The Property Buying Process

An overview of the process involved when buying real estate in Brazil…

The first step is to find an estate agent for consultation. Agents can easily be found online and there are many real estate agency websites that have English-language services. Those wishing to purchase should stay aware in order to avoid problems such as fraudulent real estate transactions, non-existent real estate offered for sale, or real estate which is actually unavailable for purchase.

Price, negotiation and offer

The price of property in Brazil is determined by the cost-per-square-meter multiplied by the size of the property. Those unsure of the price quoted can use local newspaper classified advertisements as a reference point. There is a difference between the value of land and the built square meter value.

It is normal to negotiate price and payment conditions; usually discounts can be found if the money is paid up front in one payment.

Payment conditions are a flexible area in Brazilian property transactions and depend largely on what the seller is willing to accept, therefore there is no typical offer. For example, a buyer could offer to pay 25 percent initially then the remaining 75 percent in three payments every two months following the transfer of deeds.

Acceptance of an offer does not bind the parties; once an offer has been made and accepted, a buyer is responsible for checking the legality of the property.

Due diligence formalities

The legal status of the property will need to be verified. This is carried out by the estate agent or estate agency, or by lawyers specialized in this area.

The certificate of title of the property can be obtained at the Real Estate Registry Office (Cartório de Registro de Imóveis) and shows all registered transactions related to the property over the prior 20 years. It takes approximately five business days to obtain the certificate; the cost varies from state to state.

Land that is not registered will need to have a deed for buyers to have ownership rights: this can only be enforced between the parties in a transaction.

Things to check in the title are:

  • That the real estate was built legally
  • That the specifications were approved by the city hall
  • There are no imminent land dispossessions pending
  • If the owner/seller is appropriately registered to the property at the real estate registry office (that they actually own the property)
  • That there are no third-party or government debts associated with the property (for example taxes, fees or condominium maintenance payments)

If the property has not been constructed and the sale is based on the specifications alone, it is recommended that the potential buyer check the legal status of the construction company, as well as approval papers issued by the appropriate agencies or institutions (City Hall, Regional Engineering and Architecture Council, Environmental Secretariat). The estate agent can supply all this information to the purchaser.

There is no title insurance in Brazil. However, some foreign insurance companies can provide title insurance for Brazilian properties.

Purchase and sale agreements

Once the legal checks have been carried out, the purchase and sale agreement (contrato de compra e venda) must be guaranteed through payment of a portion of the total price.

This is called the sinal (earnest money) and is normally between 10 percent and 25 percent of the total property price. The sinal does not bind the parties, but both parties are obliged to comply with the terms of the agreement.

The sinal payment generates a pre-contract receipt, which explains the conditions for the transaction to become effective. This pre-contract states how the remainder of the payment should be paid and, in case the deal is not completed, how money will be returned.

It is normal to have clauses which protect the buyer if the seller backs out. Payment is normally made in Brazilian currency in cash or by wire transfer.

Deposit and Contracts

In most cases, two weeks after the offer has been accepted, the legal checks have been carried out and the earnest money (sinal) has been paid, the public deed of sale and purchase or promise to sell and purchase can be signed by both seller and buyer, before a notary officer.

The deed then becomes binding between the parties.

The deed of sale and purchase should include:

  • The price of the real estate
  • Construction conditions (timelines, deadlines) if the property is a new build
  • Deadline for delivery of the real estate unit

At this point, this definitive purchase contract overrides the receipt that was given when the earnest money (sinal) was paid. The contract itself is now proof of all the payments made so far.

The purchase and sale indentures with the new owner's name and signature will be submitted to the Real Estate Registry Notary's Office (even if full payment will be made in the future). This now creates an obligation for the seller to transfer the title (as stipulated in the Brazilian civil code).

Any taxes due must be paid by both parties at this point.

Information prepared by Anna Paulo S. Do Carmo, CRECI 8706, APJ Imóveis Av. Alm. Marques de Leão 318, Barra, Edf. Centro Emp. Farol da Barra, Sala 309 40140-230 Salvador, Bahia Tel: (71) 9973 8275, Skype: annacarmo, e-mail / Website