Buying at a property auction in Brazil: leilão rules

Fiduciary auctions (Lei 9.514/1997, art. 27)

When a borrower who gave a property in alienação fiduciária defaults and ownership is consolidated in the lender’s name, the lender must hold a public auction within 60 days of the registration of the consolidation (art. 27, in the wording of Lei 14.711/2023). The steps:

1. First auction. If the highest bid is below the property value fixed in the contract (which cannot be lower than the ITBI tax base, art. 24, item VI and single paragraph), a second auction is held within 15 days.
2. Second auction. The highest bid is accepted if it equals or exceeds the whole secured debt, plus expenses (including registry fees), insurance premiums, legal charges including taxes, and condominium contributions (paragraph 2). If no bid reaches that level, the lender may, at its sole discretion, accept a bid of at least half of the appraisal value.
3. No qualifying bid. The lender becomes free to dispose of the property (paragraph 5).

The auctions and notices can be held electronically (paragraph 10). The former borrower keeps a right of preference to buy the property, until the date of the second auction, at the price of the debt plus costs, taxes including the transfer tax and laudêmio paid for consolidation, and the collection costs (paragraph 2-B). A bidder should know that a former owner can step in until that date. For the mortgage side, see alienação fiduciária and mortgage default and foreclosure.

After winning a fiduciary auction

• Possession. Article 30 gives the lender, its successors, “including the buyer of the property by virtue of the public auction”, a right to repossession, granted by injunction, with 60 days to vacate once consolidation is proved. Court actions on contract terms or collection procedure do not stop the repossession and are settled in damages, except the requirement to notify the debtor (single paragraph).
• Seizures and liens. Liens or seizures over the borrower’s acquisition right do not prevent the consolidation and the sale (paragraph 11).
• Tenants. If the property is let, the lease can be ended with 30 days’ notice unless the lender agreed in writing to the lease, and the notice must be given within 90 days of consolidation, with a specific, highlighted contractual clause (paragraph 7).
• Taxes and condominium fees. The borrower is responsible for taxes and charges until the lender is placed in possession (paragraph 8). Those arrears are part of the minimum bid in the second auction, as above.

Judicial auctions (Civil Procedure Code, arts. 879 to 903)

A court sale is done by the creditor’s own initiative or through a broker, or by auction run by a licensed auctioneer, in person or electronically (arts. 879 to 882). Key points for a bidder:

• The notice (art. 886) must describe the property, with reference to the matrícula and registrations, state the appraisal, the minimum price, the payment terms and the auctioneer’s commission. A second in-person auction date is indicated if there are no bidders in the first.
• Minimum price. A bid at a “vile price” is not accepted: a price below the minimum in the notice, or, if none, below 50% of the appraisal (art. 891).
• Payment. Unless the judge orders otherwise, payment is immediate, by court deposit or electronic means (art. 892). Instalments are possible by written proposal: at least 25% in cash and the balance in up to 30 months, secured by a mortgage on the property itself (art. 895). A cash offer prevails over an instalment offer.
• Tie. When bids are equal, the spouse, partner, descendant or ascendant of the debtor, in that order, has preference (art. 892, paragraph 2).
• Commission. The auctioneer is entitled to a commission from the winning bidder, set by law or by the judge (art. 884, single paragraph).
• Sale becomes final. When the judge, the buyer and the auctioneer sign the record, the sale is “perfect, complete and irrevocable” (art. 903), even if the debtor’s objections later succeed, with damages as the remedy. It may still be invalidated if made at a vile price or with another defect, or be considered ineffective or resolved if the price is not paid. The judge decides if asked within 10 days.
• Withdrawal. The bidder may withdraw and get the deposit back if, within 10 days, they prove a real burden on the property not mentioned in the notice (art. 903, paragraph 5, item I).
• Deed. The carta de arrematação (auction deed) is issued after the deposit and the payment of the auctioneer’s commission and costs, and must include the registry description, a copy of the record and proof of payment of the transfer tax, and indicate any real burden (art. 901). It is then registered; see registering the purchase.

Debts that come with the property

Article 130, single paragraph, of the National Tax Code says that, in a public auction, the tax credits tied to the property (such as IPTU) attach to the price paid, rather than being carried by the buyer personally. The Civil Procedure Code (art. 908, paragraph 1) says credits attached to the property, including propter rem debts, are transferred to the sale price, in the order of preference. For a condominium unit, see buying in a condomínio. The notice and the record show what is stated; the reader should read both.

Tax reform note

Article 263 of Lei Complementar 214/2025 names, in a judicial adjudication, redemption or auction of a property, the buyer as the taxpayer of the new consumption taxes: taxed as a regular-regime sale if there is an adjustment reducer linked to the property, or treated as a sale by a non-taxpayer if not. 2026 is a test year; see tax reform: IBS, CBS and real estate.

Which professional to consult

A lawyer registered with the OAB can read the notice, the court file and the matrícula, and an appraiser can value the property (see property appraiser). The reader checks registrations on the official registers.