Brazil: Real Estate Acquisition In Brazil – A Brief Summary

Last Updated: 21 December 2007
Article by Ana Beatriz N. Barbosa Esq

There has been a large amount of real estate investments in Brazil in the last years. Not only large investors have been appreciating the hotel and shopping center areas, small investors have been viewing the Brazilian environment as a great opportunity for retirement plans. Thus, either in large or small proportions, the Brazilian real estate market has been in great development.

Investments can be made by individuals or by foreign or national companies. In Brazil the most common practice is limited liability companies – Limitadas. The acquisition of real estate through Brazilian Companies is very much used for tax and inheritance reasons. Also, direct investment in Brazilian Companies may grant the right to permanent visa requirements (50,000 US dollars for individual investors or 200,000 US dollars for entities)1.

Rules that are usually applicable include the Brazilian Civil Code, Public Register Law (Law 6015/73), Lease Law (Law 8245/91), among others.

The Public Register Law established a system. There are many Real Estate Registrars whose "jurisdiction" is defined according to the location of the real estate property. Such registers have listed a description of the property (all real estate properties have a registration number), all previous and present owners, third party rights (as mortgages, liens, encumbrances or burdens) and other information. Any transfer or burden incurring upon real estate must be recorded at this Registrar. Transfer and other deeds shall always be executed by the parties (or its representatives) before a public notary and then recorded at the Real Estate Registrar.

Thus, to evidence the ownership of the property, a certificate is issued by the Registrar, which includes the owners and transfers during the last 20 years as well as any encumbrances, liens and burdens incurring upon the property. This document is publicly available. As this document is issued by due empowered authority, there is no need for any insurance regarding transfer of real estate. In fact, there is no title insurance product available by Brazilian insurance companies.

However, there is no State guarantee of title. Thus, it is important that a legal counsel analyzes this document to verify if all transfers were duly made (if not all future transfers may be cancelled) in accordance to the law and in their due powers.

Other documents that are necessary for the transfer (and shall be required by the notary when drafting the agreement) are certificates in name of sellers and the property to verify if there are any suits pending against such parties. Non-registered titles, claims, rights or liens are not enforceable against third parties, but can be enforced against those who took part in the transaction.

Real Estate law property in Brazil is extremely simpler that US or UK real estate law. The ownership is absolute for use, fruition and disposal and in perpetuity (there is no rule against perpetuities), solely limited to third party rights and applicable legal restrictions. There is however, need that the property be well used according to neighbor rights and public interest. When of death of owner, the heirs shall have to proceed with probation (at least regarding this property) in Brazil.

Nevertheless, there are other kinds of tenure to real estate, such as: Usufruct (the right to use and enjoy something belonging to another), Fiduciary interest, Property subject to condition, Gratuitous lease (comodato), Security sale agreement (alienação fiduciária), Promise to Purchase and sale commitment, Right to use, Rights upon superficial territory and a different species of Trust (fideicomisso). There are also properties subject to right of seisin (emphyteusis) and subject to a special coastal land system. This is an inheritance of the Monarchy and derives from the need to secure the national territory.

Real estate can be negotiated and marketed by real estate brokerage or general advertisement. A professional assistance is always recommended. Promise to Buy and Sell are commonly used to pre-establish the rights and obligations of the parties. They can be provided through private or public means. Tax, joint property related expenses and Environmental liability shall be passed on to buyer unless specifically established otherwise. Even though, third parties still may sue buyer who may then sue seller.

As previously mentioned, a fast (around 20 days depending where the property is located) due diligence is required to analyze the property title and possibility of transfer. The cost of certificates for due diligence is generally paid by seller, unless otherwise agreed. Close attention must be given to potential liabilities (including environment and regulatory) as they will not be listed necessarily in the documents. As so, having any doubts regarding this matter, please call attention to your counsel.

When of transfer, a tax (owed to the city or state department) is due. Such tax varies according to the location (in Rio de Janeiro it is 2% when of transfer among living parties, or 4% when of inheritance). In the case of a government-owned property or emphyteutics properties, there is also a cost called Laudêmio (varies – usually from 2.5% to 5% of the property value). These taxes are usually paid by buyer, unless otherwise agreed to.

In addition to taxes (see Question 16), there are costs related to the execution of the deed, and registration of the deed with the Real Estate Registrar under its title number. Such costs vary from state to state.

The buyer is responsible for payments related to execution of the deed, except if the parties agree otherwise. The brokerage fee (variable, usually around 5% of the market value) is usually paid by seller, unless otherwise agreed to. Accounting and attorney costs are paid by the hiring party.

As mentioned, once overcome the due diligence, the deed is signed before the notary and recorded at the Real Estate Registrar when it becomes binding to the parties and third parties. The deed is quite a simple document (contrary to large contracts of common law practice) because the law pre-establishes some warranties of seller (others may be included according to negotiation among parties), including: a) Eviction - in case of loss of the real estate property acquired due to any judicial order regarding third parties' rights seller is liable; and b) Debts related to the property until its transfer, except if the parties agree otherwise.

After the property acquisition, there are some maintenance fees and taxes due. Annually a property tax is due (rates vary according to the property location). There is also a small firefighters annual fee and some other minor fees that may incur. When of joint property areas, there is a condominium fee that is due monthly.

The owner can be deprived of real estate property in the event of expropriation, for public (social) need or interest, or if so demanded, in case of imminent danger. The Brazilian Constitution establishes the right to due indemnification.

Footnote

1. There are some other ways to invest as real estate receivables securities (Certificado de Recebíveis Imobiliários and Cédulas de Créditos Imobiliários) or real estate investment funds (Fundo de Investimento Imobiliário - similar to the American REIT).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions