Real Estate Law: contracts, developments and property matters in Brazil

As a rule, ownership of a property in Brazil is only transferred when the title is registered at the real estate registry office (cartório de registro de imóveis). The legal analysis of the property therefore comes before payment. The following are examined:

• the property registration record (matrícula) and the chain of owners;
• encumbrances, mortgages, attachments and lawsuits involving the property;
• certificates for the seller and for the property;
• the form of the contract and the deed: for properties above a certain value, the law generally requires a public deed (escritura pública);
• transfer costs and taxes, such as the ITBI (real estate transfer tax).

In the Federal District, a significant share of properties originates from public land, which makes it important to verify the origin of the title and the regime of occupation.

Real estate development in Brazil (incorporação imobiliária) is governed mainly by Law No. 4,591/1964 (in Portuguese), as later amended. As a rule, units can only be sold after the development is registered at the real estate registry office. The analysis of a project usually covers:

• ownership of the land and the documents required to register the development;
• contracts with buyers, builders and suppliers;
• the segregated estate (patrimônio de afetação), which separates the funds of the project from the developer's other business;
• the responsibility of the parties and the rules on delay and on undoing the transaction;
• regulatory, environmental and tax risks.

For investors, it is worth checking these points before joining. There is, however, no absolute security: the aim is to know the risks in order to decide.

We draft, analyze and review real estate contracts and act when there is a dispute over them. The most common are:

• purchase and sale and promise to buy and sell;
• assignment of rights and exchange;
• development and construction contracts;
• leases, farm leases and partnerships;
• termination of real estate contracts (distrato), including under the rules of Law No. 13,786/2018 (in Portuguese), which deals with the return of amounts and penalties.

In the review, the following are examined: price and payment terms, deadlines, penalties, guarantees, liability for defects and the way disputes are resolved.

Properties with an outdated registration record, construction not annotated in the registry, irregular subdivision or an unclear original title are hard to sell and to finance. The analysis identifies the problem and the way to solve it, which may involve:

• rectification and updating of the registration record;
• annotation (averbação) of construction and changes;
• land title regularization (regularização fundiária), when applicable, under Law No. 13,465/2017 (in Portuguese);
• a lawsuit, when the administrative route does not solve the problem.

The difference between contract analysis and registry analysis matters: a correct contract is not enough if the property's registration has problems.

Common situations of real estate disputes:

• breach of a purchase and sale or development contract;
• delay in delivering the property and return of amounts paid;
• disputes over possession, invasion and adverse possession (usucapião);
• condominium and boundary disputes;
• collection of amounts and enforcement of guarantees.

Before a lawsuit, consensual routes are assessed: negotiation, mediation, regulated by Law No. 13,140/2015 (in Portuguese), and arbitration, when provided for in the contract and suitable for the type of right. When these do not solve the matter, a court action remains, with analysis of evidence and deadlines.

In legal advice for developers and investors, the prior analysis (due diligence) brings together in a single picture:

• the registry and land-title situation of the plot;
• licenses, approvals and urban planning restrictions;
• contracts, liabilities and pending lawsuits;
• corporate structure and guarantees of the transaction;
• taxes levied on acquisition, development and sale.

The result is a map of contingencies, which makes it possible to decide, negotiate price and conditions or fix pending issues before committing.