Rental guarantees in Brazil: deposit, guarantor, insurance

The four guarantees in article 37

1. Caução (deposit or pledge). It may be in movable or immovable property (article 38). A pledge of movables must be registered at the cartório de títulos e documentos; a pledge of real estate is noted in the margin of that property’s matrícula (property record). A cash caução “may not exceed the equivalent of three months of rent” and must be deposited in a savings account approved and regulated by the public authority, with all the interest going to the tenant when the money is withdrawn. For a monthly rent of R$ r, the ceiling is 3 × r; at an illustrative rent of R$ 3,000 it would be R$ 9,000 (a calculation, not a typical figure).

2. Fiança (personal guarantor). A third person promises to pay if the tenant does not. Three rules from the Civil Code and the tenancy law matter:

• A married guarantor needs the spouse’s authorisation to give a guarantee, unless they are married under complete separation of property (Civil Code, article 1.647, III).
• A guarantee signed without a time limit can be ended by the guarantor at any time, but the guarantor stays bound for 60 days after notifying the creditor (Civil Code, article 835). The tenancy law adds a specific rule for a lease that has become open-ended: after notice by the guarantor, the guarantor remains liable for 120 days (article 40, X), and the landlord can ask for a new guarantor.
• The guarantor’s home is not protected from this debt. The bem de família statute (Lei 8.009, article 3, VII) lists “an obligation arising from a guarantee given in a lease contract” among the exceptions to the immunity of the family home. See bem de família.

3. Seguro de fiança locatícia (rental-guarantee insurance). It must cover all the tenant’s obligations (article 41), and the tenant pays the premium (article 23, XI). Whether an insurer accepts a foreign tenant is the insurer’s decision; the Act sets no rule on that.

4. Cessão fiduciária de quotas de fundo de investimento. The tenant assigns fund shares as security. It was added to the Act in 2005.

Only one guarantee

Article 37, single paragraph: more than one guarantee in the same lease is forbidden, “on pain of nullity”. Article 43, II makes demanding it a contravention, punishable by simple imprisonment of five days to six months or a fine of three to twelve times the last rent, paid to the tenant. If the contract has a guarantor and also asks for a deposit, only one of them can stand.

Substitution, end of the guarantee and what happens at the end

• Unless the contract says otherwise, any guarantee lasts until the property is actually returned, even if the lease becomes open-ended by operation of law (article 39).
• The landlord may demand a new guarantor or a different type of guarantee when the guarantor dies, is declared bankrupt or insolvent, sells all their real estate, is released, or when the lease is extended with a fixed-term guarantee (article 40).
• The landlord can give the tenant 30 days to supply a new guarantee, “on pain of undoing the lease” (article 40, single paragraph).
• With no guarantee, the landlord may demand rent and charges by the sixth business day of the month falling due (article 42), and an eviction action for unpaid rent in a lease without any guarantee can carry an urgent order to leave within 15 days; see eviction in Brazil.

What a foreign tenant can do

Many foreign tenants have no Brazilian guarantor and no Brazilian credit history. The Act leaves the choice of guarantee to the landlord, within the four types. The practical routes are therefore a cash deposit up to three months, a pledge, or a rental-guarantee insurance policy; whether a given landlord accepts any of them is a negotiation. The Act does not allow a landlord to ask for a deposit and an insurance policy together. For the broader picture of renting as a foreigner, see renting a home in Brazil as a foreigner.

Which professional to consult

A lawyer registered with the OAB can check that the lease clause respects articles 37 to 42 and the guarantor’s spouse requirements; see the property lawyer page. The cartório of the property record advises on a registered pledge. A broker can tell you which guarantee local landlords accept; see the real estate broker page.