Introduction
property under construction 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 assures;
- 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
property under construction 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 property under construction 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 assure.
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.
Additional legal analysis on property under construction
Buying property under construction in Brazil involves different risks from buying a completed and registered unit. The buyer is not only acquiring a future asset; the buyer is relying on the developer’s capacity, project documentation, construction timetable, financing, incorporation structure and contractual obligations.
Due diligence should review the real estate development registration, project approvals, developer documents, construction schedule, payment schedule, penalties, delivery conditions, buyer remedies, use of funds and whether the project benefits from asset-segregation mechanisms or other protections. Promotional materials should not replace legal documents.
The purchase agreement should address delay, changes to specifications, default, termination, transfer of the contract, adjustment of payments, delivery inspection and registration of the final unit. Foreign buyers should understand when they acquire contractual rights and when ownership of the unit will be registered.
Payment structure is also important. Installments paid during construction should be documented and aligned with the buyer’s foreign-exchange trail. If the buyer intends to use the property for residence by investment, the timing and evidence of payment may be relevant to the immigration file.
For branded residences or luxury developments, the buyer should also review management documents, service obligations, use restrictions, rental programs, condominium structure and any brand-related agreements. The commercial appeal of the project should be matched by legal clarity.
Foreign buyer safeguards in property under construction
Foreign buyers should be careful with the expression “property under construction.” In the Brazilian legal context, the safer formulation is property under construction or a unit in a real estate development. The buyer should understand whether the project is properly incorporated, whether the future unit can be individualized and registered, and what legal protections apply before delivery.
The contract should be reviewed in detail. Important clauses include price adjustment, construction milestones, delay, force majeure, buyer default, developer default, termination, assignment, delivery conditions, defect correction, condominium formation and registration of the final unit. Promotional materials should be treated as commercial information unless incorporated into binding documents.
Foreign-exchange compliance is relevant because payments may occur in installments over time. Each payment sent from abroad should be documented, and the buyer should preserve exchange records, proof of origin of funds and evidence that payments correspond to the acquisition. Banks may apply anti-money laundering review during the process, not only at the first transfer.
If the buyer signs remotely, powers of attorney and foreign documents may require apostille or consular legalization and sworn translation. These documents should be prepared before payment deadlines and signature dates, especially if the developer uses standardized forms with strict timelines.
If the acquisition is connected to residence by real estate investment, the buyer should verify whether payments made during construction, the contractual position and the project documents satisfy immigration requirements. A property under construction may require a more carefully built evidence file than a completed property.
The buyer should also plan for delivery. Inspection, punch-list items, condominium installation, municipal records, property-record updates and transfer of possession should be documented. A development transaction does not end when the contract is signed; it ends when the unit can be legally used, registered and integrated into the buyer’s ownership structure.
Contract and delivery controls for foreign buyers
Foreign buyers should review the development contract as an investment document, not only as a reservation form. The contract should explain what is being acquired, when payments are due, how price adjustments work, what happens in case of delay, what constitutes default, how termination is handled and when the future unit will be delivered and registered.
Delivery risk is central. The buyer should understand whether the developer may change specifications, how defects are reported, what documents will be delivered, how the condominium will be installed and when the unit can be occupied, rented or sold. The practical value of the investment depends on the transition from contractual right to usable and registrable property.
Payment controls are also important. Installments should be paid through documented channels, especially when funds originate abroad. Each payment should be traceable and consistent with the buyer, contract and foreign-exchange compliance file. Anti-money laundering review may occur at different points of the payment schedule.
Where foreign documents are involved, the buyer should prepare powers of attorney, corporate approvals, apostille, consular legalization and sworn translation before payment or signature deadlines. Developers often operate with standardized timelines, and foreign-document delays may create avoidable default pressure.
If the property under construction is part of a branded residence or hospitality-style project, additional documents should be reviewed. Management agreements, rental-pool rules, use restrictions, service charges, brand standards, owner obligations and exit limitations may significantly affect the investment thesis.
Foreign buyers should also plan the post-delivery file. It should include the final deed or assignment documents, proof of payments, exchange records, delivery term, inspection records, condominium documents, updated property record and any warranties or defect notices. This file may be essential for resale, tax analysis, repatriation or dispute resolution.
Residence and succession implications
If the acquisition is connected to residence by real estate investment, the buyer should confirm whether the project, payment stage and documents satisfy the applicable immigration requirements. A promise to purchase or construction-stage payment may need to be evidenced differently from the acquisition of a completed property.
Succession should also be considered. If the buyer dies before delivery or registration, heirs may need to deal with contractual rights rather than a completed registered property. The buyer’s estate plan should account for this possibility, especially in long construction projects or high-value acquisitions.
FAQ
Can foreigners buy property under construction 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 property under construction 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.
SCCM Advogados advises foreign investors on Brazilian property under construction real estate transactions, including development registration, contract review, foreign documents, payment structure and final property registration.
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