ILN: BUYING AND SELLING REAL ESTATE - AN INTERNATIONAL GUIDE

[BUYING AND SELLING REAL ESTATE IN BRAZIL]

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given that Brazilian Notaries are not obliged to (and hence will not) perform such due diligence, moreover, given that it is possible to waive in the deed of purchase the right to certain information and to obtain the basic clearance certificates. It is important to note that recent changes in Brazilian Law could facilitate the legal due diligence measures given that, among other provisions, the law now states that any claims, encumbrances or liens (with some exceptions) will affect the sale of a real property only if such encumbrances or liens were duly registered and therefore appear in the property ownership record file, with the relevant Real Estate Registry Office (the ownership record file is a mandatory certificate for the execution of the real property sale deed). ✓ Technical (e.g., engineering, geological or archeological) and environmental due diligence 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 property occurs solely by virtue of a notarial deed (save for certain exemptions, as in the event of the permission obtained for the acquisition of a property for a price lower than the official minimum wage, or in case of participation of a financial institution by means of a private instrument). The Notary Public is usually chosen by the purchaser, who also pays the notary fees. Both the seller and the purchaser may (ii) appear in person before the notary to execute the deed; (ii) appoint attorneys-in-fact to do so in their name and on their behalf by virtue

of a notarized Power of Attorney; or (iii) 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. ✓ Registration of the deed of sale with the relevant Real Estate Registry Office (in contrast with the choice of Notary Officer, who may be chosen by one of the parties, the Real Estate Registry Office’s jurisdiction is defined by State Law and, therefore, cannot be selected by either party). Under Brazilian law, a purchaser of

ILN Real Estate Group – Buying and Selling Real Estate Series

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