The process of acquisition of a property, as a rule, usually involves a thorough analysis of the documentation in relation to the property itself, the seller and the former owners. Such documentation, usually provided by the seller, is analyzed for the purpose of verifying the legal safety of the target business.
With the main goal of reducing fees and accelerating real estate business processes, Federal Law No. 13,097/2015 was published in the Official Gazette on January 20, 2015, which secures the effectiveness of all legal acts intended to form, transfer or change in rem rights over real estate in relation to previous acts that were not registered or annotated in the record file of the property. Thus, such previous acts not registered or annotated in the record file of the property could not be opposed against by third-party purchasers.
Popularly called "Law of Concentration of Acts in the Property's Record File", the Federal Law N. 13,097/2015, among other provisions, aims to protect the rights of the non-inert creditor, as well as of the bona fides purchaser, who, based on such Law, would not need to demonstrate its due diligence in the business by the issuance and analysis of the innumerous certificates usually required for such purpose, like the certificates issued by Court distributors, for example.
The Law of Concentration of Acts in the Property's Record File conferred a term of two years, counting from the beginning of its effectiveness, for the registries and annotations related to legal acts dated prior to the Law to be carried out, and said term ended on February 20, 2017.
Ideally, a greater dynamism is expected with regard to real estate acquisitions and, consequently, a reduction in the average time spent on the conclusion of the respective procedures. Although we can consider the Law of Concentration of Acts in the Property's Record File innovative, the subject still has been timidly approached by the Judiciary. In the meantime, we may be sure of one thing: while the consolidation of the Judiciary's interpretation about the application, extension and effectiveness of the Law of Concentration of Acts in the Property's Record File is not clear, a reasonable conservatism reveals itself as the best option to be adopted in the procedures of real estate acquisition or creation of other in rem rights, since an extensive due diligence continues to be the safest way to verify the viability of the business and safeguard each and every right of the bona fides purchaser.
Visit us at Tauil & Chequer
Founded in 2001, Tauil & Chequer Advogados is a full service law firm with approximately 90 lawyers and offices in Rio de Janeiro, São Paulo and Vitória. T&C represents local and international businesses on their domestic and cross-border activities and offers clients the full range of legal services including: corporate and M&A; debt and equity capital markets; banking and finance; employment and benefits; environmental; intellectual property; litigation and dispute resolution; restructuring, bankruptcy and insolvency; tax; and real estate. The firm has a particularly strong and longstanding presence in the energy, oil and gas and infrastructure industries as well as with pension and investment funds. In December 2009, T&C entered into an agreement to operate in association with Mayer Brown LLP and become "Tauil & Chequer Advogados in association with Mayer Brown LLP."
© Copyright 2017. Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. All rights reserved.
This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.