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How to Buy Real Estate Properties in Brazil

How to Buy Properties in Brazil

Buying real estate in Brazil may be one of the best business opportunities nowadays. After a strong economic boom, Brazil has been experiencing real estate prices that represent an opportunity to buyers.

Investors from many countries are taking advantage by buying both residential and commercial properties in Brazil. If you are still considering the pros and cons of buying real estate in Brazil, you may want to check some of the main reasons to buy real estate in Brazil and where to find real estate to buy in Brazil.

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+55-11-4349-1915 Brazil
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This material is intended  for general information purposes only and does not constitute legal advice.  For legal issues that arise, the reader should consult legal counsel. You should not act or rely on information at this web site without first seeking the advice of an attorney.  The determination of whether you need legal services and your choice of a lawyer are very important matters that should not be based on web sites or advertisements.

1. Do It Yourself or Hire a Lawyer

It usually comes down to how familiar you are with Brazil and how much you are paying for your property. People with solid connections with locals may rely on trustworthy realtors to help with some of the acquisition steps. This may be enough for smaller acquisitions such as lots in the coastal areas of Brazil. Investors who don't have such networking and/or are buying higher-amount properties such as a condo in Sao Paulo should retain a lawyer.

A lawyer may assist with specific parts or the totality of a transaction . For a lawyer to review the Purchase and Sale Contract and advise on the main aspects of your purchase may cost as little as USD 1,000. On the other hand, a lawyer retained to handle the entire purchase process on your behalf (e.g.: even attending the closing on your behalf) will usually cost you from 4 % to 5% of the property value.

Purchase from major developers in Brazil could also require less lawyer support since they are usually more established than individual sellers thus resulting in less risk. Purchase from private sellers, on the other hand, represent more risk and justify more money spent on legal services.

2. Check Property Records

Once you have chosen your target property, you should obtain a copy of the property deed ("escritura"). The deed should have an exact description of the property, ownership, and if any major problems (e.g.: liens, usufruto, encumbrances, or disputes) are attached to the property.

A clean deed should show no major issues, be registered on the name of the seller, and issued recently. You should avoid purchasing properties under probates, divorcing couples, or any other complex situation. 

Although some sellers will offer to give you a copy of the deed, we recommend that you obtain a copy of the deed directly from the registration office in charge of the target real estate. This will assure you are getting an authentic and up to date version of the deed. Curious to see how a Brazilian deed look like? Take a peek at an actual deed. More...

3. Draft Purchase & Sale Agreement

The Purchase & Sale Agreement document addresses not only price, terms of sale, but also the timeline for the transactions and allocation of obligation and right to the parties. Contracts will almost always be drafted in Portuguese and local currency although they can be translated so you understand the content.

Among other concerns, stipulate at least 30 days between the signature of the agreement and the closing to allow enough time for you to have all the closing-related tasks completed. Never allow a realtor to rush you. Realtors will usually suggest that you may "lose the opportunity" if you don't act immediately. The truth, however, is that the sooner you provide payment the sooner the realtors will collect their commission. More...

4. Provide a Downpayment

In Brazil, it is customary to provide a downpayment as soon as the Draft Purchase & Sale Agreement is signed. The amount to be provided vary greatly. Amounts going from 10% to 20% are mostly common, although other amounts may be negotiated by the parts.

In any circumstance, we strongly advise against full payment at this stage. Most of the balance should be paid at closing, which is the moment when the property actually change hands. If you pay in full early on or even if you provide a large payment, you will lose most of your leverage to make the seller to attend the formal closing at the registration office. Remember that some sellers (unfortunately) will think of you as a "nuisance" after they have your money in your pockets.

Also, holding most of the payment until the closing will be the most effective way to reduce the purchase risks. A lot of things may happen between signing the contract and the property registration. Therefore, the less money you have on the table, the less risk you run. More...

5. Send Money to Brazil

For a Brazilian seller to receive a bank transfer from abroad, the Brazil Central Bank must authorize the transaction. The amount being sent must match exactly the amount shown in the signed contract. It is also necessary for the seller to "open an exchange account" with their bank. This may be a turnoff for some sellers, although many individual sellers will learn about that only after they already signed the Purchase and Sale Agreement with you. More...

6. Obtain a Brazilian Tax ID "CPF"

The CPF Tax ID card is one of the most important documents a person has in Brazil as it is used by both private and government entities to identify citizens.

CPF stands for Register of Individual Taxpayers (Cadastro de Pessoa Física). Each CPF represents a unique number stored and validated by the Brazilian Federal Revenue. A card is usually issued along the number upon application. You must have a CPF for purchasing a real estate property in Brazil. You also must have it for many other purposes such as opening a bank account or filing your taxes. More...

7. Obtain Certificates for Property and Seller

Clearance certificates must be obtained regarding both the property and the seller. The registration office will require some of such certificates to be presented during the closing. So, in addition to show that many of the potential legal issues don't exist (e.g.: unpaid taxes, labor disputes, etc.) such certificates are also a formal requirement for the closing.

When we conduct our due diligence procedure, we obtain and assess more certificates than the minimum required by the registration office. We do so to cover more potential issues that may exist in addition to the more basic ones. More on certificates on the seller and certificates on the property.

8. Prepare for Closing

Once you have signed the contract, clock starts to tick. Sellers will usually add to the contract penalties in case you are not ready for the closing by a certain deadline. 

A checklist with all the items required for the closing may help you and your lawyer control everything that should be ready by the closing date. At this stage, the realtor supporting the seller will usually coordinate with the registration office to obtain the estimates for Taxes and Registration costs and also a target date for the closing.

You can learn more about the preparation for the closing and see a sample Closing Checklist to use when buying a property in Brazil. More...

9. Have Documents Translated by a Sworn Translator

For documents to be acceptable in Brazil they must have been sworn translated into Portuguese. Sworn translations are provided exclusively by Brazilian sworn translators registered with the State Commerce Boards.

Do not buy translation services from companies outside of Brazil since they are unable to provide sworn translations in Brazil unless they are reselling the services of a Brazilian sworn translator. Note that sworn translator is not the same thing as what is considered a "certified translation" in the US or UK. These are two different things. List of Sworn Translators in Brazil. More...

10. Obtain a POA - Power of Attorney Valid in Brazil

A POA is needed if you want your lawyer or someone of your network to participate in the closing on your behalf. The registration is a formal procedure that is usually done in the same registration office in charge of the real estate.

For a POA to be valid in Brazil, it must be a "Public POA". Public POAs may be done in Brazil, or in a Brazilian consulate or embassy as long as the grantor is a Brazilian citizen. For foreign citizens, whenever doing a POA abroad, some very specific steps in their home countries for a POA to be acceptable by the registration office in Brazi. More...

11. Pay Registration & Taxes

Before the closing can take place you will have to pay registration and taxes. These are usually calculated by the registration offices in charge of the closing. Taxes are usually calculated by the registration office in charge of the "Escritura" (first part of the closing) while the recording fee is calculated by the second registration office in charge of the "Registro do Imóvel". In addition to taxes, there are fees charged by the registration offices for their services. A ballpark estimate of registration and taxes is 5% of the real estate value.

Whenever paying such fees and taxes, make sure you are actually paying the right parties. Taxes are usually paid to the city where the property is located and the fees to the registration offices providing the services to you. More...

12. Attend Closing, Pay Balance, and Record Deed

The closing will usually take place at the registration office in charge of the "Escritura". For the closing to happen, the fees and taxes will have to be paid and confirmed previously and all the required clearance certificates filed with the registration office.

Some registration offices will read aloud the "Escritura" document and then ask for the parties to sign it. In our practice, it is only at this stage that we release the payment to the seller. More...

Main Steps to Buy Property in Brazil

Want to know about the above steps in details? Check individual pages with details for each of these steps or check our Youtube channel for videos explaining them.

Free Quote
info@oliveiralawyers.com
+55-11-4349-1915 Brazil
+1-212-300-7174 USA
Get a quote today!

General Information Purpose Only

This content is intended for general information purposes only and does not constitute legal advice. For legal issues or decisions of any kind, the reader should retain and consult legal counsel. You should not act or rely on information at this web site without first seeking the advice of an attorney. The determination of whether you need legal services and your choice of a lawyer are very important matters that should not be based on web sites or advertisements.