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Market spotlight

Trends and prospects

What are the current trends in and future prospects for the real estate market (both commercial and residential) in your jurisdiction?

The Brazilian real estate market has experienced significant decreases in sales, prices and the development of commercial and residential projects over the past three years. The factors that have contributed to this scenario include:

  • a severe and prolonged recession;
  • high interest rates;
  • tightening of credit markets;
  • the growth of inventories of repossessed properties and rescinded sales;
  • political uncertainty;
  • diminishing governmental subsidies; and
  • the financial distress of several major real estate developers.

However, there are signs that the market is slowly stabilising. A gradually improving economy and falling interest rates should eventually spur growth, although lingering inventories, high levels of indebtedness and political uncertainty will continue to pose serious obstacles in this regard.

Rights and registration


What types of holding right over real estate are acknowledged by law in your jurisdiction?

The main type of holding right over real estate property is the ownership right, which comprises powers to use, enjoy and dispose of real estate property, as well as to recover it from any party. 

In a situation of co-ownership, each co-owner holds a notional fraction of the property and may:

  • use the real estate in accordance with its purpose;
  • exercise the rights compatible with undivided ownership;
  • claim it from third parties;
  • defend possession; and
  • dispose of or encumber its undivided notional fraction.

The building condominium is a special form of co-ownership of real estate. Each condominium owner holds exclusive property rights relating to a unit in the building (eg, an apartment) and a notional fraction of common-use areas. The condominium is managed according to a condominium agreement.

Fiduciary ownership is a type of ownership right in which the owner provisionally assigns property to a creditor as security. In the event of default, the creditor becomes the sole owner of the real estate by means of an extrajudicial proceeding, but must procure its sale in an auction.

Are rights to land and buildings on the land legally separable?

The ownership of buildings that cannot be moved or extracted without changing their nature or social and economic purpose is legally inseparable from the ownership of the land where such buildings are constructed. Other rights also exist, such as the right of surface, which allows the relevant holder to use or otherwise economically exploit or transfer rights over buildings separately from the land.

Which parties may hold and exercise rights over real estate? Are there restrictions on foreign ownership of property?

Both natural and legal persons may hold and exercise rights over real estate. At present, foreign ownership of rural land is subject to restrictions on the size of property (measured in ‘modules of land for indefinite use’ (MEI), the size of which each city determines for its own territory) and the percentage of city territory represented by foreign-owned land.

Foreign natural persons may freely acquire rural property measuring less than three MEI. If the property comprises between three and 50 MEI, the acquisition must be previously approved by the National Institute of Rural Settlement and Agrarian Reform (INCRA). Congress must authorise the acquisition by a foreign natural person of property measuring over 50 MEI.

Acquisitions of rural property of any size by a foreign legal entity, or a Brazilian legal entity controlled by foreign persons, must be approved by the INCRA. Congress must authorise the acquisition of property measuring more than 100 MEI by a foreign legal entity or a Brazilian legal entity controlled by foreign persons.

A project for the economic exploitation of land must be submitted to the INCRA for the acquisition of rural property:

  • measuring more than 20 MEI by a foreign natural person; and
  • of any size by a foreign legal entity or a Brazilian legal entity controlled by foreign persons.

Regardless of the size of the property:

  • the sum total of rural areas owned by foreign persons and Brazilian legal entities controlled by foreign persons of the same nationality cannot exceed 10% of the total surface of the municipality; and
  • the sum total of rural areas owned by foreign persons and Brazilian legal entities controlled by foreign persons cannot exceed 25% of the total surface area of the city.

Finally, there are restrictions on foreign acquisitions of rural real estate properties located in the ‘boundary zone’, which is defined as territory within 150 kilometres of Brazil’s borders. Such acquisitions are subject to prior National Security Council approval.

At present, Congress is considering enacting changes to the existing law to lift or alter restrictions on the foreign ownership of rural land.

How are rights, encumbrances and other interests over real estate prioritised?

Rights, encumbrances and other interests over real estate are generally prioritised according to the order of submission for registration with the relevant real estate registry office. In certain instances, a claim over real estate which has yet to be submitted for registration may cause other rights submitted for registration while the claim was outstanding to be deemed null and void (eg, in connection with bankruptcy, fraud against foreclosure proceedings and fraud against creditors).


Must real estate rights, interests and transactions be registered in your jurisdiction? What are the legal effects of registration?

Rights and interests over real property must generally be registered with the relevant real estate registry office. Registration is a requisite for creating, modifying and extinguishing most real estate rights and ensuring enforceability against third parties. The main effect of the registration is the publicity of titles and acts, in order to create, assign, extinguish or enforce against third parties in remrights over real estate. Real estate leases, sales and other transactions can be entered into with registration.

What are the procedural and documentary requirements for entry into the national real estate register(s)? Can registration be completed electronically?

There is no national real estate registry. For registration purposes, each city’s territory is attributed to one real estate registry office or, in larger cities, divided into several offices, as defined by the relevant state. Registration involves the submission of physical copies of required documents and cannot be made electronically. Documentary requirements vary according to the type of real estate right and underlying transaction. For the sale of real estate worth 30 minimum wages (R28,110 or less than $9,000) or more, it is necessary to submit:

  • a public deed of purchase and sale;
  • evidence of collection of the tax on transfers of real estate assets;
  • tax clearance certificates;
  • certificates issued by the relevant real estate registry office; and
  • evidence of payment of notary fees.

The deed of purchase and sale will be submitted to the real estate registry office on payment of the registration fees. The real estate registry office will analyse the documents submitted and carry out the registration or return the documents with a letter detailing any pending requirements within 30 days. Similar requirements apply to transactions which may be executed through a private instrument instead of a public deed according to applicable law, such as acquisitions within the real estate financing system and the housing financing system.

What information is recorded in the national real estate register(s) and to what extent is such information publicly available?

No national real estate registry exists. Real estate registry offices organise information on real estate properties under their jurisdiction into individual records. Each record is identified by a number and contains such information as:

  • a description of the real estate, its location and whether it is destined for urban or rural purposes;
  • the existing owner’s identity; and
  • information on all in rem rights relating to the real estate created, modified or extinguished, as well as the identity of the grantor and holder of each such right.

Any party can request a certificate from the relevant real estate registry office and a transcript of information regarding a specific registration is available in the respective record. It is also possible to obtain electronic, non-certified transcripts of records from many real estate registry offices.

Is there a state guarantee of title?

No, there is no estate guarantee of title. Real estate public offices are operated by non-government registrars under a government grant and a certificate from the relevant office is presumed to be truthful for 30 days from the issue date. However, such presumption is not absolute and can be overturned by conclusive documentary evidence to the contrary.

Sale and purchase


How are real estate brokers regulated in your jurisdiction (eg, through caps on commission or disclosure obligations)?

Real estate brokers are regulated by Federal Law 10,406/2002 (the Civil Code) and Federal Law 6,530/1978. ‘Real estate brokerage activity’ is defined as the intermediation of the sale, purchase, exchange or lease of real estate. Brokers’ remuneration is subject to a price table approved by the applicable regional counsel of real estate brokers. Normally, broker fees vary from 4% to 6% of the sale price. There are no disclosure obligations.

Due diligence

What due diligence should be conducted before conclusion of a real estate sale contract?

Before completing a purchase, the potential buyer should analyse:

  • the chain of ownership;
  • registered liens;
  • outstanding taxes and obligations relating to the property or the existing or previous owners which may result in new liens and liabilities;
  • environmental issues;
  • potential restrictions to use or transfer deriving from government authorisations or the lack thereof or from the property’s location; and
  • whether the property’s contours and buildings are in good standing with the relevant real estate registry office.

Due diligence typically involves the analysis of:

  • certificates issued by the relevant real estate registry office and government agencies; 
  • the conclusions of the environmental assessment, where applicable; and
  • information on the property’s characteristics.

Preliminary agreements

Are any preliminary agreements typically entered into before conclusion of a sale contract?

Yes. Parties usually enter into a sale commitment agreement in which they formalise their intention to execute the purchase and sale deed and outline the main terms and conditions of the transaction, including the scope of due diligence. The sale commitment agreement can (but need not) be registered with the relevant real estate registry office, in which case the purchaser may be entitled to obtain a judicial injunction should the seller fail to execute the purchase and sale deed and transfer property as agreed in the sale commitment agreement.


Must sale contracts be concluded in writing? If so, must they be notarised?

Real estate sales must be concluded in writing. A public deed issued before a notary is generally required. If the real estate value is less than 30 times the minimum monthly wage (less than $9,000), the sale agreement may be executed by private instrument and notarised by a notary.

Can sale contracts be concluded electronically?


What provisions are usually included in a sale contract?

The sale contract, which is submitted for registration with the relevant real estate registry office as a condition for the transfer of property, usually includes provisions on, to the extent applicable:

  • the part of the property being transferred from each owner and to each buyer;
  • the sale price, including any:
    • outstanding instalments and applicable interest;
    • charges; and
    • the relevant dates and conditions of payment;
  • delay charges;
  • any security interest created over the property;
  • the time and conditions of the transfer of possession of the real estate; and
  • any conditions under which the sale may be terminated or cancelled.

Representations and warranties, covenants, indemnity, terms and conditions of use and other matters are usually detailed in the sale commitment agreement or other preliminary contract.

Obligations and liabilities

What are the seller’s disclosure obligations and other liabilities, and what are the consequences of breach?

Developers and other companies that offer to sell real estate in the consumer market must disclose sufficient and clear information on the location, size, type, characteristics, costs, taxes, risks and liabilities associated with the transaction.

Sellers generally must provide to the notary public drafting the public deed of purchase and sale:

  • personal identification documents;
  • evidence of payment of the tax on transfers of real estate assets;
  • tax clearance certificates; and
  • certificates issued by the relevant real estate registry office.

The seller must also disclose in the public deed information on any in rem liens and encumbrances and any judicial litigation in which the real estate is involved or which may result in loss of property or the creation of charges over the real estate. The buyer can waive the presentation of certain tax clearance certificates.

Buyers typically request the disclosure of additional information in the context of due diligence, including:

  • lawsuits which may affect the real estate or the buyer; and
  • environmental matters.

What contractual warranties are usually given by the seller?

Contractual warranties usually consist of:

  • the seller’s obligation to indemnify the buyer for damages arising out of incorrect information provided by the seller regarding the characteristics, status and potential use of the real estate;
  • obligations and liabilities relating to the real estate, seller or previous owners which are outstanding before the sale’s completion; and
  • environmental liability derived from actions which occurred before the sale’s completion.

Are there any other obligations on the buyer, aside from paying the purchase price?

The buyer is also responsible for:

  • paying the notary and registration fees, unless otherwise agreed by the parties;
  • paying the real estate transfer tax; and
  • updating the records of tax authorities and public utilities with respect to the owner of the real estate.


What taxes are payable on the sale and purchase of real estate? Are any exemptions available?

The real estate transfer tax (ITBI) is a municipal tax levied on the transfer of real estate property in Brazil. Each municipality sets out the applicable rate, which, at present, varies from 2% to 4%. The municipality of Sao Paulo charges ITBI at 3%. The calculation basis is the greater amount between the transaction value and the reference value arbitrated by the municipality. The buyer is responsible for paying ITBI. The following transactions are exempt from ITBI:

  • the transfer of property as a capital contribution to pay up newly issued shares or quotas of a legal entity, unless real estate activities are such legal entity’s principal source of revenues; and
  • the transfer of property pursuant to a merger, incorporation, split-off or extinction of a legal entity, unless the scope of the buyer’s business consists of the purchase and sale of real estate. 

Such exemptions do not apply if the buyer has significant corporate ownership ties to any party engaged in the sale of real property.

Capital gains tax (CGT) is levied on capital gains realised by the seller. Transactions performed between a non-resident seller and a purchaser (either Brazilian or foreign) involving the acquisition of assets located in Brazil are subject to the purchaser’s withholding of CGT. The capital gain shall be calculated as the positive difference between the sale price and the asset’s acquisition cost. The general CGT rule sets out a rate that varies from 15% to 22.5%, depending on the amount of the gain. The CGT rate is 25% for a non-resident seller domiciled or resident in a jurisdiction deemed to be a tax haven or subject to a privileged tax regime.

If the sale is made by a company domiciled in Brazil, capital gains shall be treated as taxable income for corporate taxation purposes. Taxable income is subject to 25% corporate income tax (IRPJ) and 9% social contribution on profits (CSLL). Companies whose scope of business is to buy and resell real estate and that have elected to have their income taxed on a presumed basis shall pay IRPJ and CSLL at the above rates over presumed income of 8% (for IRPJ) and 12% (for CSLL) of gross revenues from the real estate sale. Companies whose scope of business is to lease real estate and that have elected to have their income taxed on a presumed basis shall pay IRPJ and CSLL over a presumed basis of 32% of gross revenues. Only companies with revenues not exceeding R78 million (approximately $24 million) a year can opt for the presumed basis regime.

Dividends are exempt from Brazilian income tax.

Revenues from real estate sales by a Brazilian company may also be subject to social contributions over gross income (PIS/COFINS), levied at combined rates that vary between 3.65% (cumulative system) and 9.25% (non-cumulative system). The non-cumulative system, which generally applies to companies using the actual basis regime for IRPJ and CSLL, allows for the offsetting of credits generated from several costs, services and goods acquired by the company. PIS/COFINS are not levied on the sale of fixed assets, but are charged over the sale of real estate by companies whose scope of business includes the sale of real estate.

Forex flows involved in a real estate sale will be subject to tax on financial transactions, generally at the rate of 0.38%.

Transfer of title

When does title in the property transfer?

Title transfers on the registration of the real estate sale deed with the competent real estate registry office. The effects of registration retroact to the date on which the deed was submitted for registration.


What is the typical duration of a sale transaction?

The most common range is 30 to 60 days from negotiation of the preliminary agreement and due diligence to registration of the real estate sale deed. The duration may be shorter (eg, in case of a middle market urban residence with a minimal ownership chain and all real estate and clearance certificates readily available) or substantially longer, depending on the characteristics of the property and transaction.



Must a lease agreement be concluded in writing?

No, a lease agreement can be concluded by verbal consent, although that is highly unusual in the case of non-related parties. Verbal urban real estate leases are presumed to have an indefinite term, meaning that the landlord may terminate the lease at any time by giving 30-day notice to vacate the property. Rural lease agreements entered into verbally are deemed to include certain mandatory provisions on lease term, renewal, termination, pricing, indemnities and other matters.

Are there any regulations setting out mandatory or prohibited provisions in lease agreements?

Urban real estate lease agreements cannot contain provisions that:

  • link the rent to a foreign currency or the minimum wage;
  • require automatic review of the rent:
    • more frequently than on a yearly basis;
    • by criteria other than adjustment for inflation; or
    • to reflect changes in costs;
  • force the lessee to grant more than one type of collateral for the same lease;
  • otherwise conflict with mandatory rights conferred to the parties under applicable law, such as the lessee’s pre-emptive right to match the terms of any offer for purchase of the property.

Rural real estate leases are more tightly regulated and must observe several prohibitions and mandatory provisions regarding:

  • the lease term;
  • renewal;
  • termination;
  • pricing;
  • indemnities;
  • the lessee’s pre-emptive right to match the terms of any offer to purchase the property; and
  • other matters.

What provisions are typically included in lease agreements?

Provisions included in lease agreements typically concern, among other things:

  • the description of the real estate;
  • the lease term;
  • the value of the rent and mechanisms for its adjustment over time;
  • guarantees;
  • rights and obligations in connection with improvements made to the real estate;
  • terms and conditions for the transfer of possession of the property on beginning and terminating the lease;
  • the buyer’s responsibility for maintenance costs;
  • the lessor’s representations and warranties regarding ownership and undisturbed possession of the property;
  • the enforceability of the lease against third-party buyers (provided that the lease agreement has a fixed term and is registered with the relevant real estate registry office); and
  • the right of first refusal over the sale of the real estate.

What are the standard forms of lease agreement used in your jurisdiction?

Lease agreements are freely negotiated and there is no standard form.

Length of term

Are there any regulations on minimum and maximum terms of leases?

There is no minimum or maximum term for the lease of urban real estate. In order to qualify as a seasonal lease, the term cannot exceed 90 days. Rural real estate leases must observe the following minimum terms:

  • three years, if activities developed in the property comprise the cultivation of temporary crops or small or medium-scale livestock farming;
  • five years, if activities comprise the cultivation of permanent crops or large-scale livestock farming for raising, reproducing, fattening or obtaining raw materials of animal origin; and
  • seven years, in the case of forestry exploitation activities.

Are long-term tenants accorded any special rights as to extension or renewal of leases?

Tenants of commercial lease agreements are entitled to demand extensions of the lease for successive periods after the initial term by means of a judicial proceeding if the following conditions are fulfilled:

  • the original lease agreement has been executed in writing and has a fixed term;
  • the original term of the lease or the sum of uninterrupted periods of lease is at least five years; and
  • the tenant has been carrying out the same line of business in the real estate for at last three uninterrupted years.


What regulations (if any) govern rent increases?

There is no minimum or maximum limit on increases. Rent can be increased during the lease term by mutual agreement of the parties or in the context of negotiations for renewal of the lease term. In leases with a term of one year or more, the parties may agree that rent will be automatically adjusted for inflation, but no more than once a year. If the rent has not been renegotiated or reviewed for at least three years, each party will be entitled to file for judicial review to adjust the lease in accordance with market prices.

What regulations (if any) govern rent security deposits?

Bank deposits created to secure rent payments cannot exceed the equivalent of three months' rent. They must be deposited in a savings account and the respective earnings will revert to the tenant.

Can the tenant withhold rent payments on any legal grounds?

The tenant has legal grounds to withhold rent payments to offset expenses with certain improvements in the real estate or to offset due and payable obligations for a certain sum by the landlord to the tenant. The tenant can waive such offsetting rights in the lease agreement.


Under what circumstances is sub-letting typically allowed?

Sub-letting is generally allowed, unless the lease agreement provides otherwise.

Obligations and liabilities

What are the general obligations and liabilities of the landlord in respect of the property and what are the consequences of breach?

A landlord’s obligations include:

  • conferring and, throughout the lease term, guaranteeing undisturbed possession of the real estate to the tenant;
  • providing necessary maintenance and reforms; and
  • paying extraordinary condominium fees.

The landlord is also responsible for paying taxes levied over the real estate and insurance against fire, unless otherwise agreed by the parties. In case of failure to comply:

  • the landlord:
    • will be liable for damages; and
    • must pay any penalties set out in the lease agreement; and
  • the tenant may have the right to terminate the agreement.

What are the general obligations and liabilities of the tenant in respect of the property and what are the consequences of breach?

A tenant’s obligations include:

  • paying the rent;
  • using the real estate as agreed in the lease agreement; and
  • returning the real estate to the landlord after the lease’s termination in the same condition in which it was received. 

In case of failure to comply:

  • the tenant:
    • will be liable for damages; and
    • must pay any penalties set out in the lease agreement; and
  • the landlord may have the right to terminate the agreement.


Are any taxes payable on rental income? If so, are any exemptions available?

Generally, rental income is subject to income tax as follows:

  • Individuals domiciled in Brazil pay income tax at rates varying up to 27.5%, according to the amount of rental income.
  • Companies domiciled in Brazil pay corporate income tax and social contribution on profits at an aggregate rate of 34% over a basis amount determined depending on whether the company is subject to the actual or presumed tax basis.
  • Non-domiciled individuals and companies are subject to the payment source’s withholding of income tax at 15% (or 25% if the landlord is domiciled or resident in a jurisdiction deemed to be a tax haven or subject to a privileged tax regime).

Companies domiciled in Brazil also pay social contributions over gross revenues from rental payments at aggregate rates of 3.65% or 9.25%, depending on whether the company is subject to the cumulative or non-cumulative regime, respectively.


Are the landlord and tenant bound by any insurance requirements?

Landlords are responsible for taking out fire insurance as required by regulations applicable to the real estate. The parties can agree that such insurance must be contracted by the tenant.

Termination and eviction

What rules and procedures govern termination of the lease by the landlord and the tenant’s eviction from the property?

A landlord may generally file a lawsuit for judicial declaration of the lease’s termination and the tenant’s eviction in case of a contractual breach or violation of the applicable law. The landlord may request termination of the lease by providing 30 days’ notice to the tenant. The landlord may generally file for the tenant’s eviction if the tenant fails to vacate the real estate on termination of the lease.

On tendering a court guarantee in an amount equal to three times the monthly rent, the landlord can ask for injunctive relief for eviction in certain cases, such as if the tenant fails to pay rent and the landlord cannot recover the amount using the collateral provided by tenant. In such case, the tenant may avoid eviction by paying the outstanding amount within 15 days from the date on which it is notified of the injunction.

The tenant is entitled to defend itself against eviction by submitting counterclaims, appeals or resorting to other judicial remedies. In the absence of injunctive relief, eviction proceedings can last for over one year.

Schools, hospitals, public administration facilities, official sanitary facilities and nursing homes benefit from certain limitations on eviction.


Finance providers

What are the typical providers of real estate financing in your jurisdiction? Are there any restrictions on who may provide financing?

Local commercial banks and other financial institutions authorised by the Central Bank – such as government savings banks, real estate credit companies, savings and loans associations and mortgage companies – are the main providers of real estate financing, which for the most part relies on financial institutions’ access to incentivised or subsidised funding from the Brazilian System of Saving and Loans and the Guarantee Fund for the Length of Service. Certain transactions are financed through securitisation in domestic capital markets, with the issue of real estate receivables certificates. Generally, any person can finance a real estate transaction, but there are limitations on interest rates and other terms and conditions that can apply to transactions with parties not recognised as Central Bank-authorised financial institutions. Only Central Bank-authorised financial institutions can provide finance on a regular, ongoing basis and impose rates and other conditions prevailing in the banking market.

Financing structures

What are the most common structures used to secure real estate financing and how are these security interests perfected?

The most common structures used to secure real estate financing are:

  • personal guarantees – perfection involves registration of the agreement in which the guarantee is provided (which can be either the financing agreement or a separate instrument) with the registry of titles and deeds;
  • mortgages – a mortgage agreement must be executed in the form of a public deed before a notary public by the property owner and the creditor and subsequently registered with the real estate registry service;
  • fiduciary assignments of real estate – a form of temporary transfer of ownership for security purposes while the secured obligations are outstanding. The security agreement can be executed as a private instrument or public deed and must then be registered with the real estate registry office;
  • fiduciary assignments of receivables – perfection involves registration of the security agreement, which must be registered with the registry of titles and deeds;
  • pledges or fiduciary assignments of shares – perfection involves registration of the security agreement with the registry of titles and deeds and annotation of the security in the company’s share registry book (if the company is organised as a corporation) or with the board of trade (if the company is organised as a limited liability company).

What covenants are typically made in financing agreements?

Covenants vary from project to project, depending on the type of real estate project being developed, the parties involved and the risk profile. Financing agreements commonly include covenants on:

  • the use of loan proceeds;
  • the perfection of security interests;
  • negative covenants on the creation of liens or encumbrances over the real estate;
  • insurance;
  • government licences and authorisations;
  • conformity with tax, labour and environmental laws; and
  • anti-money laundering, anti-corruption and other legal compliance matters.

Enforcement of security

How are security interests enforced in the event of default?

Enforcement proceedings regarding security vary according to the type of security and applicable legislation.

Mortgages and pledges are often enforced by means of a judicial proceeding that results in the forced sale of the good offered as collateral. Conversely, fiduciary assignments of real estate have a faster proceeding: in the event of default, the security taker becomes the sole owner of the real estate by means of an extrajudicial proceeding and must then carry out an auction of the real estate. Fiduciary assignments of receivables are also enforced through an extrajudicial proceeding, which results in the use of the receivables in the payment of the debt.

The proceedings resulting from the foreclosure of the security that remains after the payment of the debts must be returned to the borrower.

What is the typical timeframe for the enforcement of security?

The timeframe for the enforcement of security interests varies according to the applicable enforcement proceeding. Extrajudicial proceedings tend to have a shorter timeframe for enforcement of the security and payment of the debt than judicial proceedings, the timeframe for which often reaches several months or even years.


Investment climate

What is the general climate of real estate investment in your jurisdiction?

Real estate prices in Brazil witnessed a strong appreciation between 2005 and 2014, supported by high rates of domestic development growth and the expansion of real estate credit.

However, for the past three years – due to low domestic development growth, high rates of unemployment, default, inflation and interest, as well as political uncertainty – real estate prices are starting to depreciate in order to accommodate the low demand.

Development in the Brazilian construction sector has also slowed in recent years, reducing new releases and increasing efforts to sell accumulated stocks. It also experienced reduced expenses for cash management improvement, as many companies in the sector suffered from debt default and an inability to perform financial obligations and were forced to discuss debt reorganisation in a judicial environment.

Despite the existing crisis in the Brazilian construction sector, the real estate market still has room for significant growth and may be an attractive investment as the country’s political and economic situation stabilises and levels of domestic consumption increase.


Who are the most common investors in real estate?

The most common investors in real estate are individual owners and investment funds, including:

  • high-net-worth investors;
  • pension funds;
  • corporate and institutional owners;
  • real estate investment funds;
  • private equity funds; and
  • all types of foreign investor.

Are there any restrictions on foreign investment in real estate?

There is no restriction on foreign investment in real estate in Brazil, which may occur through investment vehicles or directly by the foreign investor. The only exception is the investment in rural real estate, which requires special government authorisation for foreign investors, including Brazilian entities with foreign equity, according to the area of the property. Further, there are restrictions regarding the acquisition of rural properties located in the ‘boundary zone’, which is defined as territory within 150 kilometres of Brazil’s borders.

In the case of foreign investment through investment vehicles or financial instruments, such investments are subject to prior registration with the Central Bank, which is responsible for regulating and controlling foreign investment in Brazil.

Investment structures

What structures are typically used to invest in real estate and what are the advantages and disadvantages of each (including tax implications)?

The most common real estate ownership structure is holding interests in private limited liability entities, rather than directly owning the title to the real estate. Such entities can directly acquire real estate property and profit by selling or leasing it in the market. Under this structure, the investor is not liable for the title-holding entity’s debts or liabilities. The investor may profit in such a structure by:

  • selling the interest in such entities in the private market, subject to 15% or 25% income tax, depending on the investor’s origin country; or
  • receiving dividends distributed by these entities, free of income tax, but subject to the appropriate register before the Central Bank of the funds remitted to the foreign investor by the invested entity.

Another common investment structure for real estate is a real estate investment fund (REIF). The organisation of an REIF and placement of its quotas is regulated by the Security Exchange Commission (CVM). Rental income and proceeds from real estate sales received by the REIF are exempt from taxation. The inflow of funds from foreign investors into an REIF is effectively free of tax on financial transactions, and income distributed by the REIF to its foreign investors is free from income tax (Article 95, Normative Instruction RFB 1585). However, an REIF is more heavily regulated and has higher set-up and maintenance costs than a limited liability company and its quotas can be transferred only through organised over-the-counter or exchange markets. 

Foreign investors may also invest in securities specifically designed to represent real estate credits. Real estate receivables certificates (CRI) are certificates backed on real estate credit, with receivables flows based on existing payment obligations, mostly secured by real estate properties. Real Estate Finance Notes (LCI) represent credits from real estate financing, usually secured by mortgages or real estate fiduciary assignments. Foreign investment in CRIs and LCIs is subject to registration before the Central Bank and is exempt from income tax (Articles 85, Paragraph 4 and 88, Normative Instruction RFB 1585).

Planning and environmental issues


Which government authorities regulate planning and zoning for real estate development and use in your jurisdiction and what is the extent of their powers?

Federal Law 10,257/2001 provides general guidelines for urban real estate development and zoning. Municipalities have powers to structure development and zoning plans for their respective territories and approve specific projects, observing state and federal regulations on matters such as the environment and land parcelling.

What are the eligibility, procedural and documentary requirements to obtain planning permission?

Eligibility, procedural and documentary requirements may vary greatly depending on the project. Among other requirements, a developer generally must submit:

  • documents relating to the ownership of the real estate;
  • evidence of payment of the application fees; and
  • technical documents relating to the project.

Can planning decisions be appealed? If so, what is the appeal procedure?

Planning decisions can be appealed:

  • at the administrative level, before an administrative body with powers to review the decision (which may vary from city to city); and
  • at the judicial level before the courts.

What are the consequences of failure to comply with planning decisions or regulations?

Penalties may include:

  • warnings;
  • fines;
  • the suspension of activities; and
  • the revocation of authorisation to develop the project.

What regime governs the protection and development of historic and cultural buildings?

The protection and development of historic and cultural buildings is enshrined in the Constitution and is regulated by federal, state and municipal authorities. Historic or cultural interest status may be granted at the initiative of the site’s owner or the government, through administrative proceedings in which the owner has a right of defence.

Government expropriation

What regime applies to government expropriation of real estate?

The government may expropriate real estate for public utility purposes or as a penalty for non-compliance with the property’s social function, mainly due to the property’s underuse. Expropriation occurs through a judicial proceeding, in which the owner has full rights of defence.

What is the required notice period for expropriation and how is compensation calculated?

Expropriation occurs only by way of a court decision in a judicial proceeding, in which the owner has full rights of defence. It can take months or years before possession is transferred to the government. Compensation is decided by the court, based on the property’s market value, which can be substantiated by an expert report. Dispute over the price may continue in the courts long after the owner loses possession of the property.

Environmental issues

What environmental certifications are required for the development of real estate and how are they obtained?

Generally, the main environmental licences required are:

  • a preliminary permit, issued on confirmation of the project’s social and environmental feasibility;
  • an installation permit, which authorises the developer to begin construction according to the project approved by the environmental agency; and
  • an operation permit, which authorises the developer to operate the building. 

Real estate projects that are deemed to pose no significant pollution risk, as determined by the competent environmental agency, are not subject to the operation permit and the relevant environmental assessment may be completed jointly with the incorporation work in such cases. Other environmental licences may be required, depending on the project’s features and location. For example, specific authorisations are required for:

  • catching water resources and wildlife;
  • deforestation; and
  • handling hazardous materials.

Permits can be issued by city, state or federal environmental agencies, depending on the type of project and whether its environmental impact is limited to the territory of a single city or will affect more than one city or state. The entrepreneur applying for the permit must provide the competent environmental agency with documents evidencing possession of the relevant real estate and environmental impact assessment studies, among other documents.

What environmental disclosure obligations apply to real estate sales?

The seller must disclose the information reasonably required by the buyer to assess possible liabilities in connection with environmental damages relating to the real estate (eg, as a result of soil or water contamination or the illegal destruction of native forests). For such purposes, the buyer can require the seller’s clearance certificates. In addition, the seller is subject to the general good conduct standards, such as good faith, as provided for in Federal Law 10,406/2002 (the Civil Code). Failure to comply may result in the buyer challenging the transaction in court.

What rules and procedures govern environmental clean-up of property? Which parties are responsible for clean-up and what is the extent of their liability?

Federal Law 6,938/1981 and Federal Law 12,651/2012 provide that the owner of real estate, its possessor and any person taking part in polluting activities are responsible for environmental damages that occur, on an objective, joint, several and unlimited basis and irrespective of wilful misconduct, fault or negligence. An owner that is found liable for environmental damages that it did not cause will have recourse against the actual polluter.

Are there any regulations or incentive schemes in place to promote energy efficiency and emissions reductions in buildings?

Regulations establishing energy efficiency labelling for public buildings exist. Buildings may benefit from renewable energy incentive schemes that involve the purchase of renewable energy and distributed energy.