This is a common question and most certainly a very valid one. Many individuals buying real estate in Brazil focus solely on the merits of the real estate purchase and neglect carry out any due diligence process on the legal professional that will ultimately supervise the transaction. Investment Services Brazil is often called upon to assist foreigners to recover their capital from deals that have not been subject to correct due diligence by a less than thorough Brazilian lawyers. With the increase in volume of foreign buyers within Brazil, legal services are in demand and speaking from experience it is obvious that several local lawyers simply spend less time on each transaction in order to accommodate more clients.
Under Brazil law the due diligence process that a Brazilian lawyer must carry out on behalf of the client is regrettably subject. This results in a lack of accountability in the event of incompetence or neglect. Furthermore the Brazilian Courts are notoriously inefficient and corruption is not uncommon. With this in mind it is essential when purchasing real estate in Brazil to have a high level of confidence in your Brazilian lawyer and to not use them simply because they speak English. Your lawyer in Brazil should willingly share with you the exact steps and checks they will carry out in order to fulfill the due diligence on your property.
At Investment Services Brazil due diligence is carried out with the knowledge that the Brazilian legal system has numerous flaws and that due diligence, thorough due diligence is the only true protection for the real estate investor. With this objective of the real estate investor or can proceed with confidence knowing that the investment is truly protected by a firm whose intention has been showering secure a real estate transaction and not to maximize billing hours.
When buying a real estate in Fortaleza you almost certainly require the services of a Brazilian lawyer (advogado). Let us take a quick look at what you will need your lawyer to do for you in order to complete your real estate transaction.
Firstly your lawyer in Fortaleza will need to carry out in depth due diligence on the property you are considering purchasing. Regrettably many lawyers carry out due diligence as if the transaction was taking place in a country with a more evolved real estate transfer mechanism and with less fraud than Brazil. As Brazil does not have a sophisticated real estate transfer mechanism and fraud is extremely common this can be an extremely risky practice. It is for this reason that the Brazilian Courts are busy with Brazilian lawyers disputing real estate ownership. With a clear understanding of the potential risks and taking into account the reality of the Brazilian System and the criminal activity within the real estate sector a competent lawyer in Fortaleza can protect you and ensure that your investment is a successful one.
Following due diligence your lawyer (advogado) will be responsible for the transfer of the property into your name. This will include the payment of property taxes and notary fees and of course the management of the legal contracts on your behalf. Also you will need a CPF number (a Brazilian tax identity) that your Fortaleza lawyer will obtain on your behalf. Often these processes are carried out by way of a power of Atty. Investment Services Brazil will discuss this process and the points of interest is the subject of another blog.
When purchasing Brazilian Real Estate many investors neglect correctly researching the various options of ownership and how best to carry out their transaction. Let us look at an example of purchasing an off-plan apartment in Fortaleza as an aid to highlighting the issues for consideration.
Should the purchase be made in the individual’s name or should a company be registered in Fortaleza as an investment vehicle. Investment Services Brazil regularly forms Fortaleza companies for investors depending on their overall strategy. Visa application is a major factor in this as the Brazilian investors visa can be obtained with a capital investment of R$150,000 and this investment can be used to purchase Real Estate in Fortaleza (along with a suitable business plan).
Taxation is another consideration as the Real Estate investment will be subject to tax in Fortaleza. Tax on rental income and capital gains tax may both apply.
It is also important how the Real Estate transaction is paid for and we see numerous cases of poorly informed investors who face issues repatriating their capital due to incorrect advice when purchasing. Exaggerated transaction/exchange fees is something that also takes place and is an unethical practice to be aware of. Investment Services Brazil can advise you of the best option for you to invest in Brazil and assist with all aspects of the Real Estate transaction to ensure it is safe and effectively executed.