Real Estate Development in Brazil: What It Is, How It Works and How to Check the Registration

Every studio sold off-plan in Rio de Janeiro goes through a real estate development process. It is what turns a plot of land and a design into units that can be legally sold before they exist. Understanding the basics of this process is the simplest way to know whether a launch is compliant.

What real estate development is

The law defines development as the activity carried out with the aim of promoting and carrying out the construction, for total or partial sale, of buildings made up of independent units. In other words: someone brings together land, design, approvals and funding, and sells apartments that will be delivered in the future.

Developing is not the same as building. Development is the legal and commercial business; construction is the execution of the works. The two roles can sit in the same company or in different companies.

What it is for

To make the sale of something that does not yet exist secure. Once the development is registered, each future unit is tied to an ideal fraction of the land, the design and the specifications are kept on file at the registry office, and the buyer has a public document against which to check what they are buying.

Who is involved

• Landowner. May sell the land to the developer or exchange it for units in the future building, the so-called land swap (permuta).
• Developer. The party responsible for the development vis-à-vis the buyers. The law allows it to be the owner of the land, anyone holding a purchase commitment or an assignment of rights over it, or the builder or the real estate broker holding a mandate from the owner.
• Builder. Carries out the works. It may be the developer itself or a contracted company.
• Purchasers. The buyers of the units, who may elect a buyers' committee (comissão de representantes) to monitor the works.

What the development filing is

It is the set of documents that the developer files at the Real Estate Registry Office before starting to sell, as required by article 32 of Law 4,591/1964. Once filed, anyone can consult it. The main items include:

• Title to the land, or a purchase or land swap commitment that authorizes the development
• Clearance certificates for taxes, protested debts and lawsuits, for the land and for the developer
• History of the title deeds to the property over the last 20 years
• Construction design approved by the competent authorities
• Calculation of the building areas, with the area of each unit and of the common parts
• Descriptive statement of the specifications of the works
• Estimate of the overall cost of the works
• Breakdown of the ideal fraction of the land for each unit
• Draft of the future condominium bylaws
• Statement on the withdrawal period (prazo de carência), if any

Registration at the Real Estate Registry Office

The registry office examines the documentation and, if it is in order, registers the development on the property record (matrícula) of the land. From then on the developer can advertise and sell. The law requires the registration number to appear in advertisements, printed materials, proposals and contracts.

Selling units without this registration is irregular. Law 4,591/1964 itself treats the sale of fractions without the prior filing of the documents as an offense subject to punishment.

Real estate development step by step

1. Acquisition or swap of the land
2. Feasibility study and development of the design
3. Approval of the design by the city government and issuance of the building permit
4. Preparation of the development filing and registration of the development at the registry office
5. Launch and sale of the units
6. Execution of the works, with periodic reporting to the buyers
7. Certificate of occupancy (habite-se) and recording of the construction on the property record
8. Establishment of the condominium and creation of an individual property record for each unit
9. Handover of the keys and deed, or financing of the balance

Withdrawal period

The developer may reserve a withdrawal period for itself, during which it has the right to withdraw from the development, for example if sales do not reach the minimum required. This period must be declared in the development filing and cannot exceed the validity of the registration, which is 180 days. If the developer withdraws within that period, the amounts paid must be refunded to the buyers.

In practice, it is worth asking whether the launch is still within the withdrawal period. Until it ends, the works are not yet confirmed.

Protections for off-plan buyers

• Patrimônio de afetação (a ring-fenced asset regime). An optional regime, provided for in Law 10,931/2004, that separates the land and the funds of the development from the rest of the developer's assets. See the article What patrimônio de afetação is.
• Summary table in the contract (quadro-resumo). Law 13,786/2018 requires the contract to begin with a table showing the price, payment terms, adjustment index, delivery deadline and the consequences of termination.
• Delay tolerance. The same law allows up to 180 days of delay in delivery, provided this tolerance is expressly stated in the contract. Once that period has passed, the law gives the buyer the right to cancel the deal and get back what was paid, or to keep the purchase and receive compensation for the delay.
• Rules for contract cancellation (distrato). If the buyer withdraws, the law limits the amount the developer may retain to up to 25% of what was paid, or up to 50% when the development is under patrimônio de afetação.
• Buyers' committee. The buyers may elect representatives to monitor the works.

How to check whether a development is compliant

1. Ask for the registration number of the development and the registry office where it was made.
2. Request an up-to-date certificate of the property record of the land and check that the registration of the development appears on it.
3. Consult the development filing and compare the area, the specifications and the ideal fraction of the land with what is in the contract.
4. Check whether patrimônio de afetação has been recorded on the property record.
5. Check that the registration number appears in the marketing material and in the contract.
6. Research the developer: projects delivered, deadlines met and lawsuits.

Development vs. at-cost construction

In a fixed-price development, the developer sets the price of the unit and bears the risk of the construction cost. There is another regime, at-cost construction (obra por administração), in which the buyers pay the actual cost of construction and the builder receives a fee to manage it. It is explained in the article At-cost construction (obra por administração): how it works.

This article is for general information only and does not replace individual legal advice. The rules cited are a summary of the legislation in force and each contract has its own clauses — before signing, consult a lawyer specializing in real estate law.

Frequently asked questions

Is development the same thing as construction?
No. Development is the business of promoting the project and selling the units; construction is the execution of the works. The same company can do both, or the developer can hire a builder.

Who can be a developer?
Under Law 4,591/1964, the owner of the land, anyone holding a purchase commitment or an assignment of rights over it, and the builder or the real estate broker holding a mandate from the owner.

Can a property be sold off-plan without a registered development?
No. The law only allows units to be sold after the development has been registered at the Real Estate Registry Office (Cartório de Registro de Imóveis). Before that, all that can exist is a list of interested parties, with no contract and no payment.

Where can I look up the registration of a development?
At the Real Estate Registry Office for the area where the land is located. With the number of the property record (matrícula), anyone can request the certificate and access the development filing (memorial de incorporação) kept on file.

What is the withdrawal period (prazo de carência)?
It is the period, of no more than 180 days, during which the developer can withdraw from the development, provided this is declared in the development filing. If the developer withdraws, the amounts paid are refunded.