More tips on buying in Brazil for foreigners

Brazil's property market has seen significant gains in recent years. Property-related services have proliferated.  Whilst increased choice is welcome, choosing between so-called ‘trusted’ sources can be difficult.

Overseas real estate buyers will notice an increasing number of professionals fully able to communicate in English, particularly in the south – and keen to establish ties with the international investment community.  Spanish, Italian and French speakers will also find people who do business in their language.

The best place to start your Brazilian property search is the Zap.com.br website, which serves most of Brazil and has daily updated listings as well as descriptions, advanced searches, photography, map links, financial simulators and other useful features.  Other prominent sites include Balcão, Imovel Web, Lopes and Web Casas. 

However, most towns and cities have independent organisations that do not advertise on these major sites.  It is well worth communicating with these smaller operations. And keep an eye out for private sales (where the vendor avoids agency fees).

One of the main problems is Brazil's lack of a formal registry.  How can buyers do due diligence?  One method is to examine local government property tax records (Imposto Predial e Territorial Urbano, IPTU) where values are regularly updated. However, some states don't allow public access to this information.  Another method is to keep your ear to the ground; do not rely on the opinion of one agent. Build relationships with other professionals, so you get a solid idea of real prices.

Whilst buying ‘blind’ in Brazil is generally not recommended, it is not unheard of for investors who buy ‘na planta’ or off-plan.  But there are a number of points to take on board: 

• As a foreign buyer, you have exactly the same property rights as a resident;
• Be aware of ‘hidden’ charges / obligations during the construction process such as capitalized interest and commanded clauses (your lawyer will be able to inform you of these);
• Understand your rights with regards to completion delays and adherence to construction specifications (you may be able to seek compensation and even punitive damages); 
• Ensure that any complaints or issues are documented and filed – the Brazilian Code for Consumer Protection (Código de Defesa do Consumidor) allows a buyer to request a complete termination of the contract (accompanied by a full refund of any monies deposited), or make a legally enforceable claim to receive a discount on the contractual purchase price;   
• Ensure that all contracts are translated into your language – many international law firms can assist with this.

Comments

#1 BORIS GOLDSHMIT | August 28, 2010

Ruban,

Great post. Let me add a correction. There is formal registry of property titles in Brazil. A foreign buyer should always check into the records of the local Real Estate Registration office (Cartório de Registro de Imóveis) and check the property documentation (Matricula) via solicitation of the Property Title Extract (certidao vintinaria or certidão de ônus reais). While checking the local government property tax records (IPTU) is part of the due diligence process, it is very dangerous to rely on this check up exclusively. It is not uncommon in Brazil for tenants or people who have no legal possession rights or ownership rights to have properties listed in their name.

Unless a foreigner wants to lose his shirt (and underwear), it is generally a bad idea to touch a property that is anything less then perfect in terms of documentation. Of course, it automatically rules out about 80% of properties in Brazil, but it will be the only factor that can guarantee a relatively problem-free purchase and ownership experience.