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Brazilian Federal Law No. 14,118 (“Law 14,118”) came into force on January 13th, 2021, as a result of the conversion of the Provisional Measure No. 996, of August 25th, 2020, to institute the housing program “Casa Verde e Amarela”, aiming to benefit families living in urban areas with a monthly income of up to BRL 7,000.00 and families living in rural areas with an annual income of up to BRL 84,000.00.
Main changes to the National Urban Housing Program: Law 14,118 amended Brazilian Federal Law No. 11,977, of July 7th, 2009 (“Law 11,977”), in order to include as costs of the National Urban Housing Program those resulting from technical assistance and engineering insurance, structural damage, civil liability of the builder, guarantee of completion of work and others aimed at mitigating risks inherent to housing developments. Such costs may be reimbursed by the entrepreneur.
Law 11,977 also provided a waiver for the obligation of carrying out an auction, in the event of consolidation of the real estate property on behalf of the fiduciary creditor, due to the non-payment of the beneficiary’s debt. In this event, the fiduciary creditor must reinclude the real estate property in housing programs, provided that the property meets the conditions of habitability. The donation of the real estate property to those who undertake the obligation to pay the amounts due by the defaulting families, aiming at living in the real estate property, was also provided.
Innovations to the Land Subdivision Law: Law 14,118 also amended Brazilian Federal Law No. 6,766, of December 19th, 1979 (“Law 6,766”), which deals with urban land subdivision. Article 2-A was included in Law 6,766 to define who is the entrepreneur responsible for the development of urban land subdivision. The following were listed as an entrepreneur: the owner of the property, the committed purchaser, the assignee or the committed assignee, the tenant in fee, the person hired to carry out the urban land subdivision, the entity of the direct or indirect public administration qualified to promote property expropriation for the purpose of implementing housing land subdivision or carrying out land regularization of social interest and the cooperative or association of residents who undertake the implementation of the land subdivision.
Another amendment to Law 6,766 brought by Law 14,118 refers to the deadline for the execution of the infrastructure works for the land subdivision or split, to be presented for real estate registration purposes. This term started to have a duration of 4 years, now extendable for another 4 years, according to the new wording of item V of paragraph 1 of Article 18 of Law 6,766. It should be noted that the legislator was not careful to change Article 9 of Law 6,766, which deals with the schedule of execution of the infrastructure works to be presented for the approval of the subdivision with the City Hall. This term remained with a 4-year maximum duration, without the provision for a 4-year extension as brought to Article 18.
The Electronic Property Registry System (“SREI”): Law 14,118 also amended Brazilian Federal Law No. 13,465, of July 11th, 2017 (“Law 13,465), as follows:
• it created a fund for the implementation and funding of the SREI;
• it assigned to the regulatory agent of the National Property Registry Operator (“ONR”) the following functions: to discipline the institution of the revenue of the referred fund, to establish the participation quotas of the real estate registry units in the Country, to inspect the collection and to supervise the application of funds and expenses of the manager; and,
• with regard to “Reurb” (urban land regularization program), in our opinion, the changes innovated, to a lesser extent, in relation to the previous wording.
Regulation: Law 14,118 was regulated by Federal Decree No 10,600, of January 14th, 2021, as published on January 15th, 2021. Such regulation aims to:
• create bands of gross income for urban and rural families eligible for the benefit;
• create priority criteria for granting the benefit;
• impose limits on the granting of the benefit, according to the value of the properties;
• classify the types of benefits;
• create periodicity criteria for the monetary adjustment of the benefit and the value of the properties; and
• create goals for the “Casa Verde e Amarela” Housing Program.
This material does not intend to exhaust the matter, but rather to highlight the main aspects related thereto. It is merely an informative text and should not be considered as a legal opinion or a legal consultation. It is forbidden to reproduce or disclose its content, partially or fully, without reference to authorship (Souto Correa Advogados).
Fernanda Girardi Tavares
Gilberto Deon Corrêa Junior
Jorge Cesa Ferreira da Silva
Letícia Diehl Tomkowski
Rafaela Chemale Kern
Rodrigo Ustárroz Cantali