Is a guarantor required for rental contracts in Portugal?

The answer is no. But many landlords demand a guarantor, making it an essential condition for concluding the contract.

5 October 2020, Redaction

The rental market seems to be gaining popularity in Portugal, with more and more people choosing to rent rather than buy. This is a trend that is mirrored in the most recent data from the National Statistics Institute in Portugal (INE), which shows that the number of new rental contracts in Portugal increased in the first half of the year compared with the same period last year.

If you're planning on renting out a property in Portugal or renting property to live in, a good option for those who perhaps don't want to make a long term commitment abroad, you may have doubts and questions about the process and about rental contracts in Portugal. A commonly asked question regarding rentals in Portugal concerns whether it is compulsory to have a guarantor when concluding a contract between landlord and tenant or not. We explain everything on this subject on a legal basis, with the help of the law firm CRS Advogados.

The straight answer is no. A guarantor is not mandatory for the constitution and validation of a rental contract in Portugal. However, it is true that many landlords require a guarantor, making the requirement an essential condition for the conclusion of the lease, explain the experts.

The landlord's interest is to ensure that he or she receives the value of the rent, and if the tenant cannot obtain a third party to act as guarantor, then other types of guarantees must be provided, such as, for example, the possibility of providing a guarantee by means of a cash deposit, or getting a bank guarantee, among other alternatives. 

As an example, the experts at the law firm suggest using a joint bank account (where money can only be moved with the authorisation of both parties, landlord and tenant), therefore avoiding having to hand over the entire amount in cash to the landlord or having high financial costs with bank guarantees.

However, the most important thing is that landlords must be aware that if the contract does not contain a number of important points, the surety provided by the guarantor in the lease contract only covers the initial term of the contract and is extinguished in the event of automatic renewal of the contract, except, if the contract stipulates otherwise.

Moreover, even in situations where the guarantor also undertakes to comply with the renewal periods, without fixing in the contract the number of renewals, the guarantee ceases when there is no new agreement between the parties, or when there is a change in the rent or the five-year period elapses from the beginning of the first renewal.

It is therefore essential that the contract is legally sound in order to reflect the real will of the parties. A lease contract, with all its legal specificities, without the intervention of a lawyer may at the end of the day present many surprises despite what "was there written".

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