The law regulating the fiduciary alienation of real estate provides that the contracts covered may be entered into either by public deed or by private instrument, which would have the force of a public deed. Additionally, these operations could be established by both natural persons and legal entities, and were not exclusive to entities that are part of the Real Estate Financing System (“SFI”).

This was the prevailing majority understanding for the last 20 years, but on the last 5th of June, the National Council of Justice issued Provision No. 172, a decision that interprets the provisions of the law and restricts the execution of private contracts to institutions that are part of the SFI, and from then on, fiduciary alienations between private parties must be formalized through public deed.

This guidance is based on the CNJ’s understanding that the rule of the Civil Code (“CC”) should prevail, which stipulates that operations involving the transfer of real property rights must be done via public deed, and that the extensive interpretation given to the Fiduciary Alienation Law was mistaken and incompatible with the CC.

The State Corregidors will publish guidelines for registries, and the São Paulo Court of Justice (TJSP) has already taken the lead and issued guidance on the 20th that must be observed in that State. As a transitional rule, it established that private contracts entered into before the CNJ’s Ordinance may be registered as long as it is possible to accurately verify the antecedence of the signature.

In the real estate field, we already foresee an impact on the operations of buying and selling lots (subdivisions) since fiduciary alienation was a widely used form of guarantee in these businesses.

Marins Bertoldi’s office has lawyers specialized in the subject, who can assist in understanding and clarifying any doubts that may arise about the matter.

By Roger Ribas and Ana Carolina