[BUYING AND SELLING REAL ESTATE IN BRAZIL]
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to the formalities to be complied with prior to the acquisition, among which, notably, due diligence. ✓ Property legal due diligence. It is highly recommended that a legal due diligence on the property is conducted by a lawyer appointed by the purchaser, which would include a detailed audit of the rights of the seller and his/her predecessors, as well as research on any encumbrances that may be registered over the property (mortgages, claims, etc.). The Brazilian Notaries do not have the authority to conduct a legal due diligence, and the certificates and documents required for signing the deed of sale are not the same as the documentation necessary for the audit. Despite this, it is important to note that under the Law any claims, encumbrances or liens (with some exceptions) will impact the sale of a real property only if they have been duly registered in the property ownership records at the relevant Real Estate Registry Office. The ownership record, essential for executing the real property sale deed, must include these details. However, given that the law exempts some situations and is relatively recent, conducting a legal due diligence remains highly recommended. ✓ Technical (e.g. engineering, geological or archeological) and environmental due diligence. It would also be recommended, depending on the status of the property, its historical data or the prior (or future) use of the property. ✓ Execution of the purchase deed before a Notary Public. In Brazil, the acquisition of any real estate property occurs solely by virtue of a notarial deed (save for certain exemptions). The Notary Public
is usually chosen by the purchaser, who also pays the notary fees. Both the seller and the purchaser may (i) appear in person before the notary to execute the deed or appoint attorneys-in-fact to do so in their name and on their behalf by virtue of a notarized Power of Attorney; or (ii) choose for the digital signing, which will be done by a videoconference held by the Notary Public. The deed must be drawn in the Portuguese language only. The Notary Public will read the deed aloud to the parties. Therefore, a non-Portuguese- speaking party (if attending the execution of the deed in person) will need to appoint and have a translator present. Regarding the digital signing, it is important to mention that electronic signatures in Brazil are regulated through Provisional Measure No. 2200-2 / 2001 (“MP 2200 - 2”), which created the Brazilian Public Key Infrastructure (“ICP - Brasil”), the national system of digital certification. Therefore, to properly execute a digital deed, the parties must have an ICP-Brasil digital certificate. The issuance of an ICP-Brasil digital certificate requires: (i) a taxpayer registration in Brazil (“CPF”); (ii) a face - to-face meeting before a Certification Authority to collect biometric (fingerprint and face). ✓ Payment of the property ownership transfer tax. In general, the property ownership transfer tax (a Municipal tax) must be paid upon the execution of the deed, but the rules on the payment of this tax and its rates vary in accordance with the applicable rules imposed by the municipal authority where the property is located.
ILN Real Estate Group – Buying and Selling Real Estate Series
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