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    Real estate purchase agreements without registration do not warrant property

    Real estate purchase agreements without registration do not warrant property

    Guilherme Zauli, real estate coordinator at Tortoro, Madureira & Ragazzi Advogados.

    Published at Conjur, on December 10, 2018

    The acquisition of home ownership has always been one of Brazilians’ main goals. However, one must be cautious in order for this long-awaited goal not to become a disappointment.

    When purchasing certain property, it is common for people to believe they are legally protected after signing a purchase agreement.

    In spite of the fact that such agreement actually produces effects between the parties, this legal relationship will only be validated before third parties, if the acquisition is duly registered in the respective real estate registry office.

    In short, it should be highlighted that a homeowner is that who holds the real estate registry instrument in their name.

    In order to facilitate and provide greater security to real estate transactions, Law 13.097 came into force in 2015, which, among other issues, stipulates in its article 56 that: any transactions or encumbrances will only have an effect on the property, if properly registered in the real estate registry office.

    In practical terms, it is common for real estate funding borrowers, when they can no longer afford funding, to decide to “sell” the property to third parties by means of a real estate purchase agreement.

    What happens is that when trying to enter register such agreement, the buyers are caught by surprise as the registry denies it, since warranty of the previously made funding was the property itself, which was already registered in the name of the financial institution responsible for credit granting.

    Conforming with the above understanding, the Superior Court of Justice recently made a decision validating the purchase of real estate held at a judicial sale, even though a real estate purchase agreement was signed, but without registration in the respective real estate registry (REsp 1.724.716 / MS).

    Therefore, before entering into any real estate purchase agreements, it is wise to check the real estate registration, since having this document in hand and with the help of an attorney, it will be possible to analyze the feasibility of such transaction, thus avoiding the unwanted circumstance of “not getting what you paid for”.

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