On September 16, the House of Representatives of the Brazilian Congress approved a request to consider legislation on an expedited basis which would ease certain restrictions imposed under existing law on the acquisition and leasing of rural lands by foreign individuals and entities (Law n. 5,709/71, as affected by the Federal Attorney’s Office Opinion issued on August 19, 2010). 

The approval of this request should accelerate the adoption of these proposed changes during this calendar year. If enacted, this legislation will remove the cloud which has existed since 2010 over foreign ownership of rural lands and should result in increased foreign investment in this sector.

The changes most likely to be approved would (i) allow Brazilian companies controlled by foreign individuals and entities to purchase or lease rural lands for a specified finite term without obtaining prior authorization; (ii) allow foreign lenders to secure loans using a Fiduciary Sale (a mortgage alternative currently favored by many Brazilian lenders), provided the lender sells the property to a qualified purchaser within one year after the collateral is foreclosed and title is acquired by such lender; (iii) prohibit certain non-governmental organizations headquartered outside of Brazil or funded by foreign capital, foundations established by foreigners, and foreign sovereign funds from acquiring rural lands; and (iv) prohibit foreigners from leasing rural lands for an indefinite term.

The two primary bills being considered under this expedited request are: (a) Bill of Law No. 2,289, of 2007, presented by Representative Beto Faro (a member of the government’s Workers’ Party), and (b) Bill of Law No. 4,059, of 2012, presented by the Committee of Agriculture, Livestock, Food Supply and Rural Development of the House, which is attached to Bill No. 2,289, of 2007.

The next step for approving this legislation is for the President of the House, Representative Eduardo Cunha (a member of the Brazilian Democratic Movement Party), to either let the bills be analyzed by the special committee created on September 23, 2015, or appoint a reporter representative to present a report on the bills directly to the House Floor. The reporter either on the special committee or on the House Floor will then unify all of the proposed bills into a single bill for approval by the House Floor by a simple majority vote.

Once approved by the House of Representatives, the bill will be sent to the Senate, where it will be analyzed by permanent committees and then presented for approval by the Senate Floor by a simple majority vote. The Senate will be able to approve the bill as presented, make amendments, or reject the bill entirely.

If the Senate approves the House version of the bill, it will be submitted for Presidential sanction or veto. If the President of Brazil sanctions the bill in full or partially, the parts sanctioned will become law.