Real estate ownershipi Planning
According to Law No. 10,257/2001, each municipality has jurisdiction to create its guidelines with regard to land use and parcelling, construction parameters, space occupation, among others. The urbanistic directives of certain municipality are ruled upon by the directive plan. All municipalities must have their own directive plans, which shall be reviewed and updated, at least every 10 years.
Under the provisions of the directive plan, each municipality shall also create its rules on subdivision, use and occupation of the land (LPUOS), which governs the parameters for land parcelling, construction, as well as zoning directives of the municipality, in addition to the works and buildings regulation (COE), that sets forth the rules for constructions in the city.
In this sense, any constructions to be developed in a certain municipality must be approved by the City Hall in accordance with the LPUOS and with the COE and, once concluded, the use and operation of such property is also subject to the provisions of the LPUOS.ii Environment
Environmental liability of individuals and legal entities for actions that damage the environment is set forth in Article 225, Paragraph 3, of the Brazilian Federal Constitution. Non-compliance with environmental rules or an environmental accident may subject the violator to three different levels of environmental liability:
- administrative liability, arising out of the breach of an environmental protection rule, which consists of the imposition of warnings, fines and interdiction, as well as other administrative sanctions provided for in applicable law, by oversight and monitoring bodies;
- criminal liability, which consists of the imposition of sanctions that include loss of liberty and restriction of rights; and
- civil liability, which consists of an obligation to repair or remedy damage to the environment, or to compensate for the damage, in the event that the reparation or remediation is not possible.
Administrative, civil and criminal liabilities are independent and cumulative.
It is also worth mentioning that civil environmental liability does not require evidencing fault; it suffices to evidence the chain of cause and effect between the activity and the damage, irrespective of wrongfulness. Such liability applies not only to environmental damage, but also to any injury caused to third parties affected by the environmental damage, such as employees, service providers, neighbours etc., who may sue the liable party for recovery of health injuries or property damage.iii Tax
Urban properties are subject to the payment of the urban building and land tax, which is assessed and charged by the City Hall of the respective municipality on an annual basis. Rural properties, in their turn, are subject to the payment of the rural land tax, which is assessed and charged by the Federal Revenue Office, also on an annual basis.
In addition, onerous acquisition of real estate is subject to the payment, by purchaser, of the ITBI. In case of donation, the recipient shall pay the gift tax. Finally, it is also worth mentioning that acquisition of real estate is subject to payment of notary and registration fees.iv Finance and security
There are basically two kinds of securities granted over real estate admitted under Brazilian Law: the mortgage and the fiduciary sale.
The mortgage is ruled by the Brazilian Civil Code, and consists of a lien that can be created over certain property by means of execution of a public deed before a notary public and its registration with the appropriate real estate registry. Brazilian law allows for the creation of any number of mortgages over the same property, provided that such liens will have different priority depending on the order of registration in such property's record. The mortgage can only be foreclosed by means of a judicial procedure, which involves sale of the mortgaged property in public auction and, in case the amounts resulting from such sale are not enough to cover the debt, the debtor shall remain personally liable before the creditor.
The fiduciary sale, in its turn, consists of actual transfer of ownership over a relevant property, in a fiduciary manner, for the purposes of securing certain obligations. Fiduciary sale can be created either by means of private or public instrument, and its foreclosure follows an extrajudicial procedure, much faster when compared to the procedure applicable for the mortgage. On the other hand, the biggest downside when it comes to the fiduciary sale is that if in the public auction there are no bids at least equal to the debt amount, property will be definitively conveyed to the creditor, and there is a risk of the debtor being fully released from the debt, depending on the nature of the secured obligation.