Purchase and Lease of Real Estate Properties in Brazil by Foreigners
Raissa Frick/Tama Tanzilli
It is currently on debate in the National Congress of Brazil the Bill no. 2.963/19, which scope is the regulation on the acquisition, possession and registration of rural real estate properties by foreigners. The Bill still restrains the acquisition of real estate properties by foreigners. However, in general terms, the Bill aims to simplify the foreign investment and to regulate the terms of possession of the real estate properties by foreigners.
The Law no. 5.709 / 1971 governs the purchase of rural real estate properties by foreigners. In fact, the expression "foreign company" has long been subject to discussion. Since the mid of 2010, the same restrictions applied to foreign companies have been extended to Brazilian companies settled in Brazil with foreign capital. Such extended interpretation built up a greater barrier to foreign investors, reflecting on investments by foreign investors in the Brazil´s agribusiness, electric (hydroelectric and wind) sectors, including its financing.
In contrast to this interpretation, the Bill no. 2.963/19, amongst other provisions, proposes another definition to foreign companies. Differently from the current interpretation, the expression foreign companies shall be interpreted as companies that are settled down in foreign territory.
Moreover, the Bill also proposes the conditions for regulating real estate property purchased by foreigners, despite the fact that the acquisition was not in accordance with the legislation in force at that time, and within the limit proposed by the Bill.
The Commission of Economic Themes and Agriculture and Agrarian Reform has withdrawn the need for prior authorization by the National Defense Council when the acquisition of rural property by a foreign person is the result of a legitimate succession, acquisition of real rights, or exercise of possession of property intended for the execution of a concession, permission, authorization of public service, including the production, transport and distribution of electrical energy, or the concession or authorization of the use of the public good of the Union.
Nevertheless, some limitations will continue to be applicable in the acquisition of real estate properties such as the acquisition by foreigners of lands located in the Amazon biome and/or in the border areas. In these situations, the prior authorization by the National Defense Council (CDN) is still requested.
The Bill states that the total rural area owned and rented to foreigners shall not exceed to a quarter of the total area of the referred municipality where the land is located. However, it provides that the acquisition of land above such limitation might be possible in cases where the land is part of the priority development projects of the country.
GTLawyers is constantly monitoring the passing of the Bill and it will keep the clients informed on further updates adoption of the bill.
We remain at your disposal to assist you with more information on this case.