Property Sales Process | Selling Costs

Introduction

When it comes to selling your Brazilian property, the main thing to consider is timing. Brazil has a cyclical property market and you need to ensure that you are selling at a time when the market value of your property is high. You will also need to consider the capital gains tax implications of selling up. You can find out how much capital gains tax could be due by consulting your tax office.

Legal requirements

The seller also has to comply with the legally stipulated notification requirements toward those having rights of pre-emption.

Vendors must ensure they possess relevant property ownership documents, including the escritura, and make sure they have paid any outstanding tax or utility bills on their property.

The seller is obliged to sell the property free from defects. The seller is liable for defects, which reduce the value of the property, or prevent the use of the property for a particular purpose. If the property lacks a particular characteristic which the vendor claimed it possessed he/she is liable.

The process of selling property in Brazil

1. Market research

Before you do anything, check out the market. Unless you’re forced to sell, steer clear of slumps when prices are depressed and perhaps consider letting out long-term until the market recovers as an alternative.

2. Preparing your house for sale

It is worth doing some research through consulting with local agents to get advice on how to prepare your home to increase its attractiveness to prospective buyers.

3. Marketing your property

Once you have decided it’s the right time to sell and are confident your property is in a condition which will appeal to prospective buyers, you are ready to go to market. The normal means of marketing a property in Brazil is via an estate agent who can also value your property. If you used an agent to buy your Brazilian home, it could make sense to use the same one to sell it, as they will already know the property. Before you take on their services, you should check carefully what they will and will not do in terms of marketing and what they will charge as commission – make sure you shop around to get the best service!

However, it’s increasingly easy these days to sell without using an agent. There are an increasing number of specialist websites and magazines advertising property for sale in Brazil. The key advantage here is avoiding the high estate agents’ fees. You will need to do your research to get the price right. Just looking at the adverts will not be enough. You will need to get out and see comparable properties in your area and check out their facilities. Alternatively, you could try to sell your property at auction.

4. Organising legal representation

There are two legal professionals you will deal with:

A public notary
(
escribão)

Unlike traditional lawyers, Brazilian notaries are neutral government legal representatives who act as witnesses to and registrars of property transactions. Under Brazilian law, only deeds of sale (escrituras) witnessed and authorized by a notary can be registered at the land registry.
He or she will prepare all the appropriate paperwork and ensure this has been filled out correctly according to the wishes of both parties. The notary also will conduct title searches and has a responsibility to make sure the appropriate property taxes are paid on time.
Your estate agent will be able to put you in contact with the notaries they use regularly.

A reputable English-speaking Brazilian solicitor

It is essential to find an independent lawyer to represent your interests and offer impartial legal advice. You will also need to seek advice on the international dimensions of the transaction and on the critical issue of UK taxation.
If you are not intending to be in Brazil during the purchase process, you will need to grant power of attorney to your solicitor who will then act as your legal representative.

5. Accepting an offer

Once you’ve found a potential buyer and have organised legal representation, you are ready to start negotiating over price. You should be willing to walk away from the deal if you don’t secure your minimum requirements. If at this time you have already identified alternative buyers that you would be equally happy to sell to, this will be easier to do.

Once you are happy with the price, a verbal offer will need to be made through the estate agent. Your lawyer will oversee proceedings, including any deposit or reservation payments and the formal agreement of final purchase price.

6. Signing a private contract

Once all the necessary legal checks have been completed to the satisfaction of the buyer, you will be ready to sign a private sales contract. Before this stage you should have had the contract translated into English and ideally have English-speaking assistance on hand during the signing. The contract is prepared by the selling broker and signed at the office of the broker.

The private contract details the finer points of exactly what you are selling, and includes all the fundamental information about the sale such as the purchase price (including how and when it should be paid), the list of fixtures and fittings included in the sale, and the completion date when the deeds will be signed and the property transferred into your name.

This agreement commits both buyer and vendor to complete the transaction and at this point the buyer must pay a deposit which will be forfeited if the buyer walks away from the deal subsequently. However, if the vendor reneges on the deal at a later date, they are liable repay the buyer twice the value of the deposit in compensation.

7. Completion

After all the legal paperwork has been completed, you will be ready to sign the deed of sale (escritura). This is the moment of truth when ownership of the property passes from vendor to buyer. A registrar (escribao) from a Notary Public (cartorio de notas – a private legal company) must be present at this event to draft the document, then formally witness and register the transfer of ownership on behalf of the Brazilian government.

Both parties will need to provide passports or other proof of identity and unless you speak good Portuguese, the notary will insist that a translator is present to ensure you understand the full implications of the contract you are entering into.

Upon completion, the buyer must pay the balance of the purchase price, all professional fees, transfer taxes and notary fees. Copies of the deeds are then sent to the local land registry and a legal copy of all documentation will be given to each party.