes managing the construction project from the design phase (projects and permits) to the completion of the work and the turnkey delivery of the homes to the cooperators.

What are the Advantages of Acquiring a Home through a Cooperative?

1	Elimination of the developers' economic margin: in a Cooperative, the developers are the Cooperators themselves and each Cooperator has the guarantee that they will have their housing at cost price.
2	Phased capital entry: Cooperators make payments according to a pre-defined schedule (usually at five different times – at the time of joining the Cooperative, at the acquisition of the Property, at the beginning of construction, in the middle of construction and at the time of acquisition end of the respective House(s)).
3	Limitation of Cooperators' liability to the value of the respective investment.
4	Access to co.op.homes management and monitoring services, which has an experienced and specialized team.
5	Possibility of transferring the Cooperative's equity titles during the development of the Project, upon compliance with certain admission conditions required of new Cooperators.

What is the Tax Framework?

The Cooperative benefits from:

Exemption from Property Transfer Tax (IMT) and Stamp Duty on the acquisition of the property where the project will be developed

Exemption from Municipal Property Tax (IMI) while the property is owned by the cooperative

How does it work?

What are the Governing Bodies of the Cooperative?

General Assembly

Composed of the cooperators, each having one vote (regardless of the size and number of homes). Assembly Board: President and Vice President.

Board of Directors

Composed of 1 president and 2 members, appointed by the developer.

Supervisory Board

Composed of 1 president and 2 members.

Official Auditor

Official auditor or auditing firm.

This document was prepared by Vieira de Almeida & Associados – Law Firm. It is solely for informational purposes, does not constitute legal advice, and does not provide an exhaustive analysis of the regimes mentioned herein. The information contained in this document is accurate as of the date of its preparation - July 2, 2024 - and does not substitute for legal advice in resolving specific cases. For more information, please contact us at vieiradealmeida@vda.pt.

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VIEIRA DE ALMEIDA

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