Buying a property in Brazil can be a straightforward process, providing some common sense steps are taken. As with purchasing a property in any country, whether at home or abroad, it is vital to understand the basic legal requirements and procedures before you begin.
Broadly speaking, there are few restrictions on foreigners purchasing residential or commercial property in Brazil. In fact under the current market boom, developers are falling over themselves to facilitate foreign investment. The government has also injected significant funds to improve much of the infrastructure in the Bahia region, which is currently one of Brazil’s property hotspots. The regional airport near Recife is, for example, currently being upgraded to international status, to further improve the transport connections to this increasingly popular area.
The majority of buyers, particularly in the Bahia area, are opting for off plan property, although a buoyant resale market exists here also. Both types of purchase represent great value for money as prices remain low.
Bear in mind that the Brazilian financial organisations do not currently offer the range of products you would expect in EU countries. Basically this means that banks do not – as yet – offer mortgages to foreign buyers. If you need to raise finance to fund your purchase in Brazil it is advisable to investigate options such as equity release on an existing property outside of Brazil. If you opt to buy an off plan property, then quite often the developer will offer reasonably favourable instalment plans.
If you decide to buy a resale property you will most likely deal with a local estate agent, whereas off plan purchases will involve the company who are building the project. You can make your initial offer to the agent or developer and perhaps negotiate the agreed sale price. In the case of an off plan property, the developer will usually have fixed prices and a predetermined payment schedule. These terms can vary from company to company, so it is important you find out how much you are expected to pay at what stage. Understanding exactly what your financial commitment will be is crucial.
Once your offer is accepted, the most important next step is to find an independent lawyer, preferably one who can speak your language. Appointing a good, impartial lawyer is critical to a stress free purchase. If possible seek recommendations from previous buyers, who are happy with their purchase. IPW can also supply a list of recommended lawyers.
Your lawyer will undertake all the necessary legal and financial checks to safeguard your property purchase. He or she should, for example, ensure that there is no outstanding debt on the property, that the vendor is the legitimate owner of the property and that the property is correctly registered in your name upon completion of the purchase. Your lawyer should explain these steps to you as well as guide you through your financial obligations. A lawyer will charge a percentage of the total sale price, but typically you can expect to pay around 1,000 to 2,000 Euros for their services.
The funds for the purchase are nearly always transferred through the Central Bank of Brazil from the buyer’s account to the vendor’s. The bank records the transaction details and acts as a type of escrow account. This is the recommended method of transferring funds and is used in the vast majority of transactions. Be advised, in fact, it is unusual to use any alternate means.
The sale is finally legitimised by recording the changed property information on the public registry via a public official known as a notary. A notary is a type of lawyer who oversees legal and financial transactions and ensures that the public record is updated accordingly. He will verify that the transaction has conformed to Brazilian law. This system is not dissimilar to that of Spain, where the notary is the final stage of certification before the new owner takes possession.
As in Spain, the buyer also needs to obtain an identity number (in Brazil this referred to as the CPF) before being able to buy the property. Your lawyer can instruct you on the procedure for obtaining this, and in many cases can do a lot of the work for you. There is a small administrative fee and proof of identity is required. Once your application is received, you usually obtain your CPF number the following day, with full documentation posted in the following weeks.
It is important to budget between 4% to 8% of the total sale price to account for the costs of the sale. This amount varies based on the value of the property, the area and the complexity of the purchase process. The costs compare favourably with, for example, Spain where typically sale costs run at 10% to 15% of the sale price, and comprise various fees and taxes which your lawyer will be able to advise you of.
