A Q&A guide to corporate real estate law in Brazil.
The Q&A gives a high level overview of the corporate real estate market trends; real estate investment structures, including REITs; legislation; title and public registers of title; confidential information; state guarantee of title; tenure; sale of real estate; seller's liability; due diligence; warranties; cost; taxes and mitigation, including VAT and stamp duty/transfer tax; climate change targets; third party outsourcing; restrictions on foreign ownership or occupation; finance; leases; planning law and consents; and proposals for reform.
To compare answers across multiple jurisdictions, visit the Corporate Real Estate Country Q&A tool.
This Q&A is part of the PLC multi-jurisdictional guide to corporate real estate law. For a full list of jurisdictional Q&As visit www.practicallaw.com/realestate-mjg.
Brazil is a hot spot in the real estate investment world, in view of its privileged position as the host of the 2014 FIFA World Cup and 2016 Olympic Games, in particular. These large-size events are currently demanding large-size investments in infrastructure in areas such as transportation, airports and hotels, among others. In August 2012, President Dilma Rousseff launched a package of concessions for the railroads and highways sectors to attract private investment for projects all over Brazil. In relation to airports, Brazil has witnessed the granting of concessions for three main airports (the International Airport of Guarulhos (SP), the International Airport of Campinas (Viracopos - SP), and the International Airport of Brasília (DF)) to private parties in 2012. These concessions were auctioned in February 2012, and the contracts were signed on 14 July 2012 for the renovation, expansion, and exploitation of these airports. As a consequence of private investment in essential segments of infrastructure, the real estate market itself is growing.
Investment in Real Estate Investment Funds (Fundos de Investimento Imobiliário) (REIFs) has grown in Brazil in the last 12 months, with a growth in the number of investors of about 35% from January to August 2012 (Valor Econômico, 3 September 2012, http://www.valor.com.br/financas/2815086/numero-de-investidores-em-fundos-imobiliarios-cresce-35-neste-ano). This trend is incentivised by the income tax exemption available to individuals (Article 3, Federal Law No. 11033/2004) and the recent creation of the Index on Real Estate Investment Funds (IFIX), comprising the 44 main funds traded, which helps investors to track the market. REIFs are currently investing in a variety of sectors, from hospitals and logistics to industries and real estate receivables (Certidão de Recebíveis Imobiliários) (CRI), but it is possible to discern a clear trend towards shopping malls and commercial buildings in large city centres, although not restricted to the Rio-São Paulo axis (mainly São Paulo, Rio de Janeiro, Brasília, Campinas, Florianópolis, and Belo Horizonte).
On the debt financing side, CRI continue to be an option for investors.
Transactions involving housing projects continue to grow, mainly through real estate financed by the Housing Finance System (Sistema Financeiro de Habitação) (SFH), meaning the affordable housing market.
The structures of real estate investments in Brazil can be divided into direct and indirect investments. Direct real estate investments involve mainly the acquisition and sale of real property and built-to-suit transactions, whereas indirect real estate investments are those related to the financing of entrepreneurial structures (debt/equity), such as asset-backed securitisations and the issuance of CRI. Under the indirect investment category it is also common to find private equity funds (Fundo de Investimento em Participações) (FIPs), and REIFs in the Brazilian real estate investment market.
The legal concept of trust is not recognized in Brazil: the closest structure to REITs is the REIF. REIFs have existed in Brazil since 1993 and are provided for under Federal Law No. 8,668/93, and later regulated by the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários) (CVM) in Resolution No. 472/98. The latter created great incentives for the development of the Brazilian equivalent to REITs after allowing these funds to acquire various types of assets such as real estate backed securities and quotas of FIPs with real estate investments.
Individual investors are granted income tax exemption in relation to income derived from REIFs, provided the following requirements are met (Article 3, Federal Law No. 11.033/04):
There must be 50 or more investors in the REIT.
One single investor must not own more than 10% of the fund shares.
The fund shares must be traded exclusively on the stock exchange or the organised over-the-counter (OTC) market.
In the Brazilian real estate market, the main institutional investors are the following:
Financial institutions (public and private).
Insurance companies.
Pension funds.
Investment funds.
Both companies and individuals whose portfolio of financial investments is lower than BRL300,000 (as at 1 September 2012, US$1 was about BRL2) are not considered qualified investors for legal purposes, and, therefore, are granted a higher standard of protection under the law (that is, offers to them must be registered with the Securities and Exchange Commission). They play an important role in the indirect real estate market, particularly in the context of REIFs (considering the income tax exemption: see above, REITs).
In the direct real estate market private investors' presence is also significant, particularly in terms of purchase and sale of real property, and lease transactions.
Brazil's key real estate legislation includes the:
Federal Constitution1988 (Constitution).
Civil Code (Federal Law No. 10,406/2002), which provides the main guidelines for contracts, real estate ownership, tenure and transfer, and lease agreements of property located in rural areas but not destined for agricultural or cattle raising activities.
Urban Land Statute (Federal Law No. 10,257/2001) (Estatuto da Cidade).
Public Register Law (Federal Law No. 6,015/1973) (Lei de Registros Públicos).
Real Estate Development Law (Federal Law No. 4,591/1964) (Lei de Incorporações Imobiliárias e Condomínio).
Urban Ground Parcel Law (Federal Law No. 6766/1979) (Lei de Parcelamento do Solo Urbano).
Urban Lease Law (Federal Law No. 8,245/1991) (Lei de Locações), which provides guidelines for lease agreements of real estate located in urban areas, except for governmental properties, hotels, parking lots, and areas destined for advertisement, which are regulated by the Civil Code.
Real Estate Finance System Law (Federal Law No. 9,514/1997) (Lei do Sistema de Financiamento Imobiliário).
Rural Land Statute (Federal Law No. 4,504/1964) (Estatuto da Terra), which provides guidelines for lease agreements of real estate destined for agricultural or cattle raising activities.
Forest Code (Federal Law No. 12,561/2012) (Código Florestal Brasileiro).
Real estate includes the land and everything that is naturally or artificially attached to it (the accessories (acessões)), such as buildings and trees. It also includes the soil beneath the surface and the airspace above the land. To be treated as real property accessories must be attached permanently to the land, so that their withdrawal would create a substantial drop in the utility or economic value of the property.
Accessories do not require a separate registration and are registered together with land in the same title (even if they are not owned by the same entity).
Under Brazilian law, ships and planes are also considered real estate for legal purposes. Therefore, they must be registered with the relevant Real Estate Registry Office, and can be mortgaged.
The Brazilian system of land registration is based on real estate record files that are kept and controlled by the Real Estate Registry Office that has jurisdiction over the real property located within a region (in larger cities there is more than one Real Estate Registry Office).
Ownership of real estate is only transferred by registering the adequate transfer instrument (for example, a deed, intestate or testamentary succession transfer document) on the real estate record file in the relevant Real Estate Registry Office. Therefore, title is evidenced by the certificate of the registry of the relevant transfer instrument by the Real Estate Registry Office.
This is subject to two important exceptions:
Adverse possession. In the case of adverse possession, title is evidenced by a judicial order declaring ownership, which, however, begins as soon as a person fulfills the statutory requirements for adverse possession. Therefore, a person can have title to real estate without a transfer instrument if it has acquired the land by adverse possession.
Terras devolutas. In essence, terras devolutas are real properties that do not belong to anyone and are therefore owned by the government, but not occupied by it. Since these lands are not registered in the Real Estate Registry Office, title can only be evidenced after a specific proceeding whereby the government establishes the borders of the real estate and issues the transfer instrument.
The information registered in the real estate record file is set out under Article 167 of the Public Register Law (Federal Law No. 6015/73). Every real estate record file comprises two registries: the Register and the Note (averbação).
In essence, the information found in the real estate record file comprises:
Register:
the real estate description, including information on the limits and boundaries, and any built area;
enrolment with the municipality and/or federal government;
previous record files;
chain of title as of the opening of such record;
liens, encumbrances, and other burdens on the property, if any.
Note:
any lease agreements granted over the real estate;
other contracts or disputes;
pre-nuptial agreements of the current or previous owners, if any.
There are two main books that the registry offices must keep and update regarding real estate:
Book 2. This contains the record files described above (see above).
Book 3. The following acts can be registered here:
the issuance of bonds and the grant of liens over the real property;
co-ownership or special condominium agreements;
pre-nuptial agreements of any current or previous owners even if already registered in Book 2, so long as the interested party requests it;
any other contract in its entire version, even if already registered in Book 2, so long as the interested party requests it.
To enjoy the legal effects of any acts that create, modify, extinguish or transfer rights to real property (in particular against third parties), the interested party must register the appropriate documents with the Real Estate Registry Office, including the acquisition and the creation of rights over real estate (such as mortgages, easements, and servitudes).
Any information registered in the record files of the real estate in the Real Estate Public Office is publicly available, and, therefore, not protected from disclosure. The parties can sign ancillary agreements to make confidential some obligation one party owes to another (for example, a sale of movable assets), which will then not be registered with the Real Estate Registry Office. However, that will not have any effect against third parties.
Although the Real Estate Registry officer is personally liable for giving the wrong information on request, there is no state guarantee of title. Nonetheless, parties often contractually agree on an indemnification clause, through which the seller will be liable for losses suffered by the buyer due to bad title (Evicção). This indemnification clause only reinforces the rights under the Civil Code, which applies irrespective of any contractual provision. However, the parties can agree on the exclusion of this liability under the Civil Code, provided that the buyer expressly agrees to take the risk.
Brazilian insurance companies do not offer title insurance, and title insurance is not common among Brazilian buyers of real estate. Foreign investors interested in this type of insurance generally obtain it from foreign insurance companies.
The most usual types of tenure are:
Ownership, which is defined as the legal right of an individual to use, exploit, and dispose of (for example, to destroy, abandon, or alienate) the property, and to recover it from anyone who unlawfully obtained possession of it.
Co-ownership, as established by the Civil Code. This is equivalent to the common law concept of tenancy in common.
Co-ownership, as provided under Federal Law No. 4,591/64. This was created under a special condominium regime whereby real estate is divided into separate units in a multi-unit development, and a unit owner has both full ownership of the unit and an undivided interest in the land and any common areas.
Possession, which is the right to exercise certain powers pertaining to ownership (Article 1196, Civil Code), such as the right to claim, to exploit, to maintain or to recover the possession of the property.
Surface right, which gives the beneficiary the right to use and to dispose of the surface, in addition to entitlement to create limited in rem rights or security interests.
Usufruct, which is the time-limited right to use, exploit, and enjoy the benefits of a third party's real estate, provided the beneficiary does not modify the real estate's substance or change its economic purpose.
In the Brazilian real estate market, brokers usually facilitate transactions by approaching prospective buyers and sellers. However, the seller may also freely approach potential buyers using its own efforts.
Negotiations may occur simultaneously with the pre-contractual arrangements or before.
During negotiations aiming at the direct sale of real estate, the most relevant documents are:
Purchase and sale commitment (compromisso de compra e venda).
Purchase and sale public deed.
During the negotiations, the key aspects of the deal may be listed in a non-binding term sheet and/or letter of intent. Before the negotiations begin, exclusivity and confidentiality agreements are usually entered into.
If certain conditions precedent are agreed on by the parties during the negotiations, a purchase and sale commitment is generally signed. If the purchase and sale commitment contains all the elements of the final sale contract (that is, the real property, price, and agreement to sell/buy), and the parties do not have the right to withdraw, the commitment is considered as a right in rem and will be binding (Articles 1417 and 1418, Civil Code). In case the agreed conditions precedent are met, the buyer can request the transfer of the real property ownership to its name, and, if the seller does not comply, the buyer can request the court to issue an order for the transfer.
After due diligence is carried out and any conditions precedent are met, the parties sign a purchase and sale public deed under which the buyer will be entitled to acquire ownership of the real estate subject to registration formalities (see Question 5).
Letters of intent and term sheets are generally non-binding; however, their effect depends on the substance of those documents, not the name given to them. If the elements found in the document raise it to the level of a purchase and sale commitment, the binding effect will be automatically granted by the Civil Code. In those circumstances, even clauses of non-enforceability will most likely be disregarded in court.
Purchase and sale commitments are generally binding (see above, Pre-contractual arrangements).
The sale contract must be registered with the Real Estate Registry Office in order to transfer ownership and to have effects against third parties. The Real Estate Office has up to 30 days to register the contract. Refusal to register a sale contract may be related to missing documents (such as bye-laws of the seller) or non-compliance with a formal aspect of the sale contract (such as the description of the real property), in which case the buyer can correct the error or open an administrative proceeding to question the officer's request.
The transfer of title to real estate is effective upon registration of the sale contract with the Real Estate Registry Office.
Under Brazilian Law, the seller has a duty of full disclosure in good faith of any information regarding the real property. The good faith obligation is combined with the indemnification right under the Civil Code that protects buyers against any loss due to bad title (Evicção) (see Question 8). Finally, in case hidden defects that are unknown to the buyer (Vícios Redibitórios) are discovered after the sale, and they cause the property to lose its utility to the buyer or to decrease in value, the seller is liable to the buyer for either:
The restitution of an amount equivalent to the drop in value of the property due to the defect, if the buyer wants to keep the real property.
The restitution of the full transaction amount, if the buyer decides to return the property to the seller.
In addition to the restitution obligation, the seller is also liable for any damage to the buyer if it knew of the hidden defects and wilfully did not disclose the information to the buyer. However, hidden defects liability does not apply if the sale of the real property is on the "as is" basis.
Judicial certificates and tax clearance certificates in the name of the current and previous owners of the real property should be analysed to check if there are:
Any legal proceedings related to the property that may prevent or jeopardise the acquisition of title, the exercise of in rem rights or the possession of the property.
Any existing debts and/or foreclosure proceedings exceeding the assets of the property owner, which may cause the future annulment of the acquisition of the property by a court for fraud.
Besides that, due diligence related to commercial and industrial buildings generally covers:
The existence and adequacy of operational licences in relation to the real estate.
Environmental liabilities and a ground survey to detect underground contamination, if any.
For rural land, due diligence also covers enrolment records of the real estate with the National Institute for Settlement and Agrarian Reform (INCRA), Indian National Foundation (Funai), and Palmares Foundation (Fundação Palmares).
In an asset sale, warranties include ownership (including the existence of any burdens on the property), possession, and the current status (physical conditions, including the environmental ones) of the property. The seller generally also gives representations as to its capacity as the seller (legal and financial).
In a share sale, the seller also usually gives the buyer warranties on the target company's compliance with corporate, tax, environmental, labour, and social security regulations.
As a general rule, if an owner acquired real estate through an asset acquisition it inherits liability related to the real estate, such as liens and encumbrances, condominium expenses, as well as any unpaid taxes and propter rem liabilities (including environmental civil liability). The buyer is liable even if the seller gives warranties and representations stating the non-existence of such liabilities; therefore, the buyer will be required to pay and then request indemnification from the seller for misrepresentation.
In a share sale, the liability for matters relating to the real estate stays with the target company.
An occupier (whether a company or individual) does not inherit liability for matters regarding real estate, except for environmental civil liability in certain cases.
Provided the events occur after the sale/transfer of possession, and do not have any connection with the seller's past activities performed while in possession of the land, the seller or previous occupier is released from any liabilities relating to the real estate, unless otherwise provided for in the sale contract.
Buyer's costs are usually the following:
Legal and technical due diligence costs.
Notary fees in connection with the drafting of the deed.
The Real Estate Registry Office fees.
The seller is usually responsible for any costs related to the preparation of judicial and tax clearance certificates.
Intermediation or broker fees are payable by either the buyer or the seller, depending on the commercial agreement.
VAT is not due on the sale or purchase of real estate in Brazil.
The tax on transfer of real estate property (Imposto sobre Transmissão de Bens Imóveis) (ITBI) is a municipal tax owed on transfers of real property. Rates and exemptions vary according to the municipal and state legislation. The standard rate is 2%.
In addition, transfers of the use domain of navy properties (terrenos de marinha) to private parties trigger the recognition fee (Laudêmio) payable to the federal government.
The buyer usually pays the taxes.
Capital gains derived from the sale of real estate property are generally subject to taxation in Brazil at a 15% rate if the seller is an individual or a 34% rate if the seller is a legal entity.
There are no such methods.
However, depending on the facts of the case, taxation of rental income earned by legal entities in Brazil may be optimised. Specific tax advice should be sought.
On the international level, Brazil is not an Annex I country under the Kyoto Protocol, which means that no mandatory greenhouse gas emission reduction target applies. Nonetheless, Brazil has voluntarily assumed an obligation to reduce its emissions by between 36.1% and 38.9% by 2020 under the 2009 National Policy on Climate Change, based on the Brazilian Inventory of Emissions and Anthropogenic Removals of Greenhouse Gases Non-Controlled by the Montreal Protocol.
Regarding the market for carbon credits, although Brazil has already made some progress in the Clean Development Mechanism following the enactment of the Federal Law establishing the National Policy on Climate Change (NPCC), the market is still in its early stage due to the lack of internal demand.
In addition, financial institutions offer specific credit and financing lines to projects that meet the NPCC goals.
It is rather common for companies to outsource the management of their real estate portfolios to more specialised companies in order to reduce costs within the company's structure, among other reasons.
Under Brazilian Law, some restrictions apply to foreign companies and individuals in relation to:
The acquisition of land and the creation of other in rem rights over the real estate that is located within 150 kilometres of the border zone (faixa de fronteira).
Ownership and occupation of rural land, although no restrictions apply to the creation of other in rem rights over rural land.
Finally, there is an ongoing discussion both in the courts and in the executive branch on whether the above restrictions also apply to Brazilian companies whose majority shareholding is held by foreign companies or individuals, or which are controlled by these entities (see Question 43).
Foreign companies and individuals are free to purchase, lease, possess, or create in rem rights over commercial, industrial (if not considered rural land), and residential real estate.
Change of control of a company does not affect its in rem rights over its real estate. Even where restrictions on foreign ownership may apply (see Question 22), the company will continue to own its real estate, however as a result the change of control itself may be deemed null and void.
The Constitution recognises the public authorities' right to purchase premises compulsorily, subject to the:
Takings clause, requiring just compensation (Article 5, XXIV, Constitution).
Due process clause, requiring a legal proceeding that allows the owner of the real estate to present its case (Article 5, LVI, Constitution).
There are two types of expropriation in Brazil:
Expropriation as a penalty. The owner may see its real estate expropriated under:
the Urban Land Statute, if the owner of urban land does not use the land according to its social function. Expropriation can only be carried out by municipal authorities and subject to the enactment of a specific law;
Federal Law No. 76/93, if the owner of rural land does not use it according to its social function. Expropriation can only be undertaken by the federal government and proceedings must follow guidance provided by Federal Law No. 76/93;
Article 243 of the Constitution, if the landowner cultivates psychotropic plants on the premises and those plants are considered illegal under Brazilian law.
Expropriation on the grounds of public need, public utility, or social interest. This operates as follows:
public need: expropriation may be legal when the government is facing an immediate and urgent problem which cannot be resolved other than by expropriating private property;
public utility: expropriation may be legal when the use of private land is convenient and advantageous to the public interest;
social interest: expropriation may be legal when it is carried out to protect social interest (that is, those directly related to groups of poor people or the population in general), with a focus on improving living conditions, redistribution of wealth, and the diminution of social inequalities. This kind of expropriation is subject to a variety of conditions under federal law.
Expropriations under this category can be performed by the federal, state, or local government.
With the exception of expropriations under Article 243 of the Constitution (in which no compensation is granted to the landowner), a fair compensation paid must fully indemnify the real estate owner.
The urban real estate tax (Imposto Predial e Territorial Urbano) (IPTU) is a municipal tax that is due annually from owners or occupiers of urban real estate, both residential and non-residential. Rates and exemptions are set out by local laws, and vary accordingly.
The Foro is a federal obligation that is due annually from occupiers of navy properties to whom the use of domain is given (although the federal government keeps the title of the property).
There are two main ways to finance the acquisition of real estate portfolios in Brazil:
Bank loans, which enjoy special governmental benefits under the Brazilian Housing Finance System (Sistema Financeiro de Habitação) (SFH), and the recently launched My House My Life Programme (Minha Casa Minha Vida Programme). Real estate finance has also grown since 1997 due to the creation of the Brazilian Real Estate Finance System (Sistema de Financiamento Imobiliário) (SFI), which created a fast foreclosure procedure (fiduciary sales).
Through capital markets, such as by means of REIFs and public share offerings, along with real estate receivables and real estate securitisation transactions.
The most common ways of using real estate to raise finance in Brazil are mortgages and fiduciary sales, although REIFs and asset-backed securitisations are also commonly used to raise finance by means of pooling built-to-suit agreements or real estate receivables. Sale and leaseback agreements are possible, but are less common in Brazil.
Mortgages and fiduciary transfers are the most common forms of security granted over real estate to raise finance in Brazil.
A mortgage is a type of in rem security which is created by the registry of the public deed on the real estate record file with the relevant Real Estate Registry Office. The Civil Code prohibits the automatic appropriation of real estate given as a guarantee by the creditor as a result of the debtor's default, which is why a court proceeding is required to foreclose the property.
A fiduciary transfer of real estate assets occurs when a debtor assigns the title and indirect possession of an asset or right given as a security to the creditor until the relevant debt is fully paid up. A fiduciary transfer contract between the owner and the creditor (a deed is not mandatory in this case) must be registered in the real estate record file with the relevant Real Estate Registry Office to be valid against third parties. In the event of default the creditor consolidates the ownership title of the real estate and subsequently conducts an auction for the sale of the real estate through the relevant Real Estate Registry Office. No court proceeding is necessary.
Real estate securitisation is common in Brazil, and is generally performed by pooling real estate receivables or built-to-suit agreements.
Most of the standard contractual lease provisions are considered to be part of public policy, and are therefore mandatory for any lease, such as the tenant's right of first refusal in case the landlord intends to sell the property during the lease term. Nevertheless, the parties are entitled to freely negotiate within the legal boundaries.
The execution of leases in Brazil follows the general requirements established by the Civil Code regarding existence, validity, and effectiveness of contracts. A few requirements apply, in particular:
Legitimacy of the contracting parties: they must be legally constituted and/or represented in order to enter into an agreement (minors are subject to special rules).
Lawful and feasible purpose/subject.
In particular, it is strongly advised to have certain contracts in writing (equivalent to the common law statute of frauds).
Specifically for lease agreements, the landlord must have possession (or, preferably, ownership) of the leased real estate, and there must not be any legal bars to leasing the property.
As a general rule, leases can be concluded in writing or orally. However, depending on the characteristics of the lease (for example, commercial or residential), some rights are only triggered through a written lease (for example, the right of renewal). Therefore, it is always advisable to have it in writing.
Most lease agreements are drafted with an indexation clause to reflect price increases. However, the indexation is allowed only annually. In addition, rent can be reviewed to reflect fair market value every three years (Urban Lease Law).
No VAT is due on rent. The landlord may be required to pay income tax on the rent received.
There are no statutory restrictions on the length of lease agreements in Brazil. However, in non-residential leases for a duration of a minimum of five years the tenant is granted the right of renewal, provided that certain conditions are met.
In case the leased property is sold to a third party, the terms and conditions of the lease must be maintained and complied with by the new owner, provided the lease agreement includes an appropriate provision, and it is registered in the real estate record file.
The most typical restrictions on the disposal of the lease by a tenant are the following:
The tenant must not change the purpose of the lease.
The tenant must not make changes in the building without prior written approval of the landlord.
The tenant must follow municipal zoning rules and, for condominium-type properties, the building's convention.
Assignment of the lease, sub-lease, or free lease of real estate is subject to the written consent of the landlord, unless otherwise agreed in the contract.
Companies in the same corporate group can share the same business premises by entering into a lease, sub-lease or free lease agreement as long as they have separate addresses for the purposes of any relevant operational licences and for tax purposes.
By law, the tenant is responsible to maintain the premises in at least as good repair, order and condition as at the start of the lease, except for ordinary wear and tear. The landlord is responsible for any required repair or construction related to the building structure of the leased premises.
Usually the tenant is responsible for insuring the leased premises.
Except for certain limited cases, the landlord cannot terminate a fixed term lease during its term. Even the tenant's default does not automatically terminate the lease; in that case, the landlord must request the tenant to rectify the default, and if the tenant does not comply, the landlord can file a claim with the court to evict the tenant.
On the other hand, when the lease is not for a definite duration the landlord can terminate it at any time if it gives the tenant a prior 30-day notice.
The tenant can terminate a fixed term lease by paying a fine. The fine is due only if the termination of the lease is without cause, and is proportionate to the time left under the lease (cannot be in the amount of the unpaid rents).
When the lease is not for a definite term, the tenant can terminate the lease at any time if it gives the landlord a prior 30-day notice.
The tenant's insolvency grants the bankruptcy trustee the right to terminate the lease (Federal Law No.11101/05). The landlord's bankruptcy does not affect the lease agreement, which remains valid and effective.
Each municipality in Brazil has its own legislation regulating planning control. At the federal level, Law No. 10,257/01 sets out general standards and guidelines on planning control.
The following municipal consents are required:
Construction project approval.
Construction work initiation approval.
Licences regarding any impact(s) in the neighbourhood (such as transit and noise).
Environmental licence(s), if applicable.
For historical buildings/sites, a special licence, to preserve the historical and cultural interests on the premises.
The municipality issues a certificate attesting the livability and safety of the building, which allows the building to be occupied.
If the intended activities are non-residential, the municipal law enforcement authorities will certify that the activity is allowed in the given building and zone.
The initial authorisation for any construction is the construction project approval issued by the municipality.
Licences related to the impact of the new construction on the neighbourhood can be challenged by third parties before the local government.
In case the project will necessarily have a great impact on the environment, public hearings may be held by the municipality, although they do not have a binding effect on the public authority's final decision.
The municipality grants or denies a licence to start the construction work on the basis of the impact assessment.
The denial of any licences mentioned above can be questioned in both administrative and judicial proceedings.
Although the issue of whether the restrictions on real estate occupation and ownership by foreign persons (see Question 22) relate also to Brazilian companies whose majority shareholding is held by foreign companies or individuals, or which are controlled by these entities remains unresolved, the House of Representatives Agriculture Commission has recently approved a report according to which it is expected that the Agriculture Commission will propose a bill to settle the issue. However, the legislative process may take years before any clear rule is established.
Main activities. IRIB represents the notaries responsible for the administration of the Real Estate Registry Offices in Brazil. IRIB plays an important legal, institutional, and political role with respect to the representation of the Real Estate Registry Office.
Main activities. SECOVI represents several key operating sectors of the real estate production and service chains in Brazil, such as construction development companies, shopping malls, hotel enterprises, and condominiums, as well as real estate marketing and management, property rentals, lease and sale, urban development and land planning.
Main activities. ABECIP represents the real estate finance industry, bringing together the:
Housing Finance System (Sistema Financeiro de Habitação) (SFH).
Brazilian System of Savings and Loans (Sistema Brasileiro de Poupança e Empréstimo).
Real Estate Financing System (Sistema de Financiamento Imobiliário) (SFI).
W www4.planalto.gov.br/legislacao
Description. The website is maintained by the federal government and contains the official and up-to-date legislation currently in effect in Brazil. All information is in Portuguese and there is no official platform in English.
Description. The website is maintained by the Brazilian Securities and Exchange Commission and contains all official resolutions issued by the Commission both in Portuguese and in English.
T +55 11 4085 6445
F +55 11 3704 9849
E rossana@siqueiracastro.com.br
W www.siqueiracastro.com.br
Qualified. Brazil, 1988
Areas of practice. Real estate; construction and projects; forestry investments.
Recent transactions
T +55 11 3704 9840
F +55 11 3704 9848
E laugusto@siqueiracastro.com.br
W www.siqueiracastro.com.br
Qualified. Brazil, 2009
Areas of practice. Real estate; construction and projects; forestry investments.
