Legal Aspects of Acquiring Real Estate in Brazil by Foreigners

Brazil is internationally known for its natural beauty, beaches, nice weather, carnival, music and culture. But now, it has become one of the most wanted countries for foreigners looking to acquire a second home, to live or retire, and also for people just looking to investing in real estate due to the reasons set above, along with the low value of its currency and very cheap real estate market.

Defining moments and timing are always the catalyst for any real estate opportunity and the right moment for investing in real estate in Brazil is now. Inflation is at an all time low and the government of Brazil is encouraging foreign direct investment.

Investing in real estate in Brazil is as safe and easy as in any modern country like the US or Europe for example.  All property sales are titled and foreign investors receive the same investment and possession rights as Brazilians (some restrictions apply for beach and rural areas/lots). 

The first thing a foreigner needs to do, is to apply for a CPF number. CPF stands for “Cadastro de Pessoa Fisica”, which is, in rough terms, is the Brazilian version of the American Social Security. Only with this document that you will be able to purchase real estate, open a bank account (visa restrictions apply), etc. That can be done by an attorney in Brazil or personally throughout the Brazilian Embassies and Consulates spread all around the world; but please be advised that the last option usually takes a few months and that there are no guarantees for the issuance of the CPF, whereas the first option, usually takes 48hs and is much safer.

The second step is to procure reliable professionals to assist you, meaning, experienced, and most importantly, licensed real estate agents and attorneys. It is never recommended to purchase real estate without the assistance of experienced professionals, needless to say in a foreign country.

In Brazil specifically, due to the innumerable searches and certificates (“certidões”) in various courthouses and registries (“cartórios”) one must go in order to verify the authenticity and security of the property, along with the legal analysis of all these documents, it is literally impossible for a do-it-yourselfer to fulfill all of these obligations and procedures properly in order to have his or her rights safeguarded.

 Also, special attention should be given to the purchase and sale contract, once it must be done in accordance to federal, state and municipal Laws and they do vary from one location to another. Another aspect is the registration of the contract at the proper registry, in order to avoid multiple sales. Some crooked sellers may sell the property many times if the contract is not registered in the proper “cartório”, leaving the buyer(s) with a complex lawsuit in their hands. Also, there must be a clause in the contract for the registration, so please pay special attention to this, as Brazilian realtors often leave this out.

Very important also is the international money transfer. Due to money laundering regulations, a transfer must follow some rules/laws. For a transfer to be accepted and legal it must be done through “Banco Central do Brasil” and the parties must produce a properly executed and registered contract for purchase and sale with a clause mentioning such transfer pursuant to the “Banco Central” rules for real estate transactions. Please be aware that Brazilian Realtors and Brokers do not know these rules and clauses; please consult with your attorney and have it written in the contract accordingly.

This has also extremely importance when becomes your time to sell your property, either to purchase another one or to take your money back to your home country. If your first transfer did not follow the rules, “Banco Central” will not allow you to transfer this money back to your country, as this could be considered a felony crime named “Evasao de Divisas” and the Brazilian IRS (“Receita Federal”) would, most likely, get involved on it as well and you, definitely, don’t want that to happen.

Basically, when purchasing real estate in Brazil the two most important things are; get professional assistance either from a licensed realtor or broker, and have an attorney do a thoroughly title search. There is always the possibility to purchase title insurance. Homeowners, investors and lenders in the United States have been using title insurance for decades.  No one would even think of entering into a major real estate transaction without it.

Caribbean and Latin American homeowners, investors, and lenders have historically relied on an opinion letter from an attorney as their safeguard against unforeseen problems stemming from a property purchase. When purchasing or providing financing for any property in Brazil, there is always the risk of related title defects.  These defects could include survey errors, title flaws, fraud, forgery, undisclosed liens and encumbrances, or a host of other problems. Attorneys identify risks when researching title and its ownership, but client must decide whether or not to accept the risks of unforeseen circumstances. If by chance the attorney misses something or could not foresee a hidden defect, a buyer could face substantial losses or damages. Title insurance can insure over defects, thus eliminating, completely, any risk for a buyer. Most importantly, in both cases, these services are not expensive at all.

Assuming that the buyer hired a qualified attorney and/or purchase title insurance for the property, there are no further worries and buyer should be able to take advantage of the joys of living in Brazil with peace of mind. 

Nevertheless, after purchase, homeowners still have legal obligations. Just like in any other part of the world, after the purchase the new buyer will be responsible for paying property taxes annually. In Brazil, however, they are quite cheap; usually vary from 0.2% to 2% of the assessed value, not market value. Nonetheless, the new owner should make sure that it is paid every year to avoid any legal actions by the government. The property tax bills are usually sent in the beginning of each year.

For those properties with a homeowners association, the maintenance shall be promptly paid as well, as fines for lack of payment may be up to 20% plus interest on every monthly missed due.

In conclusion, if a foreigner seeks the assistance of experienced professionals, follows the proper procedures to purchase real estate pursuant to the Law, it is very unlikely he or she will suffer any type headaches during or after the purchase process.

For further information or should you have additional questions, feel free to contact me at the numbers below.

Jose C. Santiago

Licensed Attorney - Brazil

Certified Title Attorney - Brazil

Licensed Real Estate Agent – USA

Certified Paralegal - USA