South American Real Estate News

Brazilian Real Estate Law

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1. Real Estate Law

1.1        Please briefly describe the primary laws that govern real estate in your jurisdiction.  Laws relating to leases of business premises should be listed in response to question 10.1.  Those relating to zoning and the environment should be listed in response to question 12.1. Tax-related should be listed in response to questions in Section 9.

The Brazilian Civil Code provides that real estate ownership may be acquired by either acquisition, adverse possession, accession or succession rights.  The Brazilian Civil Code also establishes other rights associated with real estate but not based on personal relationships (in rem rights), which are enforceable against third parties, such as surface rights, easements and usufruct.

The Real Estate Development Law approaches two main subjects: developing real estate enterprises composed of autonomous units; and building condominiums.

The Land Statute regulates Brazil’s use, occupation and rural land relations.  The referred law provides the State’s responsibility and obligation to guarantee the right of access to rural land for those who live and work there.

The City Statute provides for general urban land policies and other instruments that aim to help implement urban development.

The Parcelling of Real Estate Property Law concerns urban spaces destined for building and explicitly targets the urbanisation of individual plots of land by dividing or unifying them into parcels for the exercise of elementary urbanistic functions and buildings.

Public Registry Law regulates any kind of public registry in Brazil, including the registration of real estate ownership by the Land Registry.

Certain real estate matters are regulated by state or municipal laws rather than federal laws, such as taxes, registry proceedings, and zoning and environmental regulations.

1.2        What is the impact (if any) on real estate of local common law in your jurisdiction?

This is not relevant as our legal system is based on civil law.

1.3        Are international laws relevant to real estate in your jurisdiction?  Please ignore EU legislation enacted locally in EU countries.

There are no international laws competent to real estate in Brazil.

2. Ownership

2.1        Are there legal restrictions on ownership of real estate by particular classes of persons (e.g. non-resident persons)?

Brazilian law imposes restrictions on foreigners’ acquisition and lease of rural land in Brazil.  The Brazilian Foreign Ownership Land Control Law, which governs the acquisition and use of rural lands by (i) foreigners who have permanent residency in Brazil; and (ii) foreign legal entities authorised to operate in Brazil, shall also apply to Brazilian companies controlled by foreigners.  Federal Act No. 5,709/1971 and its regulatory Decree No. 74,965/1974 provide some restrictions applicable to acquiring and leasing rural property by foreign legal entities authorised to operate in Brazil.  Acquisition or lease of rural land in violation of such restrictions is deemed null and void, and the State Public Notaries (responsible for drafting the title) and the Land Registry are liable for their non-observation.

3. Real Estate Rights

3.1        What are the types of rights over land recognised in your jurisdiction?  Are any of them purely contractual between the parties?

Brazilian law recognises the owner’s rights over its own real estate (ownership and possession), rights over third parties’ real estate (such as surface, easement and usufruct) and collaterals (such as mortgage and conditional sale).

Possession is an exercise, complete or partially, of the powers inherent in ownership, which may arise from a purely contractual relationship between the parties (e.g. lease) or an in rem right (e.g. ownership).

3.2        Are there any scenarios where the right to land diverges from the right to a building constructed thereon?

Such scenarios exist in Brazil through surface and slab rights. The surface right entitles an individual to plant or build on a third party’s land for a determined period.  After this period, the plantation and/or the building constructed on the real estate shall be incorporated and belong to the landowner (grantor), unless otherwise established by the parties.  Federal Law No. 13,465/2017 establishes a new in rem right in the Brazilian Civil Code: the slab right (direito de laje), which is an in rem and autonomous right to the upper or lower surface of base construction.  It will be subject to a separate recording with the Land Registry and may be sold to third parties and even be subject to a security interest.

.3        Is there a split between legal title and beneficial title in your jurisdiction and what are the registration consequences of any split? Are there any proposals to change this?

There is no formal split between legal title and beneficial title in Brazil or proposal to change this scenario.  However, the Brazilian Civil Code provides the usufruct, which is an in rem right similar to the title split, by which the right holder is entitled to possess, administer and gather the fruits and benefits arising from the real estate owned by a third party.

4. System of Registration

4.1        Is all land in your jurisdiction required to be registered?  What land (or rights) are unregistered?

Yes, it is.  The Public Registry Law provides that each property must be recorded with the competent Land Registry.

4.2        Is there a state guarantee of title?  What does it guarantee?

Brazil does not have any state guarantee of title. Given a real estate transaction, the potential acquirer of rights shall perform prior legal due diligence to verify material issues that may affect the intended transaction. Moreover, the corresponding title must be registered with the competent Land Registry to be effective against third parties.

4.3        What rights in land are compulsory registrable?  What (if any) is the consequence of non-registration?

The in rem rights over real estate, including ownership, must be registered with the competent Land Registry by the concerned party. In the event of a lack of registration, the right should only take effect between the contracting parties; therefore, third parties will not be forced to comply with it.

Moreover, according to Brazilian Lease Law, recording a lease agreement on the respective real estate title certificate grants to the lessee: (i) the right to maintain the lease if the property is sold to a third party during the lease term, provided that the agreement expressly sets forth the effectiveness clause; and (ii) in case of a breach of the lessee’s right of first refusal, the right to retrieve the leased real estate transferred to a third party.

Full Information

Source: Legal Group Ltd

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