Knowledge of real estate laws in Brazil critical before investing in 'Island of Magic' property

October 25, 2012
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Knowledge of Real Estate Laws

Most of the ink has that been spilled surrounding the Brazilian people and their real estate preferences has been about their emerging role as buyers of American properties.

Brazil's economy is stable, in part due to anticipation surrounding the country's hosting responsibilities for both the 2014 World Cup and the 2016 Olympics. The most affluent Brazilians, many of whom have enjoyed recent financial successes, have flocked to U.S. cities in droves.  The New York Times has reported on the trend twice in the last year, with feature stories about Brazilians purchasing properties in both New York City and Miami.

Law firms in Brazil assist foreigners with real estate transactions

But, simultaneously, foreign buyers of Brazilian properties continue to expand their own investments, even as prices climb considerably. In fact, some, including the Brazilian government agency known as the Institute of Applied Economics Research (IPEA), believe that the Brazilian government has undertaken policies that have produced a real estate bubble. In part because of decreased interest rates and readily available credit, the IPEA study authors estimate that property values have climbed at an unsustainable rate in the last four years - 165 percent in Rio de Janeiro and 132 percent in Sao Paulo.

A lavish city in the southern part of the country, Florianopolis (also known as Floripa and the Island of Magic), is another location where prices have risen, and are likely to continue to do so unabated, for reasons supplementary to the interest rate issue. Prices in Floripa are climbing for two additional reasons explained recently by a local real estate professional.

"Most of Floripa is set on an island which cannot be expanded, so property is a finite resource, a rare commodity," Samantha Gore told Property Wire last week. "Most of the island's luxury homes were bought outright without mortgages, before finance was even available, and vendors have always been able to sit tight until they achieved their full asking price."

Buyers of Floripa properties should keep in mind that, in general, whenever special circumstances surround the sale of a property, such as if it is part of an estate sale or if it has structural issues, a real estate lawyer is more of a necessity than a luxury. This is especially true if buyers are not familiar with local laws.

An experienced Brazilian law firm can act as a local, trusted ally to foreign buyers with real estate interests in Brazil, shielding them from any legal problems regarding the purchase or ownership of properties.

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