BRAZIL: Approval of the bill regulating the acquisition of land by foreigners
February 2021 – Brazil – Rossetti Advogados
On December 15, 2020, the Brazilian Federal Senate approved bill 2.963/19 drafted by senator Irajá (PSD-TO), which regulates the acquisition, possession, lease and registration of rural real estate by foreign individuals and legal entities organized and established outside the Brazilian territory.
The acquisition of land in Brazil by foreigners is the subject of legal disputes involving Law No. 5.709, of 1971, which regulates, to this date, the acquisition of rural real estate by foreigners resident in Brazil or foreign legal entities authorized to operate in Brazil, which Law is previous to the Brazilian 1988 Federal Constitution. This fact was the subject of different legal interpretations throughout the time, which resulted in much legal uncertainty and drove foreign investments out of this industry.
The text approved by the Federal Senate includes, without limitation, the following issues:
- In certain cases (acquisition by sovereign funds, location in the Amazon biome, for example), the acquisitions are subject to the approval of the Brazilian Defense Council (CDN);
- Waiver of authorization or license for the acquisition and possession by foreigners of rural properties with areas not larger than 15 tax modules. The sum of the rural areas owned by and leased to foreign persons may not, however, exceed a quarter of the surface of the municipalities where they are located;
- The foreigners must draw up a public deed for acquisition of the property, and the registers of deeds shall keep a special register, in a special book, of the acquisitions of rural real estate by foreign individuals and legal entities;
- It ratifies previous acquisitions by Brazilian individuals or legal entities, even if they are directly or indirectly controlled by foreigners; and
- In the event of violation of the statutory rules, the legal transactions carried out may be annulled.
The bill will now be analyzed by the Brazilian House of Representatives. In case it is not amended and approved in full, it will be sent for the President to sign it into law. In case it is subject to any change, it will be submitted to the Senate again, and then sent for it to be signed into law.
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This article is based on publicly available information and given for informational purposes only. It is not intended as legal advice or as a comprehensive analysis of the matters referred to herein.