BRAZIL Law and Practice Contributed by: Alberto Malta, Davi Ory, Ana Vogado and Maria Eduarda Amaral, Malta Advogados
6.16 Effect of the Tenant’s Insolvency Tenant insolvency doesn’t automatically termi - nate Brazilian leases unless contractually speci - fied. In judicial recovery or bankruptcy (Law No 11,101/2005), landlords become unsecured creditors, but guarantees like sureties remain enforceable despite insolvency proceedings. If tenant default results from economic crisis, the landlord may pursue termination and evic - tion, except when the property is essential to the business operation under bankruptcy pro - tection. 6.17 Right to Occupy After Termination or Expiry of a Lease In urban leases, if the tenant remains in the property for more than 30 days after expira - tion without landlord opposition, the contract extends indefinitely per Article 56 of Law No 8,245/1991. Repossession requires 30 days’ notice and potentially an eviction lawsuit with a 15-day vacate injunction possibly being issued. Commercial tenants may claim compulsory renewal via legal action, provided that the con - tract has a fixed term of more than five years and the same commercial activity has been carried out in the premises for at least three consecutive years. For rural leases, the Land Statute grants tenants preferential renewal rights. Landowners must provide six months’ notice of third-party offers or intention to directly exploit the prop - erty. The absence of this notification results in the automatic renewal of the contract unless the lessor subsequently expresses this intention in a notary’s office. 6.18 Right to Assign a Leasehold Interest Lease assignment or subleasing requires express landlord authorisation in line with Article 13 of
Law No 8,245/1991. Without consent, these actions constitute breach of contract and could lead to termination and eviction. Rural leases fol - low similar rules under the Land Statute. Commercial contracts commonly include claus - es permitting assignment to companies within the same economic group, allowing corporate restructuring without contractual terms being breached or the tenant’s right of first refusal being violated. 6.19 Right to Terminate a Lease Urban leases can be terminated through mutual agreement, contract breach, default on essential obligations or necessity for urgent government- mandated repairs. Tenants may unilaterally ter - minate with proportional penalty payment, while landlords cannot terminate early without legal grounds except in specific scenarios like sale of the property without a validity clause registered in the registration. In this case the purchaser can terminate the contract with 90 days’ notice. For leases with an indefinite term, unmotivated termination is allowed with 30 days’ notice. Special use properties (hospitals, schools) have termination restrictions under Article 53 of Law No 8,245/1991. Built-to-suit contracts may include early termination penalties equivalent to the contractual balance. Rural leases follow protective regulations with mandatory minimum terms under the Land Statute. Property sale doesn’t terminate these leases and reposses - sion requires notification to be given six months
before the expiration of the contract. 6.20 Registration Requirements
Lease registration in Brazil provides two key benefits: right of first refusal to purchase the property and effectiveness against third parties when including a validity clause. Without reg -
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