TerraLex Cross-Border Real Estate Guide

All real estate in Brazil must be registered before a Real Estate Registry Office under the Enrollment Certificate (“Matrícula”). Each Real Estate Registry Office has jurisdiction over a determined area.

Real estate rights are registered before the Real Estate Registy Office, including: transfer, guarantees (as mortgages), co-ownership, options to purchase, sale and purchase commitments. The lease agreement must be registered to grant to the lessee the continuance of the lease if the property is sold.

• Provide the Tax Payer Registry Number (CPF or CNPJ)
• Provide a prior due diligence regardimh land historic, prior owners, analysis of the Enrollment Certificate, verify liens and encumbrances, analysis of Court certificates.
• Provide a preliminary agreement (Sale and Purchase Commitment) establishing the conditions for the sale.
• Provide a Deed (ex. Sale and Purchase) or agreement to be registered before the Real Estate Registry Office
• Transfer the ownership before the Municipality and others public entities
• Provide the payment of taxes

The following usual structures are used in investing in real estate are (i) Limited liability entities; (ii) Corporations; and (iii) Investment funds.

The “propter rem” obligations, as taxes, condominium expenses, are transferred to the new owner.

In general, tax obligations, condominium expenses, environmental matters.

No.

The acquisition of rural land by foreigners and by foreign-controlled Brazilian companies requests some legal requirements: (i) the area where the rural land is located; (ii) the size of the rural property; (iii) acquisition or lease purposes; and (vi) the authorization of relevant authorities.

If the acquisition involve financing by banks, a private contract shall be registered before the Real Estate Registry Office.

No.

No.

Yes. Only the registry before the Real Estate Registry Office transfers property.

Yes, considering the publicity of the acts.

The main taxes associated with real estate ownership and transfer are:

• Transfer Taxes (ITBI), in general from 2 to 3% of the amount of sale
• Donation tax (ITD), from 4 to 8% of the amount involved
• Property Tax, established by the Municipality
• Income Revenue (capital gains), due to the Seller
• Brokerage fee, usually 6% of the sale price.

The foreign investors have no tax benefits.

IOF tax (Financial Operations Tax), considering the credit operation.

The leases are regulated by Law No. 8.245/91. The commercial leases with a determinate term entitle the tenant to renew the lease for an equal term if the following conditions are met: (i) the agreement is executed in writing and for a determinate term; (ii) the term of the agreement (or the sum of terms) is equivalent to at least 5 years; and (iii) the tenant has been engaged in the same business for a minimum term of 3 years. For the application of renewal right, the tenant shall file a Renewal Claim within 6 months prior to the end of the term of the lease agreement.

The lease agreements for the residential purposes have the term of 30 months.

The tenant may always terminate lease agreements, upon a 30-day prior written notice and payment of the contractual fine. The fine is paid in proportionality to the elapsed period of agreement. The termination of the lease by the landlord is not allowed before the ending of the term, except for specific cases, as the use of the property by the owner.

It is common to include the payment of municipality tax as an obligation of the tenant in the lease agreements.

It is common to include the payment of municipality tax as an obligation of the tenant in the lease agreements.

No.

After 12 months, the rent amount shall be adjusted with the inflation rate established in the lease agreement. After 3 years, it is possible to file the Renewal Claim to re-establish the market value of the rent.

The registry of lease agreement is not mandatory. However, the registry grants the right to the continuance of the lease if the property is sold, in favor of the tenant (if there is this provision in the lease agreement).

Income Tax.

The foreign entity shall be registered with the Taxpayer Registry (CNPJ or CPF).

Yes. For the rural properties it is necessary to obtain the authorization of the relevant authorities.

In 2012, Law N. 8245/91 has modified to rule the built-to-suit agreements. In this case, the tenant may refuse some rights established for the typical lease.

The Law N. 8245/91 defines “locação por temporada” as rental contracts with a maximum duration of 90 days, for purposes such as leisure, study, or health treatments, and sets obligations for both landlords and tenants. According the Court precedents, the condominium can restrict or prohibit short-term rentals in residential buildings.

No.