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Rights and registration

Rights

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).

Registration

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.

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