BRAZIL | Essential Guide | Buying Property in Brazil

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Buying Property in Brazil | Essential Guide | Brazil

FOREIGN OWNERSHIP in Brazil

There are no major restrictions for overseas buyers for buying residential or commercial property in Brazil.

There are some limitations or fees applicable for specific areas such as marine land, islands, agricultural rural land or areas near Brazil's International borders.

IS IT SAFE TO BUY REAL ESTATE IN BRAZIL?

Yes, Brazil is a safe place to buy real estate. We recommend that as with any overseas purchase that you use an approved estate agent and lawyer.

HOW MUCH WILL IT COST TO BUY OR SELL PROPERTY

On average transaction costs (ie stamp duty, fees etc) can be between 3% and 8% of the purchase price. This may differ on the location (eg beachfront), type of property and State you buy in. If there is a significant amount of work to establish title and ownership then these costs may be more.

This budget will cover you for Goverment Purchase tax (2%-7%), legal and registration fees.

WHAT DO I NEED TO BUY PROPERTY IN BRAZIL?

To buy a property in Brazil, you need to register for a CPF, which is a kind of credit check document issued by the Brazilian government authorities. Your Alexander Richards representative can help you to obtain this quickly and easily.

LEGAL MATTERS

We have a panel of approved (English speaking) lawyers to help you with your purchase.

The costs are generally between Ł500-Ł1000.

For this the lawyers will

Check the current owners have the correct title to the property,
Check for any charges and liabilities on the property,
Checking your contract and advise you on the obligations for both parties,
Helping you through the payment/funds transfer,
Ensuring the property is registered in your name.

There are generally no limitations to returning money back overseas if registered with the Central Bank at the time of your purchase.

MONEY TRANSFER

Funds are sent directly from your own bank to the sellers bank account in Brazil, via the Central Bank of Brazil who record your funds into the country. The seller has to present their contract to the bank to release the funds. This ensures the government have recorded your investment into the country. We recommend you only use the official route otherwise you may have problems transferring funds out of Brazil when you sell your property.

CAN I GET A MORTGAGE IN BRAZIL?

The mortgage market is quite underdeveloped in Brazil. In 2005 about 50,000 mortgages were granted however this will grow as interest rates decline and as banks develop these products.

Brazilians have tended not to get mortgages because the sector is not as well developed as in the US, UK etc and rates have been very high (20-30%) or the difficulty in providing adequate proof of income etc.

Foreigners cannot get mortgages. Buyers usually arrange alternative financing in their own countries.

Some Developers of new build & off-plan developments offer installment plans over a between 12 to 60 months. The charges applicable vary from developer to developer and payments are usually indexed.

If you have property in your own country and would like to borrow against this, then we can introduce you to an Independent Financial Advisor who can help you raise finance accordingly.

LAND REGISTRATION SYSTEM in Brazil

Real estate registration in Brazil is carried out by private notary publics, under the form of a public permission, under Justice Control. All real estate registries in Brazil are under control and fiscalization of a State Judge. The real estate registry system in Brazil is quite developed and safe, in which each property can only be registered at a single registry, which keeps the entire commercial history and the physical identification of each property. The access to all information of a real estate, including those concerning its owners, mortgages and other burdens, is public. In the larger cities, these services this may be automated.

It is very important to ensure that any property you buy has clear title.

CODE OF ETHICS

The Real Estate Agents Law imposes a Code of Ethics over all professionals and companies operating in the segment. There are internal disciplinary processes, with sanctions ranging from fines to violator's license suspension and cancellation. Sanctions are imposed by COFECI, through the CRECIs.

LICENSING REQUIREMENTS

All real estate agents must enroll with the Real Estate Agents Regional Councils. All real estate agencies must have a real estate agent partner as technical responsible. To enroll, the applicant must take the Real Estate Transactions Technician course.
Other Industry Professionals

To close a sale, it is necessary a public deed is drafted by the notary public, and it is registration by the real estate registrar. The sales can be entered into directly between sellers and purchasers, but in case of intermediation such activity can only be carried out by real estate agents or agencies accredited by the CRECIs. Lawyers are not mandatory, but they can only represent any of the parties as attorneys-in-fact.

ESTATE AGENT SERVICES

The services are designed to assist the parties in sales and rentals. The basic services are real estate appraisal and publicity (newspapers and placard placement), purchasers and potential tenants assistance, Contact between the parties through proposals and counterproposals forwarding, technical and legal advisory for the parties and real estate documentation, agreements drafting and assistance with public deeds and their registrations.

PROPERTY MARKETING SYSTEM (In the US known as MLS) & REFERAL SYSTEMS

There is no national system such as the American MLS of NAR-Homestore yet.

The agents and agencies work system is controlled by COFECI - Real Estate Agents Federal Council, that established a national "reference" in the practices for all States.

Almost all companies trading real estate are local, and also restricted to their local region/state in that activity.

RELATIONSHIP BETWEEN BUYER / SELLER & ESTATE AGENT

The purchase and sale in the Brazilian real estate market is regulated mainly by two federal laws: The Real Estate Agent Law (Law number 6530 of 1978), and the Consumer Defense Code (Law number 8078 of 1990). It does not matter whether there is a written agreement or not (although the Real Estate Agent Law requires written agreements); in case of proof that the natural or legal person professional sold or intermediated the sale or rental or any asset or service to a purchaser or seller, or to a landlord or a tenant, the Brazilian legislation is quite modern in the protection of customers rights. In general, the agreements are entered into with the sellers or with the landlords (owners).

WHAT ARE THE LEGAL FORMALITIES FOR BUYING A PROPERTY IN BRAZIL?

The process can appear somewhat bureaucratic and long winded however our job is to simplify the process and reduce the time. We will be happy to answer any questions you might have.

INSPECTION VISITS

VISAS/ PASSPORTS

Travellers from most countries will receive an automatic visitors visa entry, this is granted for 90 days. It is possible to apply for an extension for a further 90 days at the local police station. Travellers from some countries are required to apply for a residency at their nearest Brazilian Embassy before travel. Please ask us if you require more information about Visas to Brazil.

Before travelling to Brazil you should have at least 6 months from the return date of your journey until your passport expires.

FLIGHT COSTS

Flight costs are dramaticaly reducing to Brazil. We have can help you book your flight. An example of a direct flight from London airports to some destinations of the northeast of Brazil are currently around Ł290 to Ł500 (return). Prices do fluctuate depending on the season / operator and destination airport. At present there are over 220 scheduled flights from Europe to Brazil and ever more if you include charter flights. For example TAP has 48 weekly flights to Brazil from Lisbon.

LIVING IN BRAZIL

As a Tourist

A normal tourist visa is for 90 days. You can either extend or leave and reenter to get a new tourist visa and you can stay for a maximum of 180 days per year as a visa. Please contact embassy for details of visa waiver countries and details of visa requirements.

As a Resident

You can live in Brazil if

You invest US$50,000 in an appropriate business.
Retire to Brazil and can prove you have income of US2,000 per month as a pensioner.
Are married to a Brazilian.

Below is a short article by Alison McGowan who bought a property in Rio:

"Brazil - the land of samba, carnival, football, caipirinha. A world of contrasts, of first world mixed with third world, a country with a fusion and confusion of cultures which blend into something uniquely Brasilian, tropical, colourful, exuberant. What struck me when I first came here in 1979 was the sheer beauty of Rio, the colours, the tropical heat, the easygoing lifestyle. the infectious happiness of the local carioca, and the brilliant music, always the music- bossa nova, jazz, samba, chorinho..

No, it was not exactly a difficult decision deciding to live and work here, swapping the long grey winter days in London for the sun and the warmth and the early morning walks along the beach. In fact I stayed almost 6 years the first time and I always knew I would be back, even though it took me 18 years to do it. The really difficult decision was actually whether to buy here or not.

Friends, both Brasilian and British, fell neatly into one of two categories- those who thought I would be crazy to buy, and those who thought I would be crazy not to. Arguments put forward by the former (generally people who had never lived here) included the safety aspect as in "with Rio such a dangerous place you may not want to stay", coupled with the fact that house prices were not exactly rocketing up, and there are no mortgages available to foreigners. Counteracting this was the fact that I actually felt safer in places I rented in Rio than I ever did in London, I knew it would not be difficult to get a remortgage in the UK, the prices were only a third of what I would have had to pay in London, and I really wanted to live in a home which was just the way I wanted it, without having to worry about a 12% increase in the rent every year. My arguments finally won! .

The buying process is not difficult, just time consuming and confusing if you don't know the city or what to expect, you don't speak the language and you don't have a lawyer you can trust. The time consuming aspect extends to the actual finding of the property in the first place, as most estate agents do not have pictures of the properties they are selling, have not personally visited them and inevitably "bend the truth" to get you to visit places which are clearly not what you are looking for.

In my case I was lucky. I already knew I wanted to be in Ipanema or Leblon, quiet, but close to all the nightlife, with beautiful views and walking distance from the sea. And having visited some 20 properties, and scoured the Sunday papers for weeks I realised I was already renting the best possible place. So I convinced the landlord to sell it to me. Regrets? Not a single one. Smug? Certainly! If you want to enjoy a relaxed, tropical lifestyle in the most beautiful of cities, there is sincerely nowhere that could ever be better than Rio."