BRAZIL Law and Practice Contributed by: Mariana Cobra, Janaína Vargas, Mayara Zanini and Marcela Freire, Mattos Filho
6.13 Tenant’s Ability to Alter and Improve Real Estate Changes to be made by tenant in the leased property require landlord’s written consent, except if there is a provision in the lease agree - ment waiving this requirement. It is common practice for landlords to require the inclusion of a provision assuring that necessary and useful improvements are incorporated to the property, and if not indemnified by the land - lord, they can be removed, provided that such removal does not cause damage to the property. 6.14 Specific Regulations Typical urban lease agreements are regulated by the Urban Lease Law, which applies to real estate located in urban areas, except for public properties, hotels, car parks, and areas intended for advertisement, which are governed by the Civil Code. Leases can be classified as residential, non- residential and seasonal (temporary living period not exceeding 90 days), all of them with specific provisions in the Urban Lease Law. There are also specific provisions in the Urban Lease Law for schools and hospitals, which make those properties less attractive to land - lords. In relation to rural land, the Rural Land Statute, which regulates the rural lease agreements, also imposes on the tenant and landlord certain provisions of public policy. Additionally, some restrictions apply to foreign companies and indi - viduals in relation to lease of rural properties in Brazil; please refer to 2.11 Legal Restrictions on Foreign Investors .
6.15 Effect of the Tenant’s Insolvency Under the Urban Lease Law, the insolvency of either party does not authorise the counterparty to terminate the typical urban lease agreement. Therefore, only if the tenant is in default the land - lord may terminate the lease. In such case, the landlord may proceed in due course with the col - lection of any outstanding balances owed by the tenant and seek other remedies guaranteed by law, such as eviction. 6.16 Forms of Security to Protect Against a Failure of the Tenant to Meet Its Obligations The Urban Lease Law contemplates four forms of security that may be provided by a tenant. The types of security are: • security deposit in cash or pledge of mov - able or real properties – if offered as cash, it must not exceed the amount of three monthly rents; • guarantee: the landlord may require a new guarantor or a change in the type of security in case of death or insolvency of guarantor; • rent insurance: must cover all of tenant’s obligations; and • shares in investment funds. The landlord may require a new guarantor or substitution of the type of security in case of liquidation or winding-up of the investment fund. Under penalty of criminal or civil law, it is forbid - den to require more than one type of security for the same lease term. 6.17 Right to Occupy After Termination or Expiry of a Lease According to the Urban Lease Law, if the term of the lease is not extended by an amendment, and the tenant continues to occupy the leased
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