In a recent decision, dated November 21st, 2018 that originated from “Recurso Especial” No. 1.733.560/SC, STJ ruled that the real estate exchange contracts are not equivalent to the purchase and sale transactions concerning tax effects.

In respect to this case, the plaintiff, a real estate developer, has entered into an agreement with the owners of the land, by which such land would be exchanged for certain units originated from the real estate ventures carried out by the real estate developer.

According to the aforementioned decision, although the Government sustained the applicability of PIS, COFINS, IRPJ and CSLL in the transaction, STJ still decided that the real estate exchange cannot be equivalent to the purchase and sale agreement from the tax perspective. STJ justified its position, since there is effectively no receipt of revenue, turnover or profit from the exchange of the land for the units.

Law No. 13,786, came into effect on December 28th, 2018, also known as “Lei dos Distratos”. It has changed the provisions of Law No. 4,591 and Law No. 6,766, ruling the early termination of the agreements regarding the acquisition of the units originated from real estate development and land subdivision, due to acquirer’s breach.

Amongst the changes brought by Law 13,786/2018, one of the most significant is the increase of the penalty imposed to the acquirer responsible for the contractual breach. Said penalty, if agreed in the contract, allows the withhold, by the real estate developer, of the up to 25% of the total amount paid by the acquirer. In cases of real estate development with segregate estate (patrimônio de afetação), the fine imposed on the acquirer can be up to 50% of the amount paid by the acquirer to the developer.

Law No 13,777, that regulates the real estate fractional ownership, was published on December 21, 2018. Said law has changed certain provisions of the Civil Code and Law No. 6,015/1973, which rules the public registries in Brazil.

The fractional ownership regime allows the acquisition, in a shared way of a real estate property. The use and enjoyment of the property by the owner will occur alternately and proportionately to the predefined period, as well as in accordance with the specific condominium rules of this legal regime.

Although it is a legal structure already known by the Brazilian real estate market, especially in the touristic regions, Law No. 13,777/2018 will provide greater legal certainty to the real estate market, since it specifies, in great detail the relationship between the acquirers and entrepreneurs and between the property owners.