Buying real estate in Brazil is an extremely attractive proposition given the strength of this emerging market. There are numerous indicators pointing to Brazil as a target for foreign investment and in particular investment in the real estate sector. However, when purchasing real estate in a foreign country such as Brazil it is important that you are aware of the buyer process and in particular the Brazilian legal system. Under Brazilian law a foreigner may purchase real estate within Brazil so long as they respect the laws surrounding real estate investment. Under Brazilian law foreigners are subject to the same laws as Brazilian nationals in relation to real estate ownership. Whilst it is obvious that Brazil intends to attract foreign investors its legal system is extremely bureaucratic and cumbersome. For this reason when investing in Brazil it is essential that as well as using the services of an experienced a Brazilian lawyer that you also understand the overall process and more importantly the potential risks within the Brazilian legal system. If we use the example of a foreigner purchasing and off plan apartment in Fortaleza, we will examine the key steps the buyer will pass through with his Fortaleza lawyer.
Firstly a word of caution. At Investment Services Brazil we have seen several cases of Brazilian lawyers carrying out less than effective for due diligence. This results in the client entering a possible ownership dispute or potentially been the subject of fraud, a crime that is certainly extremely prevalent within Brazil. For this reason the most important first stage of purchasing the apartment in Fortaleza is to select a lawyer (or Advogado) carefully.
Once the purchaser has decided on the apartment they will enter into a contractual sales agreement with the vendor (contratocompra e venda). As with most countries this contract binds both the seller and the purchaser to the sale. It is at the stage that the Fortaleza Advogado would carry out due diligence on the property. Depending on the property type there are numerous due diligence checks that we will cover as the subject of another blog.
Once due diligence is complete the next stage of the sale is to arrange transfer of the property into the purchaser's name. This will include registering a transfer of ownership document with the town hall and updating the master ownership records for the property. At this stage several taxes and notary fees must also be paid by the purchaser. The Fortaleza lawyer who will oversee and administer this entire process on behalf of the real estate investor. Once taxes have been paid and the master records updated, a title document is issued to the buyer. At this stage the property is legally owned by the purchaser. In Brazil law is more ambiguous than developed countries and as such recovering from any legal negligence is extremely slow and difficult. For this reason at Investment Services Brazil we emphasize very strongly the need for precise and thorough due diligence.