Introduction
Off-plan properties, launches and new developments may attract foreign investors because of entry price, expected appreciation, location, branded residences, rental potential, future residence or asset diversification.
The legal structure is different from buying a completed property. The buyer is acquiring a future unit tied to the developer, project, incorporation registration, contract and ability to complete the works.
Real Estate Development and Memorial de Incorporacao
Real estate development in Brazil is governed mainly by Law No. 4,591/1964.
Article 32 provides that the developer may only sell or encumber ideal fractions of land and future units after registration of the memorial de incorporacao before the competent Real Estate Registry.
Before signing, the foreign buyer should verify:
- registration number of the development;
- property record;
- competent Real Estate Registry;
- responsible developer;
- approved project;
- descriptive memorial;
- documents filed at the registry;
- consistency between marketing materials and registered documents.
Due Diligence on Developer and Project
Review should not be limited to brochures, renderings or promotional videos.
Relevant points include:
- developer history;
- corporate regularity;
- relevant lawsuits;
- title status of the land;
- liens or guarantees;
- financing of the works;
- approved project and licenses;
- construction schedule;
- patrimonio de afetacao;
- consistency between commercial promise, contract and official documents.
Patrimonio de Afetacao
Patrimonio de afetacao is a special segregation regime under Law No. 4,591/1964 that may separate the land, rights and obligations of the development from the developer’s general assets.
It can increase protection for purchasers, but it is not automatic in every project and does not eliminate all risks.
It should not be presented to foreign buyers as “zero risk”.
Contract and Summary Chart
Brazilian law requires contracts for real estate development units to begin with a quadro-resumo, or summary chart, highlighting key elements.
Foreign buyers should review:
- total price;
- down payment;
- payment schedule;
- brokerage commission;
- monetary adjustment indexes;
- cancellation consequences;
- default consequences;
- delivery deadline;
- liens on the property;
- incorporation registration number;
- property record;
- competent Real Estate Registry.
Monetary Adjustment, INCC and Payment Flow
Off-plan contracts often provide monetary adjustment during construction, frequently by construction-cost indexes such as INCC.
The advertised price may not equal the final effective disbursement. Buyers funding the purchase in foreign currency also face exchange-rate exposure.
Planning should consider price, indexation, exchange rates, remittance dates, banking compliance, balance due at delivery, possible financing and transfer delays.
Delivery Deadline and Construction Delay
Law No. 4,591/1964 allows a tolerance period of up to 180 calendar days if clearly and expressly provided in the contract.
The buyer should review the expected completion date, tolerance clause, consequences of delay beyond the tolerance period, potential termination rights and compensation rules.
Cancellation, Withdrawal and Buyer Default
Withdrawal or default does not automatically mean full refund of amounts paid.
Law No. 13,786/2018 regulates consequences of contract cancellation in real estate developments. Retentions, brokerage deductions, penalties and specific refund periods may apply.
This is especially important for buyers expecting future resale, later financing or immigration use.
Financing and Balance at Delivery
Many off-plan contracts require payments during construction and a significant balance at delivery.
Foreign buyers should not assume Brazilian bank financing will be available, especially if they are non-residents. Financing may depend on CPF, Brazilian bank account, income, tax residence, local credit profile and bank compliance.
Delivery, Habite-se and Final Registration
Physical delivery of the unit is not the same as full legal regularization.
The process may involve completion of works, issuance of habite-se or equivalent municipal certificate, annotation of construction, condominium registration, individualization of the unit, final deed or applicable instrument and registration in the buyer’s name.
Receiving keys does not necessarily mean all registry acts are complete.
Marketing Materials and Contract
Brochures, renderings, decorated units, digital campaigns and projected returns do not replace the contract, descriptive memorial and registered documents.
If a feature is economically important, it should be reflected in binding documents.
Intended Use
Projects marketed for income, short-term rental, branded residences, hotel operation or professional management require specific review of condominium rules, zoning, rental program agreements, tax treatment, exclusivity clauses and management costs.
Projected income should not be treated as a legal guarantee.
Checklist Before Signing
Foreign buyers should verify:
- development registration;
- property record;
- competent Real Estate Registry;
- developer and builder;
- patrimonio de afetacao;
- approved project;
- descriptive memorial;
- summary chart;
- total price and adjustment indexes;
- delivery deadline and tolerance period;
- cancellation rules;
- balance at delivery;
- financing feasibility;
- CPF and foreign documents;
- international remittance structure;
- intended use and rental rules;
- path to final registration.
FAQ
Can foreigners buy off-plan property in Brazil?
Yes. Foreigners can buy units in new developments, subject to legal, contractual, documentary and foreign-exchange requirements.
What is memorial de incorporacao?
It is the set of development documents registered before the Real Estate Registry, required for regular sale of future units.
Is off-plan property risky?
It can be legitimate, but it involves specific risks involving construction, developer, contract, price adjustment, financing, cancellation and future registration.
What is patrimonio de afetacao?
It is a segregation regime that may protect purchasers by separating development assets and obligations from the developer’s general assets. It does not eliminate all risk.
Does receiving the keys mean I own the property?
Not necessarily. Ownership usually depends on registration of the title before the Real Estate Registry.
Conclusion
Buying property under construction in Brazil may be attractive for foreign investors, but it requires specific legal review.
The buyer is not only acquiring a physical asset. The buyer is entering a development contract with construction, payment, delivery, financing, cancellation and registration risks.
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SCCM Advogados advises foreign investors on Brazilian off-plan real estate transactions, including development registration, contract review, foreign documents, payment structure and final property registration.
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