Buying off-plan in Brazil: incorporação rules

The registered memorial

Article 32 of Lei 4.591/1964 provides that the developer may sell or encumber the ideal fractions of land and building that will become the units only after registering, at the competent property registry, the incorporation memorial. The documents include the land title or an irrevocable promise to buy it, negative certificates of taxes and protests, the 20-year history of the land titles, the approved construction project, the area calculations, the specifications of the work and the cost estimate. Registration produces a number, and article 35-A requires the contract to state the number of the memorial registration, the land’s matrícula and the registry office. The reader can check these items against the registry record. See due-diligence certificates.

The summary box

Article 35-A, added by Lei 13.786/2018, requires the contracts to start with a quadro-resumo with twelve items, among them:

• The total price, the down payment and how it is paid.
• The broker’s commission, its conditions and who receives it.
• The schedule of instalments and the monetary correction indexes.
• The consequences of cancelling, with the penalties in bold and the refund deadlines.
• Interest rates and the amortization system.
• Information on the right of withdrawal for contracts signed at a sales stand.
• The period to settle the balance after the completion certificate (habite-se), the encumbrances on the property, and the deadline for the habite-se.

If something is missing, the developer has 30 days to amend the contract; if it does not, the omission is “just cause” for the buyer to terminate. The cancellation consequences take effect only if the buyer separately agrees to them by signing next to those clauses.

Delay in delivery

Article 43-A allows a tolerance of 180 days past the contractual completion date, if expressly and clearly agreed. Beyond this, if the buyer is not the cause of the delay:

• The buyer may terminate, and receive all sums paid plus the penalty stipulated, within 60 days of the termination.
• Or, if the buyer keeps the unit, the buyer is owed 1% of the amount actually paid for each month of delay, pro rata, with monetary correction, on delivery.

The two remedies cannot be combined (art. 43-A, paragraph 3).

The seven-day right of withdrawal

Article 67-A, paragraph 10, gives the buyer who signed at a sales stand or outside the developer’s head office an unextendable period of 7 days to withdraw, with return of all sums advanced, including the broker’s commission. The buyer must prove timely exercise by registered letter with acknowledgment of receipt, and the posting date starts the count (paragraph 11). After the seven days, the contract is irrevocable (paragraph 12). Full cancellation rules are in cancelling an off-plan purchase.

Protection of the buyer’s money

A developer may put the development under the patrimônio de afetação regime, which keeps the land and the construction separate from the developer’s other assets. It is optional: “at the discretion of the developer” (art. 31-A). See patrimônio de afetação. Article 50 provides for a representatives’ commission of at least three buyers, named in the construction contract or elected, to deal with the builder or developer.

The preliminary contract and its register

The buyer’s contract is a promessa de compra e venda. Under the Civil Code (art. 1,417), a promise without a right of regret, made by public or private instrument and registered at the registry, gives the promisor-buyer a real right to acquire the property, and article 1,418 allows the buyer to demand the final deed and, if refused, ask a judge to award the property. This explains why registering the contract is worth considering: see purchase agreement and deposit.

Tax points

• For the buyer: the transfer tax (ITBI) is municipal; see ITBI.
• For the buyer who owns another property and later sells it: the Receita treats a private contract to buy a property under construction as already owning it, so the single-property exemption is lost (Q&A 665). Selling a home and buying off plan qualifies for the 180-day exemption (Q&A 575): see reinvestment exemption.

Which professional to consult

An architect or engineer can read the project and the work reports (see architect and engineer), and a lawyer registered with the OAB can review the contract and the memorial (see property lawyers). Registrations are checked by the reader on the official registers.