Real estate partnerships between builders and landowners are widely used in Brazil as a means to enable construction projects, optimize property usage, and ensure profit for both parties. However, such arrangements can present significant risks to third-party buyers of "pre-construction" properties.
The issue becomes even more serious when the builder, to finance the project, offers the land and development as collateral for a mortgage with financial institutions or when it becomes involved in legal disputes resulting in liens on the property.
This article provides a comprehensive reflection on the legal risks faced by buyers in these scenarios, the rights assured by law and jurisprudence, and the builder’s responsibility to ensure the regularization of properties. The analysis is based on legal and jurisprudential perspectives, especially in light of the Superior Court of Justice (STJ) Precedent 308, which protects buyers from mortgages established by the builder.
The Context of Real Estate Partnerships and Risks to Buyers
In a real estate partnership, the landowner transfers their property to the builder, who is responsible for developing the project, obtaining necessary approvals, carrying out construction, and selling the units. The builder often needs financial resources for the construction and therefore takes bank loans, offering the land and the development under construction as collateral.
In this scenario, the builder not only used the land and project as mortgage collateral but also faced civil and labor lawsuits that resulted in liens on the property. This situation poses numerous complications for the buyer, who, even after fully paying for the purchased unit, is unable to obtain property regularization due to liens registered on the title deed. The buyer is left vulnerable, as the property is encumbered by the builder’s debts to third parties, from which they had no involvement.
Protection for the Good-Faith Buyer: STJ Precedent 308
The Brazilian legal system, aware of the inherent risks in buying pre-construction properties, provides mechanisms to protect good-faith buyers. The main reference in this regard is STJ Precedent 308, which states:
"A mortgage agreed upon between the builder and the financial institution, whether prior or subsequent to the purchase and sale agreement, is not enforceable against buyers of the respective properties."
This precedent aims to protect buyers from mortgages agreed upon between the builder and financial institutions, ensuring that the property is delivered free of such liens after payment is complete. In practice, it means that the mortgage cannot be enforced against the buyer, who has the right to receive the property free of encumbrances, regardless of agreements made by the builder with third parties.
However, practical application of this protection is not always immediate. In the specific case, although the buyer fully paid for the property, the builder claims difficulties in removing the mortgage, justifying that it depends on authorization from the financial institution. Furthermore, the liens resulting from other legal actions against the builder have further complicated the situation.
Builder’s Responsibilities and Available Legal Measures
When entering into purchase and sale agreements with third parties, the builder assumes the responsibility to deliver the properties free of any encumbrances. This includes the obligation to remove mortgages and liens affecting the purchased units. However, in many cases, builders face financial difficulties that compromise the regularization of properties and expose buyers to significant risks.
In such cases, the buyer may file a specific performance action, requesting judicially that the liens preventing the regularization of the property be removed. Even with a daily fine (astreintes) for non-compliance with the obligation, enforcement may prove ineffective.
In response to the builder’s inaction, the buyer may also consider other measures, such as filing for the builder’s bankruptcy, which could lead to the liquidation of its assets and payment of creditors, including the buyer. Although the builder may avoid bankruptcy by paying the fines, the property’s regularization often remains pending due to claimed financial hardship.
Risks and Guarantees for Buyers: Good Faith and Third-Party Liens
Another relevant aspect of the case is the lien resulting from civil and labor lawsuits filed against the builder. Although the buyer has no direct relationship with these debts, the property they purchased ended up being affected by such measures, which is a common occurrence with companies facing multiple lawsuits.
At this point, the buyer may file a third-party objection to seek exclusion of the lien, demonstrating that they acquired the property in good faith and that it should not be encumbered by the builder’s debts. Additionally, they may seek compensation for material and moral damages due to the delay in property regularization.
The buyer’s good faith, supported by STJ Precedent 308, is an essential factor for their legal protection. However, in practice, enforcement of their rights often depends on legal actions and the builder’s financial ability to settle its debts, which frequently prolongs the litigation.
Conclusion
The complexity of real estate transactions involving partnerships between builders and landowners underscores the importance of adequate financial and legal management to prevent good-faith buyers from being harmed by the builder’s debts and obligations. While STJ Precedent 308 provides crucial protection, its practical application may encounter barriers when multiple liens exist on the property, necessitating a more assertive judicial approach from buyers.
It is crucial for buyers, before acquiring a pre-construction property, to thoroughly investigate the builder’s financial situation, check for existing mortgages and other guarantees, and, if necessary, include contractual clauses offering greater security regarding property regularization after payment. In court, actions such as specific performance, third-party objections, and compensation claims are tools that can assist buyers in defending their rights.
The builder’s responsibility is clear: to deliver the property free of encumbrances. When this does not occur, the buyer has the right to compensation and full regularization of their property.