Care when buying real estate

Legal transactions involving the transfer of real estate property should be done with caution, because, strictly speaking, their effectiveness depends on the seller having financial suitability, so that the absence of caution on the part of the buyer may result in the loss of the property and the amounts invested in its acquisition.

This risk arises from the fact that the presumption of ownership in our legal system is relative. In other words, the acquisition of real estate, even if the legal requirements for its acquisition are observed, such as notarized public deed, registration in matriculation, payment of Property Transfer Tax and rights – ITBI, may have its validity challenged, in such a way that there will never be, in fact, certainty in its acquisition.

There are numerous causes that can invalidate the purchase and sale of real estate: false power of attorney; if the transferor practices the sale as a fraudulent act that results or may result in damage to creditors (fraud against creditors); if the seller practices the sale in order to prejudice the judicial process of execution (execution fraud); absence of legal requirement, such as lack of full capacity, among others.

In this way, the acquisition of a property should be analyzed beforehand with caution, to avoid that the investment is made in vain. Before closing the deal, you should check:

(i) if the property has the documents in order;

(ii) if the seller is, in fact, the owner, or has the power to do so;

(iii) whether the owner is financially and morally fit;

The work of verifying such factors that bring greater security to the legal business is called “due diligence” and consists of a legal audit carried out through the analysis of documents and certificates, both from the seller and from the property itself.

In a “due dilligence” should be checked at a minimum:

the marital status of the seller;

the existence of any real rights to the property, such as mortgage, Promise, pledge, usufruct, lease guarantee;

if the good is engraved with inalienability (clause of impossibility of sale);

the origin of the property, because if it was acquired from family members, it must have had the consent of the others;

if the seller is incapable or minor;

if there is construction endorsement;

if there are municipal debts of the property;

if there are condominium, water or electricity debts;

if it is emphyteutic property, that is, property owned by the Union, and its useful domain can be transmitted, which falls specific taxes, they are usually real estate in beaches;

if there are debts and judicial executions of debts of the seller, they can somehow reach the property even after the sale.

Another item to pay attention to is if the seller is a partner in a legal entity. In this case, it will be necessary to obtain procedural Distribution certificates from the courts, as well as a protest certificate from the protest registry office of the place where the company is headquartered.

Obtaining such certificates is tied to the possibility of possible disregard for the legal personality of the company, so the responsibility for some obligations may fall on the person of its partners. In this case, if there is legal action in progress, the sale may be considered as execution fraud and be annulled.

Here is the main risk of buying and selling property: the cancellation of the sale due to a past legal fact the purchase. The cancellation of the sale generates the return of the property to the third party to be benefited from it, without any immediate compensation to the buyer in good faith-it is the so – called eviction. The bona fide buyer shall have the right to claim compensation from those who sold the property, including the value of the property and compensation for losses and damages arising from the cancellation of the legal business of purchase and sale.

However, as is known, justice is lengthy and obtaining such compensation does not operate immediately, I depend on my own judicial process for this. In order to avoid such risks, the so-called “due diligence” is carried out, to keep the business as safe as possible or even to take calculated risks.

Cindy Massesine Pimentel, lawyer, graduated in law, with emphasis on public law, from the Pontifical Catholic University of Campinas (PUCCAMP -2019), enrolled in the Brazilian Bar Association, São Paulo Section (OAB/SP) (2019). Postgraduate in Notarial and registry law by the Renato Sara Teaching Complex