Buying Real Estate in Brazil—The 3 Biggest Mistakes
For many Germans, the dream of owning a home in Brazil has long since become a reality. Whether it’s a vacation home by the sea, a retirement home, or an investment—the Brazilian real estate market offers interesting opportunities.
However, people who have already purchased a property in Germany often assume that the process in Brazil is essentially the same. This is when the chain of errors begins.
Brazilian real estate law is no more complicated than German real estate law—but it works differently. Those who are unaware of these differences often take on avoidable risks.
In our law practice, we regularly assist German clients with the purchase of real estate in Brazil. Whether in the context of the settlement of an estate, the equalization of marital gains, or an investment, we repeatedly encounter the same mistakes.
Mistake No. 1: You sign the preliminary contract before the legal review is complete
Probably the biggest difference between buying real estate in Germany and Brazil lies right at the start of the transaction.
While in Germany the notarial purchase agreement is typically signed first, in Brazil it is customary to sign a private preliminary agreement (Contrato Particular de Compra e Venda or Compromisso de Compra e Venda).
Many German buyers consider this contract to be a non-binding reservation agreement. In fact, however, it is often the economically crucial part of the entire transaction.
The preliminary agreement generally already contains all material agreements between the buyer and the seller, in particular
the purchase price,
the payment terms,
Deadlines,
Contractual penalties,
Cancellation policies and
the obligation to have the notarized deed of sale drawn up at a later date.
It is not uncommon for a down payment (sinal) of 10 to 30 percent of the purchase price to be due upon signing.
Many buyers sign the preliminary contract and make the down payment before all legal due diligence has been completed. If it later turns out that the seller does not, after all, have the right to dispose of the property or that there are significant legal risks, the buyer is often already contractually bound.
Our recommendation is therefore clear: Legal due diligence should always be completed before the preliminary agreement is signed—and not just before the notarization.
Mistake No. 2: You inspect the property—but not the seller
In Germany, the legal review often focuses on the property itself. In Brazil, that is usually not enough.
In addition to the property itself, the seller’s background must also be carefully examined. This is because certain legal proceedings or financial difficulties on the part of the seller could affect the validity or security of the transaction.
For this reason, numerous certificates are routinely obtained as part of a proper due diligence process. Depending on the specific case, the following, among other things, are reviewed:
pending civil proceedings,
Labor court proceedings,
Tax receivables,
Enforcement proceedings,
Insolvency proceedings,
Specific aspects of family law,
Authority to act on behalf of the company, as well as, of course,
the ownership structure.
It must also be clarified whether the seller has sole authority to dispose of the property. Particularly in the case of inherited properties, existing marriages, or co-ownership, other individuals often need to be involved in the transaction.
Therefore, anyone who merely reviews a land registry extract is often aware of only a small portion of the actual risks.
Mistake No. 3: You Rely on Real Estate Agents or Standard Contracts
Many buyers assume that the real estate agent will provide legal guidance throughout the purchase process or that the contract template used already includes all necessary provisions. Both assumptions are incorrect.
The real estate agent primarily facilitates the sale of the property. He does not conduct a comprehensive legal review, nor does he represent the buyer's interests—even if he would like you to believe otherwise.
In addition, in practice, standard contract templates are often used that, while they may be suitable for standard cases, do not take into account the specific characteristics of an international real estate purchase. In international cases, family law considerations must be taken into account in particular.
German buyers, in particular, therefore often require provisions that are not included in standard contract templates—for example, regarding payment processing, representation by authorized agents, conditions precedent, or the consequences of a failed transfer of title.
A real estate purchase should therefore never be considered legally secure simply because a real estate agent is involved or a pre-drafted contract is used.
Conclusion
Buying real estate in Brazil differs from buying real estate in Germany in several key ways. If you are aware of these differences, you can avoid most risks before they arise.
In our experience, the biggest problems do not arise because Brazilian real estate law is particularly complicated. Rather, they arise when German buyers apply the procedures they are familiar with in Germany to Brazil.
Thorough legal due diligence, a review of the preliminary agreement, and support through the registration process in the Registro de Imóveis lay the foundation for a secure and successful real estate transaction.
