BRAZIL Law and Practice Contributed by: Alberto Malta, Davi Ory, Ana Vogado and Maria Eduarda Amaral, Malta Advogados
encumbrance and court certificates (state, fed - eral, labour), protest and tax clearance certifi - cates (municipal, state, federal), and compliance with the Federal Revenue Service (RFB) and the Active Debt Registry. Additional items include permits, occupancy certificates ( habite-se ) and property-specific documents. Rural properties require the rural property registry certificate (CCIR), rural environmental registry (CAR) and georeferencing while urban assets demand review of zoning and administrative constraints. For condominiums, verification of unpaid dues is necessary. Physical inspections, seller back - ground checks and environmental clearances (by the Institute of Environment and Renewable Natural Resources (IBAMA) and state agencies)) are also recommended. Despite the protective concentration principle under Statute No 13,097/2015, which favours good faith third parties, exceptions apply, most notably Article 185 of the National Tax Code, which allows the annulment of transfers involv - ing unregistered tax debts due to presumed fraud. Tax liability verification is therefore a criti - cal aspect of due diligence. In acquisitions by developers, scrutiny must be heightened to include pre-construction factors like soil testing, as unresolved issues may delay project execution, generate penalties or com - promise financial viability. 2.5 Typical Representations and Warranties In Brazilian real estate transactions, it is standard for the seller to contractually declare full owner - ship, absence of liens or disputes and compli - ance with tax, zoning, environmental and labour obligations. These guarantees are typically sub - ject to survival periods, liability caps and carve- outs for fraud or wilful misconduct.
Statutory warranties also apply. The Civil Code establishes a five-year liability period for struc - tural soundness and a one-year period for latent defects, which is calculated from the point of discovery. The Consumer Protection Code, when applicable, allows complaints within 90 days of delivery for durable goods. Contractual liability may be subject to a statute of limitations of up to ten years, depending on the nature of the obligation. In large-scale transactions, representations and warranties often survive for 12 to 24 months post-closing, with extended terms for core mat - ters (eg, ownership, tax, environmental). Cap clauses typically limit the seller’s liability to between 10% and 30% of the deal value and basket clauses, simple or tipping, set minimum indemnification thresholds. Although not legally required, market practice demands disclosure of environmental risks, such as contamination or hazardous materials, includ - ing asbestos, which has been banned since a 2017 STF decision. In the event of breach or false representations, buyers may pursue claims for latent defects, eviction or damages. If wilful misconduct is proven, the contract may be annulled for defec - tive consent. While representation and warranty insurance (RWI) remains uncommon in Brazil, it has been adopted in specific high-value or foreign-led transactions. 2.6 Important Areas of Law for Investors Real estate investors must consider aspects of civil, contract, land registration, urban plan - ning, environmental, tax, corporate, consumer protection and compliance laws, along with fed - eral, state and municipal regulations related to
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