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Supreme Court Ruling Raises Concerns in the Real Estate Market

Property Loss Due to Previous Owner's Debt

Imagine losing your property due to a debt incurred by the previous owner. This situation has become a real concern in Brazil due to a recent decision by the Superior Court of Justice (STJ), which has escalated the risk of legal conflicts and is causing widespread repercussions in the real estate market.


STJ’s decision allows the current owner of a property to be adversely affected if any previous owner had a debt listed in the active debt registry, even if it occurred years after the property was sold.


Not even newly built properties are exempt from falling into this trap. If a property developer is listed in the active debt registry due to debts incurred during the construction phase, the burden can be transferred to the buyer of the unit.


Decision on Active Debt from Former Owners Is Already Causing Headaches:

Representatives from the real estate market have expressed apprehension about the STJ’s decision, stating that it creates legal uncertainty, given that a property may have changed hands multiple times before being acquired.


Attorney Marcos Otto Hanauer, from the law firm Magalhães e Hanauer Advogados Associados in Joinville (SC), recounts the outcome of a case similar to the one ruled by the STJ last May.

“The case involves a property that was sold in 2018 in Santa Catarina, in the city of Presidente Getúlio, while the request for attachment originates from the city of Iraí, in Rio Grande do Sul. In other words, the debt comes from another state,” explains Hanauer.



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dramatic nature of the situation

The attorney believes that such cross-state issues can lead to significant bureaucracy. “This exacerbates the dramatic nature of the situation, as we have 27 federative units. If, for each ongoing business, it becomes necessary to individually seek negative certificates from each state, it will cause great inconvenience. If we consider that buyers have to go to such lengths, obtaining negative certificates from all states, they will also have to do so for all municipalities in Brazil, around 5,600 in total.”

In addition to emphasizing the good faith of the client in the transaction, Hanauer considers it impossible to demand that a property buyer conduct a search for negative certificates in all states of the federation. “States, municipalities, and the federal government should be responsible for creating a system that facilitates this consultation,” he concludes.



Expert Recommends Extra Caution in Real Estate Negotiations:

In practice, what can be done to reduce risks? The starting point is to pay close attention to the ownership history of the property, demanding negative certificates from all previous owners listed in the property’s registry – even the construction company involved, if applicable.

To conduct a safe transaction, in cases where a previous owner has a debt listed in the government’s registry, it is necessary to contact the debtor to regularize the debts. The problem arises when the debtor fails to address the debt, leading to a domino effect of collections and, in the worst-case scenario, the loss of the property.


Diego Gama, a lawyer specialized in real estate law and secretary-director of Creci-DF, explains that the STJ’s decision is based on Article 185 of the Tax Code, modified by Complementary Law 118/2005.

The article reads as follows: “The alienation or encumbrance of property or income, or the beginning thereof, by a taxpayer in debt to the Public Treasury for a tax claim duly enrolled as an active debt, shall be presumed fraudulent.” In other words, the Judiciary assumes bad faith on the part of both the seller and the buyer, considering all property transfers made since 2005 by owners with pre-existing debts as fraudulent.

“Although the enactment of LC 118/2005 has been in force for 18 years, its applicability and legal interpretation have varied over the years, especially in Regional Courts. Therefore, until there is a legislative modification, I always recommend obtaining all certificates. If they are positive, measures should be taken to ensure that the debtor guarantees the debt and/or regularizes the debts listed as active,” advises Gama.

“Even if the decision allows for the waiver of certificates, a risk analysis must be conducted. The decision to waive them should be conscious and not induced. The buyer needs to understand that the transaction is secure. Of course, it is possible to conduct transactions in cases involving active debt listings, but the necessary precautions must be taken. It is worth noting that the STJ establishes good faith when the debtor offers additional guarantees besides the alienated property, i.e., when they do not deplete their assets by making the transfer,” adds the attorney.

Tags: #former owner #CUPOLA #diego gama #real estate law #debt #active debt #fraud #Imobi Report #real estate market #attachment #STJ


Source: https://imobireport.com.br/perda-de-imovel-por-divida-do-antigo-dono-decisao-do-stj-inquieta-o-mercado/

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