- How to Buy Real Estate
- June 2, 2010 | Author: Ana Cláudia de Oliveira Banhara
- Law Firm: Miguel Neto Advogados - São Paulo Office
Buying real estate seems to be a simple task, yet there are certain rules to follow. It is not only a dream coming true, but also having a good business materialized. Of course one is required to abide by the law, and for this purpose, it is important to know that in Brazil, real estate acquisition is regulated by the Civil Code and Registry Law. However, there are some other careful measures to be taken which are not written anywhere, and which lie at the very beginning of any real estate acquisition.
A careful reading of all documents relating to the real property is one of the most important things, including clearance certificates from the notary public in charge of the real property registration, and information about the property owners. Another important formality to be observed by buyers is analyzing the Real Estate Tax (IPTU) clearance certificate; if the real estate is an apartment, it is important to submit a request for condominium statement from the building manager about the financial situation of the apartment’s owner.
Moreover, the buyer should observe all the documentation concerning the real property and its owner, and carefully check the condition of the property. Of course, the property’s structural conditions and its location should be checked as well.
After these initial comments, the purchaser should be well aware of the property-related information and the documentation relating to its owners. It is very important that the buyer is advised by a professional for a careful review of the former owners of the property, thus surveying their financial good standing, and the study of the existence of lawsuits filed against them. This is because the seller of property, who is the passive part in a lawsuit, could have, for instance, committed its inheritance and/or estate, including the property eventually sold.
This is very important because sometimes a lawsuit, if any, does not seek recovery or execution of assets in the first moment, but may, in the future, result in charges. As we know, once a debt is set up, the debtor cannot dispose of its assets, under the penalty of having the sale annulled on account of fraud. It is critical, also, to be sure about the civil status of the seller and, if is he married, the related property system, for any examination of the name of both spouses.
In this step, the search about the existence of lawsuits must be made between the owners over the last 20 years.
The purchaser should be aware that all property must be registered with the Real Estate Registry Office. Currently, the registry of the property is done through a "registration". This registration is the "identity card" of the property, and brings all its official information. Each registration refers to only one real property and should contain all the history of the property, description, and name of its owner.
Once the purchase is completed and the title deed is drafted, the purchaser must register the deed with the Real Estate Registry Office, and will be required to pay the Real Estate Transfer Tax (ITBI) as well as the costs and fees of the Real Estate Registry Office.
Is important to notice that if the purchaser does not sign the deed in the Real Estate Registry Office, he/she is exposed to a serious risk, in that seller may again sell the property, in which case the property would be subject to seizure by debt from the seller, among many other problems.
In view of the above, one can easily notice that a due diligence review should be an essential part in every property acquisition process, which includes hiring a lawyer able to conduct it in the best way possible.