On October 8, 2014, the Federal Government enacted Provisional Measure N. 656 ("MP 656"), which, among other provisions, set forth in articles 10 to 17: (i) the effectiveness of real estate transactions over prior legal events, in the absence of registration and annotation of pending lawsuits or other restrictions in the real estate record files of the acquired properties; and (ii) mechanisms for concentrating, in the real estate record files, all information with regard to legal events that can result in the burdening of the real properties.
The purpose of MP 656 is to simplify the procedures in real estate acquisitions, reducing time and costs related to the assessment of risks involved in these transactions.
Notwithstanding, on a first look, such mechanisms set forth in MP 656 with the aim of guaranteeing legal certainty to real estate transactions - even in the event they actually come to practical and economical implementation, which will already be a challenge - do not cover all possible encumbrances with respect to the real property, its owners and, especially, its antecessors, so that other circumstances not contemplated by MP 656 may motivate further discussion.
The provisions on the aforementioned articles of MP 656 will enter into force thirty days after its enactment, and all registries and annotations in real estate record files made prior to MP 656 shall be adjusted to its terms within two years after the date it enters into force.
Primarily, until the complete implementation of MP 656 and the confirmation of its actual benefits, it is advisable that potential buyers keep taking all customary precautions in the context of real estate transactions.
Attorneys of the Real Estate practice