Documents Involved in Real Estate Acquisition in Brazil

Daniela Quiros,  Saturday, 4 January 2014

 

This article is part of a series of 8 articles about buying property in Brazil. The other articles in the series cover the following topics:


Today, we will dwell on property purchase in Brazil in the context of the documents required for the legal procedures and signing of the deed. Investing in Brazilian real estate is a relatively low-risk endeavor for those looking for a reliable solution in long-term investment. You can buy real estate in Brazil for personal use, to have a monthly income from renting it, or to profit from reselling it. Whatever your intention may be, Brazil is a logical choice for foreigners looking to invest in real estate overseas. The purchase process is relatively simple and transparent, provided the buyer has trusted acting on his behalf.

Who can buy property in Brazil and What Are Ownership Types?

Anyone can buy property in Brazil, provided the person has CTF, a tax identification card issued in Brazil. That means that foreigners have the same rights as Brazilian citizens when purchasing real estate. There are no restrictions as to the property's location, the number of real estate units acquired, or the amount of funds invested. The only difference between buying a residential house and acres of rural land is in the paperwork required to proceed with legal formalities. Also, anyone looking to buy land in a rural area for agricultural purposes has to be a resident of Brazil. Special authorization from government is required when a foreign citizen wants to buy land on the seashore or within 150 km from international borders. According to Brazilian laws, federal government owns all mineral and water resources in the country, as much as all the beaches, natural reserves and mineral resources. Private parties, including foreigners, are allowed to lease and exploit these resources under a number of circumstances: concession, grant, permission or authorization from the government.

Certain properties can only be acquired under leasehold. This concerns the federal government property, and includes certain areas that can be leased to people or corporations for a yearly fee, and involves an official arrangement. In this case, the leaseholders are allowed to sell their leasehold rights provided they pay the transfer fee and the annual leasehold fees. As lucrative as it may sound, we would not recommend this type of acquisition because it may be subject to public easements on the leased property.

As for the rest of residential homes, land and pre-order constructions, foreigners need to present the same portfolio of documents as the citizens of Brazil. A foreigner is not required to have a Brazilian nationality, or to have a permanent address in the country.

The list of the required documents is as follows:

  • Passport
  • CPF or individual taxpayers number issued by the Brazilian Department of the Treasury, Cadastro de Pessoa Física. This is a mandatory document for anyone looking to buy real estate in Brazil.
  • If the buyer is married, he or she must also present the spouse's CPF and the spouse's written consent to acquire property.
  • You will also need to present a proof of solvency issued by the Brazilian tax office. You will receive this certificate when you apply for a CPF identification card.
  • You will also want to have a search sheet for an in-house examination with relevant copies from public records with carefully reviewed statements about in-house examinations and survey plan with accurate amounts.
  • If your purchase involves , loan, or seller financing, corresponding certificates from the bank must be present. Your lawyer may suggest drafting a mortgage clause as an amendment to the deed. In either case, the buyer has to present proof of financial solvency.
A foreign citizen can buy property in Brazil without physically being in the country. As in any other country, you'll need to provide a power of attorney to the trusted person to act on your behalf when acquiring property in Brazil.

Property registration system in Brazil

The property registration system in Brazil is well-developed, transparent and safe. A private Notary Public carries out the registration in a single registry pertaining to the area where you buy the property. The record belonging to the property in question reflects all relevant transactions, liens, debts, encumbrances involved in the purchase and sale. The public registry collects the entire commercial history of each property listed, and its physical identification, as well as relevant information about the owners. It is essential that you buy property with a clear title, and no restrictions, or obligations that will question your legal rights after the purchase. Conveniently, the registry is open to public access, and anyone, even the foreign citizen, can inquire into the property's status, ownership details, pending debts, mortgages, and other relevant details.

The Most Common Reasons for A Dispute On The Deed, Or Failure To Convey The Real Property Transfer

We shall address that question from two perspectives: the case of a definitive sale, and a promissory sale. In either case, the deed must be duly registered at the public registry office to take legal effect. A promissory sale is typical for seller-financed deals, and the most common reason for non-conveyance is the buyer's failure to provide payment. Nevertheless, a clause of termination and other additional requirements are often amended to the contract upon the request of both parties.

In the second case, a definitive sale requires a full portfolio of documents from the seller relevant to the property and himself: a no-mortgage certificate, certificate of duly paid taxes, all documents certifying the absence of pending lawsuits that can impede the sale of the property in question. Provided all the documents are in place at the moment of sale there can be no legal impediments for the purchase and sale. Both parties, accompanied by their legal representatives, assemble at the public registry office of the Notary Public to formally sign the deed of the definitive sale. This is a public instrument and the binding agreement which obliges the buyer to present satisfactory proof of payment, be it payment in cash, wire transfer, initial deposit in case of a seller-financed deal, and proof of lender funds or the like. Both parties sign the deed in the presence of Notary Public, in case there are no doubts and questions as for the documents presented by both the seller and the buyer.

Because there is no title insurance in Brazil, both parties are responsible for ensuring that there are no legal restrictions on the sale of the property. All the provided documentation must satisfy the current rules and laws, so in case any defect occurs in the title or any restrictions arise that may prevent the new owner from entering his legal rights on the title, the Notary Public has no right to record the deal. As a result, one of the most common reasons that can prevent a definitive sale from being recorded is the seller's failure to provide satisfactory clearance documentation. For more insight on , refer to the corresponding article.

Acquiring Real Estate Indirectly Via Purchasing The Shares of an Existing Corporation

Some property in Brazil is owned by corporations instead of individuals; therefore, the assets and liabilities of the Corporation are different from those of individual owners. As a result, you can acquire shares in a Corporation without having to pay transfer fees and taxes to the government. In this case, the transfer only triggers fees related to any corporate transaction, for example, brokerage fees, stock exchange payable fees, fees relevant to registration of amended documents that will reflect the change in the equity interest with the commercial registry. Nevertheless, the due diligence will require your representative to verify all possible liens and encumbrances associated with the Corporation. This kind of acquisition may end up more complicated in terms of paperwork, legal fees and due diligence than that of a simple free title transfer.

Title Insurance in Brazil

Title insurance is not available in Brazil, but deeds of sale and transfer are public instruments and have the legal power. A Notary Public is not authorized to convey the deed and register it, unless all the documents provided by the seller comply with the rules and regulations of the current laws. Nevertheless, there are a number of cases that out-rule the deed, such as disputes over rightful ownership.


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A very valuable read

Rio in the evening Brazil is an attractive destination for your real estate investment. Foreigners enjoy the same proprietary rights as Brazilians do, with very few exceptions that concern large tracts of rural land. Even though each municipality has its own taxation and regulatory systems, there are insignificant discrepancies between them. A professional and experienced lawyer would be of great help to foreigners looking to invest in Brazilian real estate. 
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