BRAZIL Trends and Developments Contributed by: Ivandro Ristum Trevelim, Rafael Jordão Bussière and Fabio Perrone Campos Mello, Campos Mello Advogados
which will need to request prior authorisation from the National Security Council. If approved, the Bills will be an important change which will certainly contribute to the desired rise in investment in the Brazilian economy and agri - business, such as a possible occupation and use of rural areas by foreign investors in the energy The Legal Landmark on Guarantees (Law No 14,711/2023), published at the end of 2023, was created to modernise the existing legislation on the subject, aiming to provide greater legal cer - tainty to the guarantees provided, notably mort - gage and fiduciary sale, as well as to facilitate their enforcement and reduce the risks related to debtors’ default. This comprehensive legislative amendment, which impacts not only real estate law but also banking operations, seeks, among other things, to revitalise the mortgage institute, optimise the functioning of fiduciary sale, and promote a more conducive environment for taking out real estate loans, by reducing their interest rates, as it facilitates the location of assets and their enforcement by the creditor. and energy distribution sectors. Legal Landmark on Guarantees A significant change is the possibility of estab - lishing subsequent fiduciary sale on the same real estate property. This means that a real estate property already encumbered by fiduciary sale may be further encumbered by subsequent fidu - ciary sale, aiming to secure obligations distinct from those that led to the initial encumbrance. Thus, in the event of enforcement of property encumbered with more than one fiduciary sale, the previous ones will have priority over the subsequent ones, with the rights of subsequent creditors subrogating to the price obtained from
the sale of the real property. If the creditor pays the debtor’s debt, they will be subrogated both in the credit and in the fiduciary ownership. The subsequent fiduciary sale can be registered in the real estate registry from the date of its execution, but it only becomes effective upon the cancellation of the previously constituted fiduciary ownership. The new rules optimise the functioning of real estate fiduciary sale in Brazil because, unlike the previous model, where there used to be a mismatch between the debt value and the prop - erty value (especially in the final instalments of the obligation payment), the property remained “tied” to a debt much lower than its value. Thus, with subsequent fiduciary sales, properties can be involved in various obligations, and their value is not restricted to securing a single debt. Two other novelties that have been introduced are also worth mentioning. • There is a legal provision for the parties to include in the contract that, in the case of default, the creditor may declare due the other obligations secured by the same prop - erty of which they are the holder. • The possibility of fiduciary sale being con - tracted to guarantee third-party debts, in addition to one’s own debt, has been formal - ised. The new Law also brought changes to the prop - erty consolidation procedure. From now on, the contract may define the grace period for the issuance of the notification, and if there is no such provision, it will be issued within 15 days. Furthermore, provisions were created to prevent the debtor from benefiting from their absence. An example of this is that, henceforth, it is pre -
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