BRAZIL Law and Practice Contributed by: Alberto Malta, Davi Ory, Ana Vogado and Maria Eduarda Amaral, Malta Advogados
either party in case of default, as both remain jointly liable toward the government. 6.12 Insurance Issues Fire insurance is mandatory for condominiums. Premiums are distributed among owners as ordinary expenses. For urban leases, landlords are responsible for supplementary fire insurance unless contractually stipulated otherwise and are typically transferred to tenants in practice. Non-condominium properties handle insurance by agreement between parties. Rural properties commonly utilise multi-risk insurance covering weather damage, fires and events threatening agricultural production, although not legally mandated. During the COV - ID-19 pandemic, attempts to claim business interruption insurance largely failed as policies excluded pandemics and courts upheld these exclusionary clauses. 6.13 Restrictions on the Use of Real Estate Lease agreements can specify property pur - pose, which tenants cannot unilaterally change. Violations may trigger termination and evic - tion. Subletting or assignment requires express landlord consent. Property use also faces legal restrictions including zoning rules, environmen - tal licensing and building regulations. In con - dominiums, tenants must follow conventions and internal regulations. If they do not, they risk having to pay fines and if they commit repeated violations they risk being expelled. 6.14 Tenant’s Ability to Alter and Improve Real Estate Tenants may alter leased properties subject to legal and contractual constraints. Brazilian law categorises these interventions as improve - ments or accessions. Under Law No 8,245/1991,
necessary improvements (preserving the prop - erty) are compensable even without authorisa - tion. Useful improvements (enhancing function - ality) require prior consent for compensation and retention rights. Voluptuary improvements (aesthetic) aren’t compensable unless expressly agreed. STJ Precedent 335 validates contractual waivers of improvement compensation. However, for permanent incorporations (acces - sions), STJ ruling REsp 1,931,087/SP (2024) established that improvement waiver clauses don’t automatically extend to authorised acces - sions. Unauthorised modifications constitute contract breach, potentially triggering termina - tion and forfeiting compensation rights. 6.15 Specific Regulations Law No 8,245/1991 regulates urban leases, excluding parking spaces, advertising spaces, hotels and financial leasing contracts, which are regulated by the Civil Code. The Law cat - egorises leases as residential, non-residential or seasonal (limited to 90 days). Special purpose properties (schools, hospitals, religious tem - ples) receive stronger tenant protections under Article 53. Built-to-suit contracts (Article 54-A) allow waiving rent revision rights and permit a fine of the full amount remaining in the event of early termination. Rural leases follow the Land Statute with public order provisions, including restrictions on foreign acquisition/leasing requir - ing INCRA authorisation depending on area and location. During the COVID-19 pandemic, the Emergency Legal Regime established temporary measures including eviction suspensions and termination fine exemptions for vulnerable tenants, which expired after the public emergency period.
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