Saturday, October 9, 2010
Getting a Piece of Brazil
There is an expression "Who doesn't register
Brazil is a fantastic country that can offer some outstanding life-style opportunities for the right person. Unfortunately, there is not much information available for people looking into something more than a brief touristic adventure. Property purchase requires detailed understanding of the requirements of the law and the dynamics of the search, negotiation and buying processes.
This article is not intended to serve as an authoritative source of information related to dealing with a variety of situations in Brazil. Instead, it serves the purpose of answering some of the most common questions pertaining to a number of areas as well as orienting you in respect to the possibilities of situation assessment, requirements and, of course, action.
I am a strong believer in pre-emptive approach to solving problems. It is much easier and a lot less expensive to take some evasive and precautionary actions than to deal with full-blown unanticipated problem. It is even truer in any country where you have numerous disadvantages of unfamiliarity with judicial process and law, language and culture.
Here are some of the terms and requirements of conducting Real Estate transactions in Brazil:
Can foreigners buy or rent Real Estate Property in Brazil?
Yes, they can!!!
Foreigners are permitted to buy, own and rent Real Estate Property. By law Brazilians and foreigners are on almost equal footing when it comes to property ownership and tenant rights. Non-Brazilians are subject to certain limitations dictated by national and security interests. Foreign Governments can't own Real Estate Property except buildings and properties used for consulate or embassy sites.
Sources and further information:
Constitution of Federal Republic of Brazil Article 5, Item XXII.
Any local Cartório Office.
What documents do I need to buy or rent property in Brazil?
Your travel passport is usually enough in order to sign a rent lease agreement. To buy a property CPF (Cadastro das Pessoas Físicas) is also required. CPF is easily obtainable by foreigners.
Who can I use as a rental/real estate agent?
There are numerous business establishments and licensed individuals who can offer your services of apartment rental brokers or for sale property listings.
Administradoras _ Business specializing in administering RE properties for individual owners or condominiums.
Imobiliárias - Essentially Real Estate Agencies
Procuradores -( Real Estate Brokers) Businesses specializing in locating desired properties.
All these businesses can be found in local Yellow Pages under Administração de Bens, Administraçã de Condomínios, and Imobiliárias.
Needless to say, references and direct referrals can save you from unscrupulous operators. In case of untried and unknown agent you might want to verify that the individual or business you are dealing with are members of CRECI .
(I 'm on CRECI registered to act as a Real Estate Broker on Brazil.)*
But what is CRECI (Conselho Regional de Corretores Imobiliários) or Regional Council of Property Managers?
CRECI is the Professional Organization regulating career Property Managers and Real Estate brokers. Only registered members are legally allowed to work as Corretores (Property Managers, Realtors or Brokers). While CRECI membership is not a guarantee against dishonest actions by certain individuals or companies, it provides you with at least additional leverage and official complaint organ.
Do I need a local lawyer to conduct Real Estate transactions in Brazil?
It is not mandatory, but recommended.
Can I lose the rights to my property?
Yes, under certain circumstances you can.
What is a Registro Imobiliário?
Registro Imobiliário is the statute of Real Estate Property. In order to claim possession of a Real Estate Property you have to register the transaction of property ownership transfer at Registro Imobiliário.
Usually takes place at Cartório do Registro de Imóveis located in the same jurisdiction as the property, but can also be conducted at any location by an authorized official.
There is an expression "quem não registra não é dono" (Who doesn't register is not the owner). Your contracts and agreements are not valid until they are registered in Cartório.
What is the extent of the degree of publicity about ownership of property in Brazil?
It literally means that anybody can have access to property ownership information without any reason or authorization.
What is Matrícula?
Matrícula is the passport of a Real Estate Property; the only legal relationship between the property and its Matrícula is one-to-one. Besides uniquely identifying a property, Matrícula contains detailed description and historical records of all legal, judicial and financial transactions pertaining to the property and full information, such as description of the property, its precise address and location, past and present owner information, mortgages etc.
Do all Real Estate Properties have Matrícula?
No, not all of them do. Only properties that were constructed or involved in some type of legal or financial transactions since December 31, 1973 have one.
What happens if the property was altered through construction or natural causes and doesn't correspond to the description contained in Matrícula any more?
Property description needs to be changed through a judicial process called Processo de Retificação.
Unless you are willing to plunge into legal quagmire, verify that the property description contained in Matrícula corresponds exactly to reality. To be specific, you buy what is on the paper, not the RE property itself.
What documents do I need to request from property seller before considering buying a property?
At a minimum the documents you should ask for are:
- A copy of Certidão de registro da Incorporação no Cartório de Registro de Imóveis.
- A copy of the Convenção de Condomínio*.
* Just if you are buying some place inside of a condominium such an apartment or a house.
- A copy of License of Construction (Alvará).
* Just if you are buying some place under construction, or land plot with some construction project, or in case of someplace recently constructed.
- A Copy of Architectural Plan of the construction approved by the Mayor's Office.
What do I need to do when I find a property that I'd like to purchase?
- Check for Matrícula of the real estate property. Matrícula is a document that contains information about all transactions directly related to the property since its construction. IPTU values may be variant, ask your Broker or to the owner the informations about this tax. The ownership transference you can be obtained (the Matrícula) through a local Cartório de Registro de Imóveis.
Verify that the property is debt and lien free. In order to verify IPTU payment complacency check with Prefeitura by submitting o número do contribuinte (registration number) indicated in Matrícula do imóvel
- Verify that the Condomínio fees are paid off.
Any debts on the property can and should be taken into consideration during the negotiation.
How much should I give for a Sinal?
Sinal (down payment) can range anywhere from 5 percent to 50 percent of the agreed value of the property.
Can I pay for my property in currency other then Real?
No, always pay in local currency.
What is an acceptable commission paid to the Real Estate agent for sale or exchange of a property?
The standard fee is 6 percent of the value of the deal (property). In case of property exchange, commission is usually split up between the parties involved. In sale, the seller pays.
What is CPF?
CPF (Cadastro das Pessoas Físicas) is an identification number that is used for documentation, registration and identification of individuals during and for financial transactions.
Why do I need CPF?
CPF is required for identification and registration purposes, to conduct financial transactions, such as opening up a bank account.
What is Cartório?
Cartório is a Notary Office.
How much should I pay domestic help?
Check the local market. Talk to people who have domestic help. Determine whether how much service you need and number of days per week that you may require it. If you can limit work hours to 6-8 hours up to three times per week, you can hire help as prestador de serviço and pay only agreed hourly or daily wage. Based on the availability and quality of domestic help and the amount of work daily rates can be as low as R$ 40.00 and as high as R$ 80. Full time help should get paid at least 1½ minimum wage plus transportation and other expenses.
What Payroll taxes should I pay if I employ workers in Brazil?
Social Security tax: 20 percent
Other Fees: 2.0 percent to 6.0 percent
Labor Accident Insurance: 1.0 percent to 3.0 percent
Severance Pay Indemnity Fund (FGTS): 8 percent (deposited monthly to employee's escrow account).
How much do I tip Porteiro?
Tipping is not big in Brazil. Though some places that deal almost exclusively with foreigners became tip oriented, the majority of establishments are not. Restaurants add 10 percent service fee to the check (BTW, it doesn't necessarily mean that the waiter gets it), hotel bell boys (men) would appreciate a Real or two, the taxists are mostly getting by on rounding up the fare. But what do we do with porteiros (doormen)?
Porteiros are sometimes tipped small amounts (R$2-R$5) when they provide occasional assistance services, such as helping with shopping bags or other courtesy gestures. It is not required and oftentimes a smile and obrigado suffice, but a small tip can go a long way.
What are basic rights granted to workers in Brazil?
Brazilian Labor and Employment Laws are extremely worker friendly. Here are just a few of the guaranteed rights:
1. Wages: Minimal salary is constitutionally guaranteed and is currently set at R$ 540.00* (To have sure the price in American dollars please consider for one American dollar in Brazil R$1.62* ) a month.
This is not a standard values, they may change any time. For an actualized Brazilian minimum salary value, and for the dollar tax rate, please check on Brazilian government web sites.
2. 13th Salary: The 13th salary is equivalent to an additional month's salary paid annually or proportionally to number of months worked in the year.
3. Vacation: Employees are entitled to at least thirty (30) fully paid vacation days after working one year for the same employer if not absent from work for more than five unjustified times during this same period.
4. Maximum Workweek is set at 44 hours with overtime pay required for additional time worked. Overtime pay shall be at least 50 percent more then regular hourly rate
5. Prior notice in case of dismissal: In case the employer wishes to dismiss an employee, he is obliged to give a prior notice of at least thirty days to the worker.
6. Guarantee Fund for Time of Service (FGTS): The government severance employment Fund (FGTS) is the equivalent to 8 percent of the employee's salary, deposited every month by the employer in a blocked FGTS bank account in the name of the employee. In case of dismissal without cause the employer has to pay a 40 percent penalty of the FGTS over the entire amount deposited in the FGTS bank account. Withdrawals, are however, authorized only under circumstances established by law.
What about Christmas presents, bonuses and tips for your building and domestic help?
They are completely at your discretion, with the exception of the Thirteenth Salary.
By Mr. Boris Goldshmit Real Estate Investor in Brazi.,