BRAZIL Law and Practice Contributed by: Mariana Cobra, Janaína Vargas, Mayara Zanini and Marcela Freire, Mattos Filho
• Rural real properties: Federal Law No 5,709/1971 and Federal Decree No 74,965/1974 establish certain conditions for the direct or indirect acquisition of rural properties by foreign entities and individu - als. There are ongoing discussions before the Brazilian Supreme Court and within the executive branch of the government concern - ing the applicability or not of such conditions to the acquisition of rural real properties by Brazilian companies whose majority of the capital stock is held by foreign companies or individuals or that are controlled by such foreign parties. • Rural real properties located in the Brazil - ian border strip: pursuant to Federal Law No 6,634/1979 and Federal Decree No 85,064/1980, prior consent from the National Defense Council is required for the direct or indirect acquisition of ownership, possession or any other in rem right over rural real prop - erties located within 150 km of the country’s national border. Such consent is also required for the participation of a foreign entity or individual in any manner in a company which owns, possesses or holds any in rem right over rural properties located in the Brazilian border strip.
effective types of security, such as fiduciary sale, discussed in 3.2 Typical Security Created by Commercial Investors . 3.2 Typical Security Created by Commercial Investors Two forms of security are typically created by a commercial real estate investor who is borrow - ing funds to acquire or develop real estate: mort - gages and fiduciary sales ( alienação fiduciária ). A fiduciary sale has been the most typical secu - rity as it transfers to the creditor the fiduciary/ conditional ownership of the property (therefore, the property is not affected by the insolvency of the debtor) and allows a nonjudicial foreclosure procedure. 3.3 Restrictions on Granting Security Over Real Estate to Foreign Lenders There are no restrictions on the granting and foreclosing of security over urban and rural land for foreign lenders. 3.4 Taxes or Fees Relating to the Granting and Enforcement of Security ITBI does not apply to the creation of security, but is levied on the enforcement of fiduciary sales because in this case an actual transfer of full title to the creditor occurs. Notary fees are owed in the event of execution of deeds, and registration fees are owed upon registration of the security documents with the relevant Real Estate Registration Office. Such fees are determined at the State level and vary in accordance with the amount of the debt.
3. Real Estate Finance 3.1 Financing Acquisitions of Commercial Real Estate
Usually, private funding finances the acquisition of commercial real estate. Private funding has been boosted by Federal Law No 9,514/1997, which introduced Brazil’s Housing Finance System. Commercial real estate is generally financed by (i) the circulation of bonds and securities backed by real estate receivables, negotiable on the capital markets; and (ii) more
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