Supreme Court Ruling Raises Concerns in the Real Estate Market
Property Loss Due to Previous Owner's Debt
Property Loss Due to Previous Owner’s Debt is a growing risk in Brazil following a recent court decision. Unfortunately, this risk has become real in Brazil after a recent decision by the Superior Court of Justice (STJ). The ruling has increased legal uncertainty and raised serious concerns across the real estate market.
The STJ now allows a property to be affected if a previous owner had a debt registered as active debt. This rule applies even if the debt appeared years after the sale. As a result, current owners may face legal consequences despite acting in good faith.
This issue does not affect only older properties. Newly built units can also fall under this rule.
If a real estate developer appears in the active debt registry due to obligations created during construction, the risk may transfer to the buyer. Consequently, purchasers can inherit legal problems they did not create.
Representatives of the real estate sector have expressed strong concern about the decision. They argue that the ruling creates uncertainty, especially because many properties change ownership several times before reaching the current buyer.
Attorney Marcos Otto Hanauer, from Magalhães e Hanauer Advogados Associados in Joinville (SC), described a similar case judged in May. According to him, the property was sold in 2018 in Presidente Getúlio (SC). However, the attachment request originated in Iraí (RS). In other words, the debt came from another state.
Therefore, buyers may face legal claims from regions completely unrelated to the original transaction.
Bureaucracy and Practical Challenges
Hanauer believes this scenario significantly increases bureaucracy. Brazil has 27 federative units, which complicates the verification process.
If buyers must obtain negative certificates from every state, the burden becomes excessive. Moreover, they would also need certificates from all Brazilian municipalities, totaling more than 5,600 cities. As a result, the transaction process becomes almost unmanageable.
The attorney also emphasizes the buyer’s good faith. He argues that it is unreasonable to expect buyers to investigate debts across the entire country. Instead, public authorities should create an integrated system to simplify these checks.
So, how can buyers reduce their risks in practice?
The first step is to carefully analyze the property’s ownership history. Buyers should request negative certificates from all previous owners, including the construction company, when applicable.
If a former owner has an active debt, the buyer must request that the debtor regularize the situation. Problems arise when the debtor refuses to settle the debt. In such cases, legal actions may escalate and, in extreme situations, lead to property loss.
Lawyer Diego Gama, a real estate law specialist and secretary-director of Creci-DF, explains that the STJ based its decision on Article 185 of the Tax Code, amended by Complementary Law 118/2005.
The article states that any transfer of assets made by a taxpayer with registered active debt is presumed fraudulent. In practice, the Judiciary assumes bad faith from both the seller and the buyer. Therefore, property transfers made since 2005 by indebted owners may be considered invalid.
However, legal interpretation has varied over time, especially in regional courts. Because of this uncertainty, Gama strongly recommends obtaining all possible certificates. If any certificate is positive, buyers should require guarantees or proof of debt regularization.
Even when the law allows certificate waivers, buyers must conduct a thorough risk analysis. This decision should always be conscious and informed.
According to Gama, transactions involving active debt can still occur. However, they require strict precautions. The STJ recognizes good faith when the debtor provides additional guarantees and does not transfer assets to avoid payment.
Ultimately, informed due diligence remains the best protection in the Brazilian real estate market.
Our experts and developers would love to contribute their expertise and insights and help you today.
Last reviewed: October 2026. This article explains a court decision for general information; it is not legal advice – have a Brazilian real estate lawyer run the due diligence on any purchase.
In some cases, yes. Following a Superior Court of Justice (STJ) ruling, a property can be reached by a tax debt registered as active debt against a former owner, even where the debt surfaced after the sale and the buyer acted in good faith. The decision has been strongly criticised by the real estate sector and may still evolve.
Yes. If a developer appears in the active-debt registry for obligations created during construction, the risk can follow the unit to the buyer.
Full due diligence before signing: the property's matrícula (ownership and lien history), negative certificates for the seller – tax, court, labour and federal debts – and, for new builds, the developer's certificates; a registered pre-contract; and an independent lawyer. See our pre-contract guide and the buying timeline, where document verification is step 3.
At minimum: the updated matrícula from the Registro de Imóveis, federal tax (Receita Federal/PGFN), state and municipal tax, labour court (TST), civil and federal court distributors for the seller's domicile and the property's location, and the condominium debt statement.
Brazil has 27 states and more than 5,600 municipalities; demanding certificates from every one of them for each sale would make transactions unmanageable. Lawyers argue that the buyer's good faith should prevail and that an integrated national register is needed.
Oabitat coordinates the due-diligence package with real estate lawyers in Rio for every purchase it brokers, including the seller's certificates and the property's lien history. See buying property in Brazil as a foreigner.
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