its registration with the relevant Real Estate Registry Office. In addition, the rural property must be registered with the Federal Revenue, since the property must have an identification number (“NIRF”). 9. RESTRICTIONS ON REAL PROPERTY ACQUISITION BY FOREIGNERS Brazilian law does not impose restrictions on urban real property ownership by foreign entities or persons. However, foreign entities or persons are currently not permitted to own rural real properties without governmental authorization. It is worth noting that over the course of the last two decades fierce debate has been ongoing in on the issue of property ownership by foreign entities. Up until the end of 2016, in São Paulo State the mere fact that an entity was duly registered with the São Paulo Board of Commerce, with no consideration given to the nationality of its shareholders, was sufficient for such an entity to be treated as a Brazilian entity, hence making it possible for the entity to own rural property in São Paulo State. However, the Supreme Court suspended this practice. Presently, the position is that a foreign entity is the one under direct or indirect foreign control. With the edition of the INCRA’s Norma tive Ruling nº 88/2017, the exigence of INCRA’s pre - approval on rural real properties acquisition by foreigners was pacified, however, changes on this issue are still expected, considering there is no clear period for implementation. of a final ruling by the Supreme Court, or from the several bills put forward for consideration by the National Congress.





CONSIDERED OF PURCHASE/ACQUISITION OF A REAL PROPERTY AT TIME Right of first refusal: A provision stipulating that in the event of a sale, sale commitment, assignment, or commitment to the assignment of rights in connection with a leased real property, the tenant has the right of first refusal to acquire the leased real property, and that the landlord must bring the transaction to tenant´s knowledge. Further, in case of joint ownership, members of the condominium also have the right of first refusal. Validity Clause: A type of clause, which if included in a lease agreement and registered at the Real Estate Registry Record, grants the right to a tenant to see out the lease for the entire term should ownership be transferred to a third party. Restraint of mortgage/non-encumbrance clause: This type of clause prohibits the encumbering of a property with a mortgage; only applied on specific circumstances. Non-communio bonorom clause: This type of provision prevents the property from becoming part of a joint estate due to marriage or union, regardless of the regime governing the union or marriage. Inalienability clause: This clause restricts the owner’s faculty/ability/capacity to dispose of the property. 11. NOTES/OBSERVATIONS ON TAXATION Real property transfer tax varies between municipalities and, therefore, depends on where the property is located. It is important to note that in case of donation of real property, Municipal transfer tax shall not be levied, but State Donation and causa mortis shall be the payable tax instead.

ILN Real Estate Group – Buying and Selling Real Estate Series

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