Yeah, but you won't. Conservation laws will prevent you from tearing down the old house and instead oblige you to invest to prevent it from falling over on its own.
It's Southern Europe. Ask the locals how often they wait for the bureau to allow repairs and how often they just go ahead and do whatever changes they feel are needed.
Be sure to ask the locals how often they get away with that vs. how often foreigners get away with it (especially foreigners who've paid a 5000-euro deposit and explicitly promised not to do it, in exchange for a 1-euro purchase price)
Uh, no, that's a good way to get fined, at least in Portugal/Spain.
People will often circumvent rules when they can (e.g. add a second story without a permit, but avoid putting regular windows to claim it's just a storage attic), but if you want to make more profound changes, you better be prepared to fight the bureaucracy.