Whilst Brazil’s property and land market continues to attract global investment attention, the processes behind the completion of legal transactions in the country have long been recognised as being excessively bureaucratic and slow – with lawyers themselves commonly referring to the system as a maze of statutes, rules and regulations.
But with reforms and the rise of the digital age, it is now relatively easy for Brazilian lawyers to keep up to date and access the latest legislative/doctrinal changes, court decisions, lawsuit tracking systems and legal news (using online publications such as Revista Forense, Saraiva Data, Busca Law and Revista dos Tribunais).
For foreigners, although investment has been legally regulated since 1962, it was not until 1995 – when amendments to the Constitution were passed to further open up various sectors of the economy (including mining, gas, oil, energy, communications in addition to real estate and land) – that activity began to gain momentum. Brazil also signed to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which enabled cross-country disputes to be more easily manageable. Such events were seen as significant steps in enabling foreign business transactions to be done in an entirely legitimate and legally enforceable manner.
To eliminate any doubt, overseas investors are therefore awarded exactly the same rights as Brazilians (although the law currently stipulates that the purchase of foreign land of over 25,000 acres by non-residents requires prior approval).
Here is a checklist of some of the essential steps to bear in mind when doing real estate business in Brazil:
- Ensure the lawyer you are instructing has a specific amount of experience and is registered with the Brazilian Lawyers Association (Ordem dos Advogados do Brasil);
- Work with a lawyer who can speak your own language and ensure that any contracts and/or agreements are professionally translated;
- Any reservation contracts (usually accompanied by a deposit payment) should be fully reviewed by a qualified professional;
- Ensure that full procedures are undertaken with regards to the property or land legal search process – particularly with regards to title (Certidão de Ônus Reais);
- Ensure that all relevant paperwork will be completed in a timely manner by requesting for set deadlines;
- Only use a lawyer who will charge once the transaction is fully completed;
- As well as appointing a lawyer, any real estate or land transaction requires the instruction of a public notary (escribão) who reviews all documentation to ensure Brazilian legal requirements are adhered to. The main laws of interest are: 8.935 (defines the attributions and competence requirements of a public notary); 7.433 (provides the requirements for the drafting of deeds); 93.240 (lists documents necessary for the drafting of real estate transactions as well as associated taxation obligations) and 10.406 (determines the authenticity of a deed) – note that English translations are readily available on the web;
- For pre-construction purchases, at a bare minimum, your lawyer should check that planning permission is fully in place; there are no liens; full licenses are in order; the land is fully regulated; architectural / technical / structural standards will be adhered to; bank guarantees / payment securities are in place and the development company has an up-to-date solvency report.