15th September 2017
Luanda Backheuser & Camilla Redoschi de Souza Brandão (De Luca Derenusson Schuttof e Azevedo, São Paulo)
Each country has its own legal system and unique aspects when it comes to real estate property purchase. This article by MSI's Brazil law member De Luca Derenusson Schuttof e Azevedo aims to highlight the basic notions of the acquisition of rural estate property in Brazil purchased by foreigners and Brazilian entities controlled by foreigners.
The choice of Brazil is justified as, in the last 12 months, real estate prices in Brazil increased by an average of 0.65 per cent. The inflation measured by the Broad Consumer Price Index (‘IPCA’) should close the same period with an increase of 5.49 per cent, according to the Brazilian Central Bank: in other words, when the effect of inflation is considered, the index shows that real estate should have a real price drop of 4.58 per cent.
To briefly present the Brazilian aspects relating to the acquisition of a rural area by foreigners and Brazilian entities controlled by foreigners, it is important to outline the real estate system and applicable legislation.
Real estate property in Brazil
The main sources of law related to real estate can be found in the Federal Constitution of 5 October 1988 (‘Brazilian Federal Constitution’ or ‘Magna Carta’), Law No 10.406/2002 (‘Brazilian Civil Code’), Law No 10.257/2001 (‘Urban Properties Rules Law’), Law No 4.504/1964 (‘Rural Properties Rules Law’) and Law No 5.709/1971 ‘Acquisition of Rural Property by Foreigners Law’).
It is important to mention that, although the right to own real estate in Brazil is guaranteed by the Brazilian Federal Constitution, ownership rights are not absolute since it is subject to restrictions on land use and to the principle of the social function of property (in Portuguese, Função Social da Propriedade), which establishes that the property not used in accordance with what its social purpose may be is subject to expropriation procedure by relevant authorities.
The ownership of a given real estate property is formalised by the title of the land duly registered before the Real Estate Registry Office in charge of a given territorial jurisdiction.
Read the full article on ‘Buying property in Brazil’
DDSA - De Luca, Derenusson, Schuttoff & Advogados (DDSA) is a full service law firm based in Sao Paulo, Brazil with a deep knowledge of our clients’ businesses and different markets.
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