Saturday, June 19, 2010
Acquisition of real estate
Issues regarding real estate property situated in Brazil are governed primarily
by the Brazilian Civil Code (BCC).
Basically, foreign individuals and entities have the right to acquire real estate
property in Brazil according to the same conditions applied to national individuals
or entities. However, it is important to mention that the federal tax authorities
require that nonresident individuals or entities holding real estate located in
the national territory apply for the individual or corporate taxpayer registration
number (CPF or CNPJ).
Furthermore, Brazilian regulation provides for special restrictions in case foreigners
are interested in purchasing properties located near the coast, at the border or
at specific locations considered as conflicting with national security.
Law 5,709/71 establishes that foreign individuals who have permanent
residence in Brazil, foreign companies authorized to operate here and Brazilian
companies controlled by foreigners are authorized to acquire rural properties,
under certain conditions and limits.
On the other hand, foreign entities not authorized to operate in Brazil and
foreign individuals who do not have permanent residence in Brazilian territory
may only acquire rural property under certain circumstances including:
a) foreign individuals are free to acquire rural property from inheritance rights;
b) foreigners are limited to acquire land equivalent to 50 rural modules maximum;
however, acquisitions ranging from 3 rural modules to 50 rural modules are subject
to prior approval from INCRA (Brazilian Agency in charge of rural property issues);
c) the acquisition of more than one property larger than 3 rural modules
is subject to specific approval from INCRA. In addition, when a sole
property is larger than 20 rural modules, its acquisition is contingent
upon the approval of a planning for exploration of the land.
Taking into account that the ownership of large areas of Brazilian land have
been in dispute since colonial land grants were made, it is very important
to ascertain that the seller has valid title of the area. This verification can be
made at the real estate registry. If the seller has been in possession of the
land for many years, and in the absence of ongoing lawsuits, purchase of the
land is reasonably safe. In all cases, buyers should seek legal advice.
Upon the purchase of freehold property, buyers should follow the steps to
register the change of title at the real estate registry.
It is also recommended that long and short leaseholds be registered at the
real estate registry in order to minimize potential disputes with the landlord.