Legal Aspects of Acquiring Real Estate in Brazil
Brazil is internationally known for its natural beauty, beaches, nice weather, carnival, music and culture. But now, it has become one of the most wanted countries for foreigners looking to acquire a second home, to live or retire, and also for people just looking to investing in real estate due to the reasons set above, along with the low value of its currency and very cheap real estate market.
Defining moments and timing are always the catalyst for any real estate opportunity and the right moment for investing in real estate in Brazil is now. Inflation is at an all time low and the government of Brazil is encouraging foreign direct investment.
Investing in real estate in Brazil is as safe and easy as in any modern country like the US or Europe. All property sales are titled and foreign investors receive the same investment and possession rights as Brazilians.
First thing a foreigner needs to do, is to apply for a CPF number. CPF stands for Cadastro de Pessoa Fisica, which is, in rough terms, the Brazilian version of the American Social Security. Only with this document you will be able to purchase real estate, open a bank account (visa restrictions apply), etc. That can be done by an attorney or personally throughout the Brazilian Embassies and Consulates spread all around the word.
The second step is to procure reliable professionals to assist you. The word reliable I mean, experienced, and most importantly, licensed real estate agents and attorneys. It is never recommended to purchase real estate without the assistance of an experienced professional. In Brazil specifically, due to the innumerable searches and certidões in various courthouses and cartórios one must have in order to verify the authenticity and security of the deal, along with the legal analysis of all these documents it is literally impossible and rarely seem a do-it-yourselfer be able to fulfill all of these obligations and procedures properly.
Also, special attention should be given to the purchase and sale contract because it must be done in accordance to federal, state and municipal Laws and they do vary from one location to another. Another aspect is the registration of this contract. Some crooked sellers may sell the property many times if the contract is not registered in the proper cartório, leaving buyers with a complex lawsuit in their hands.
When purchasing real estate in Brazil the two most important things to do are to hire an experienced attorney to represent you during the entire transaction and purchase title insurance. Homeowners, investors and lenders in the United States have been using title insurance for decades. No one would even think of entering into a major real estate transaction without it.
Caribbean and Latin American homeowners, investors, and lenders have historically relied on an opinion letter from an attorney as their safeguard against unforeseen problems stemming from a property purchase. When purchasing or providing financing for any property in Brazil, there is always the risk of related title defects. These defects could include survey errors, title flaws, fraud, forgery, undisclosed liens and encumbrances, or a host of other problems. Attorneys identify risks when researching title and its ownership, but client must decide whether or not to accept the risks of unforeseen circumstances. If by chance the attorney misses something or could not foresee a hidden defect, a buyer could face substantial losses or damages. Title insurance can insure over defects, thus eliminating, completely, any risk for a buyer. Most importantly, in both cases, these services are not expensive at all.
Assuming that the buyer hired a qualified attorney and purchase title insurance for the property, there are no further worries and buyer should be able to take advantage of the joys of living in Brazil with peace of mind.
Nevertheless, just like in any other part of the world, after the purchase the new buyer will be responsible for paying property taxes annually. In Brazil, however, they are very cheap; usually go from 0.2% to 2% of the assessed value, not market value. But the new owner should make sure that it is paid every year to avoid any legal actions by the government. The property tax bills are usually sent in the beginning of each year.
In conclusion, if a foreigner, with the assistance of experienced professionals, follows the proper procedures to purchase real estate in accordance to the Law, it is very unlikely he or she will suffer any type headaches during or after the purchase process.
I hope to have been able to advise prospective buyers of the dangers, precautions and solutions one must have when purchasing real estate in Brazil. Should you have any questions, related to this matter or any other legal questions, please feel free to contact me directly at:
Jose C. Santiago
Licensed Attorney - Brazil
Phone: (55-11)9348-5729 - São Paulo, Brazil
|This message has been edited by yachtmarine from IP address 184.108.40.206 on Mar 19, 2006 12:43 PM|