The Legal Side of Buying in Brazil

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Understanding the full regulations relating to purchasing real estate in Brazil is important, enabling a comprehensive knowledge of the commonly referred to ‘ease of purchasing process’. Here we attempt to provide a greater insight to potential buyers of the processes involved, providing increased clarity for personal assurance.

It has been mentioned several times that there are no restriction on foreign purchases in Brazil. While this is correct for the average investor wishing to buy a holiday home or apartment, yet some restrictions do apply on rural land.

If purchasing rural land through a company, the use of the land needs to be directly related to the company’s functions, such as agriculture or industry. Foreign individuals purchasing rural land in Brazil are required to migrate within three years of acquiring the land.

Another area of clarification is the compulsory use of a legal representative. While it is not a compulsory requirement by law, it is highly recommended. The extensive amount of documentation to be checked through, ensuring a property fully complies with legal regulations is best clarified by a Brazilian based lawyer.

Many real estate and investment companies promoting developments in Brazilwill have contracted the services of an independent legal firm, prior to releasing the projects to the clients. These legal due diligence reports can involve many processes that the agents pay the legal firm to carry out. The fact that the legal firm has carried out an extensive report, having full knowledge of each particular project, is why many agents recommend particular legal firms. This will allow the buyer to have access to a lawyer who understands all the pro’s and con’s of units on each project the client wishes to purchase.

While the full extent of the documentation to be studied can vary depending on the location of the unit to be purchase, the main checks will include:

  • Company registration documents of the developer
  • Land title certificate
  • Planning permission
  • Building license
  • All documentation outlining the planning and construction regulations of the project
  • Any debts against the property
  • Bank guarantees, building insurance and financial payment security for buyers, such as escrow accounts
  • Land surveys

The lawyer will also be able to arrange a CPF number for the client if they do not already have one. A CPF number is a legal requirement for carrying out all types of transactions in Brazil, from buying a house to applying for a job, even for obtaining a mobile phone contract. CPF stands for Cadastro de Pessoas Físicas and is an independent taxpayer number.

While the application can be made without the use of a solicitor, the process is far simpler obtaining assistance. Non resident foreigners will need to submit the application at a Brazilian consulate in their place of residence, or apply through a lawyer based in Brazil. The process takes approximately two months to complete, requiring proof of identity, such as a passport, with an officially notarised copy.

Once the CPF number has been obtained, it is a legal requirement to submit an annual tax statement, or tax exemption statement. If the tax statement is not submitted, the CPF number will be cancelled.

While all of the necessary processes can be carried out without contracting the services of a legal representative, the sheer volume of processes required in a relatively short space of time can be mind boggling. Not forgetting the restrictions of the language barrier, as all legal documentation in Brazil is submitted in Portuguese. Contracting the services of a qualified solicitor specialising in Brazilian real estate is a small price to pay, considering the substantial loses one stands to face from even the smallest oversight if carrying out the processes alone.

Understanding the processes involved will assist individual buyers in ensuring that the work carried out by their contracted legal representative are concise. This can enable a feeling of increased stability and ease of mind in foreign property investment markets.

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