Buying an Apartment without Matricula

@californiainbrazil

It means that you will only ever have possession of the apartment, and never full title (escritura). Possibly because records were lost years ago, or more likely transactions were never completed (ie title transferred by escritura, possibly many times), and now it would need a lengthy and expensive court case, with lots of back taxes to pay. The legal process is called adjudicação.

Every time a sale is made, the first cost to pay towards escritura is ITBI (Town Hall Transfer Tax), usually around 2% of the property value. If this is not paid at the time, it is passed on to the next owner, then the next, etc, etc, with interest and fines potentially being added each time. PLUS, the tax is applied at the assessed value today, at the time the taxes are paid,not what the place was worth many years ago!

I have just completed such a process and it took 7 years to go to court (albeit with the pandemic in the middle), and 3 sets of back taxes that I will have to pay. But I got the place for a song as it had been abandoned and was a renovation project, so was worth it.

In some cities (eg Pipa in RN), this is not uncommon, but I would suggest you walk away from it.

Sorry for asking @peter_itamaraca, but what happens to properties that end up being abandoned because it is too complicated and took too long to find out how to untangle the property mess (the red building in Pillar for example)?

Is there a fire-sale process whereby everything is reset to zero? 

In California, I think that there is an all-cash auction process on the steps of a government building and people can walk with an official title in exchange for a briefcase full of cash....

I have not done this myself as those auctions tend to be "hush-hush" - MI6 style communications (or it's so far from me that it's a mystery).

@Pablo888

Residential properties that have been "abandoned" are usually observed for a decent period, then slowly and quietly occupied. That is one basis for possession, and after many years and following certain procedures usucapiao (squatters rights) may be applied for in a court of law. But that takes time and money, so often it remains at possession - like in the original example, I imagine.

In terms of commercial buildings like the red one in Pilar, that was subject to action by the tax authorities and federal government with police involvement, and probably nothing will happen until it is ready to collapse...

There are property auctions in Brazil, but these are usually as a result of things like bank foreclosures, or commercial sales, not like town hall step auctions in the US.

@californiainbrazil

My understanding is that the "Contrato de Compra e Venda" is a promise from the seller, that s/he will sell it to you. In many cases this is enough for you to pay for it, take possession and live in it, but it is not legally yours yet. Not sure what "RGI" means, but it sounds like the property papers are not all in order and the sellers might not be able to transfer the deed of title (escritura) to you as is. This could be due to many reasons such as many heirs to the property (and disagreements between them), divorce, lack of payment of property taxes, liens and so on. Proceed with caution. My advice would be to get a despachante to check the property for you and see what the problem is and what it would take to solve all the problems (how much it would cost) and have the escritura.

I bought an apartment recently, paid 20% when we signed the 'Contrato de Compra e Venda' and the rest when we all signed the escritura.  I had a despachante helping me with all the details and it went very smoothly.

The RGI is the history kept at a cartorio where legal transfers of title (escritura's) for property are documented and recorded. You must go to the cartorio where the property has been previously  transacted in the past to register your escritura in the RGI. Buying a legal property and not registering the RGI leaves you open to RE fraud.

I just closed last month on an apartment. The cartorio fees for the escritura and RGI came to R$10,000........having said that, you can buy cheap property where these fees can easily be 10% of the total purchase price, perhaps dissuading some from obtaining the escritura and RGI.

One other thing I noticed in the NE is that there are a lot of cheap houses R$150-250K without escritura/RGI. IMHO a developer bought a parcel and developed the houses on said parcel either legally or otherwise, but, to keep their costs down, they sell an undivided interest in the raw land that just happens to have a house on it, circumventing the additional expense of properly developing the parcel.

One other thing I noticed in the NE is that there are a lot of cheap houses R$150-250K without escritura/RGI. IMHO a developer bought a parcel and developed the houses on said parcel either legally or otherwise, but, to keep their costs down, they sell an undivided interest in the raw land that just happens to have a house on it, circumventing the additional expense of properly developing the parcel. - @Gasparzinho 777

Except that a developer cannot get planning permission and the necessary licences from the Town Hall and other authorities unless he has already transferred title to the raw land into his name. Further, he cannot legally sell any houses until he has received the Habit-se (licence to occupy) from the Town Hall, paid all and any employment taxes, etc, and registered the houses in his name. So a developer would, or could, never do this.

How do you explain the inexpensive, casa de condominium type of offerings that do not qualify for financing, etc ? And why don't they qualify ? That is what I'm curious about. Trying to understand the angle I guess. I see these places offered only with financing offered by the developer. Not interested in buying one.

Just to close this discussion here.... I have heard many, if not all, of the reasons not to do it....

Is the only sure way to make this enterprise a success is to be well connected - with local people who can move the process along secured before starting?

Just to close this discussion here.... I have heard many, if not all, of the reasons not to do it....
Is the only sure way to make this enterprise a success is to be well connected - with local people who can move the process along secured before starting? - @Pablo888

Exactly correct!

@Gasparzinho 777

What may to you be cheap at R$150-250k, may be expensive to the next person. I know dozens of "casa de condominium" type houses, as you call them, that are perfectly legal and may be bought with finance - indeed I know of none that are not. And the typical price is within this range for a fully licensed, newly-built home. As in every country in the world property prices vary from suburb to suburb, city to countryside, region to region, location to location, and Brazil is no different. Just because a home is cheap by comparison does not mean it is illegal.

But I was referring to commercial developers who would not consider building and trying to sell illegal homes, as this would negate their business plan.

However there are numerous reasons why a home may not qualify for finance, the most common one being problems with the buyer, not the property. But owing back taxes or condo fees and incomplete paperwork from the current owner (not the developer) are a couple of possibilities.

I'm going to draw a correlation from my limited experience in the two property markets in Brasil where I have bought and sold.......Rio de Janeiro and Petropolis.

In both locations, you have "communidades" or favelas, as the disrespectful You Tube crowd that encourages tourism calls them. You also have residential properties developed by "milicias" that are then sold to lower or middle income buyers. In both cases there is zero oversight, regulation, inspection, or taxation undertaken by any authoritative body. In fact a milicia operated illegal high rise condo in Rio collapsed a couple of years ago. Ergo, inexpensive and "nao possui RGI".........seen stuff in the Unamar area also described as such. Nice looking small houses. Thus, my curiosity. And I guess there is only one explanation, which I touched on in an earlier post on this board. Thx for the reply.

@Gasparzinho 777

My apologies - you mentioned NE Brazil in your original comment, not the favelas and illegal buildings of Rio and that area, so I presumed we were still discussing NE Brazil... I cannot comment about Rio area as I have no experience there.

Yes, the NE, but, I'm also speaking generally about things I've seen in both areas. Trying to put a picture together as to why things are the way the way are in different places, and see if there a commonality of cause, so to speak. That's all. What is common in the SE IMHO also exists in the NE as well. The scale of it may be different, but it probably exists as well.

In both locations, you have "communidades" or favelas, as the disrespectful You Tube crowd that encourages tourism calls them. - @Gasparzinho 777

Although I understand the desire to replace the term "favela", the use of the word is far more prevalent than just the "You Tube crowd". In fact, it remains ubiquitous. This morning (Nov. 9) the word appears dozens of times in most Brazilian newspapers because yesterday the census numbers of how many people live in them were released. For example, a headline on the front page of Folha de S. Paulo today reads: "Brasil tem 16,4 mi vivendo em favelas, aponto Censo". O Globo has the front-page headline: "O Brasil favela".

My quibble with the word "communidade" is that it is so generic that it's meaningless. Almost everyone lives in a "community".

Funny that the word "favela" was mentioned....

Here is an article about that.... a ranking of favelas in São Paulo.

https://noticias.uol.com.br/cotidiano/u … -paulo.htm

I saw an apartment I was interested in but the detail on the apartment said "Não possui RGI. Negociação será através de contrato de compra e venda". I thought the only way to register a property was through a public deed and then filing that for the matricula with the Cartorio de Imoveis.
Anyone have any experience with the above? - @californiainbrazil

No Matricula, no deal.  Seller has to provide it, or the broker can pull the matricula from the subject property through a subscription database. 

Granted it might not be the original, but a copy, which is fine for due diligence only.

What it might be offered is a "Contrato de Gaveta" another big no-no.

And the latest quitclaim deed has to show a seller of record on the thread.

And you need to see that the seller has no encumbrances in its name. Same if he/she has a business. 

There are a lot of properties which never gotten changes, for tax purposes. But then again, you are walking into a can or worms as far as conveyance process goes. 

Outside the Cartorios de Titulos de Protestos Certificate , all certificates are actually free of charge. There is no excuse to get the pre evaluation paperwork timely and at your request.