Regulation

The real estate activity is primarily governed by federal laws that regulate property rights, urban policy guidelines and instruments, real estate development activity, multi-use condominium, land subdivision and rent of urban properties, as well as by municipal laws, which establish land use and occupation rules, zoning and construction. In relation to the environment, federal, state and municipal legislation, in a concurrent and complementary manner, also have power over the real estate activity regulation, particularly concerning environmental permit. The Civil Code regulates, among other aspects, the acquisition of properties. For the purpose of providing more safety to real estate transactions, businesses involving acquisition of property or other real rights over immovable assets must, as a general rule, be conducted by means of a public deed drawn up in a Notary Public Office, except in cases where the law expressively allows the use of private instruments, as in cases of purchase and sale of property involving SFI (Real Estate Financing System) and SFH (Housing Finance System), among others provided by law. In both cases, the Civil Code states that, however, the effective transfer of property rights to the purchaser shall only occur upon registration of a public deed or private instrument, in the cases provided by law, when the property is registered by the Property Registry Officer of the competent judicial circuit, according to the property location.

The Civil Code regulates, among other aspects, the acquisition of immovable assets. For the purpose of providing more safety to real estate transactions, businesses involving acquisition of property or other real rights over immovable assets must, as a general rule, be conducted by means of a public deed drawn up in a Notary Public Office, except in cases where the law expressively allows the use of private instruments, as in cases of purchase and sale of property involving SFI (Real Estate Financing System) and SFH (Housing Finance System), among others provided by law. In both cases, the Civil Code states that, however, the effective transfer of property rights to the purchaser shall only occur upon registration of a public deed or private instrument, in the cases provided by law, when the property is registered by the Property Registry Officer of the competent judicial circuit, according to the property location.


Real Estate Development

The real estate development, regulated by Law 4.591, of December 1964 (Real Estate Regulation and Development Act), consists in an activity conducted with the purpose of promoting and executing the construction, for total or partial disposal, of buildings or set of building composed of units, by means of sale and purchase undertakings or the effective sale and purchase of lands in undivided interest linked to future units in buildings to be constructed or in construction under a Condominium Property Regime, the developer being responsible for the delivery, within a certain period, price and certain conditions of finished works.

Among other aspects, the Real Estate Regulation and Development Act regulates the rights and obligations of the developer, including:

  • obtain all the approvals and authorizations from competent organizations necessary for implementing the venture;
  • Only negotiate sales of units under construction after obtaining the development registry at the land registry with the Property Registry Officer;
  • indicate in all advertisement, commercial material of the venture and sale and purchase agreements the land real estate registry number and the development registry number in the referred registry with the competent Property Registry Officer;
  • indicate, in preliminary documents, the period for the developer to withdraw from conducting the project;
  • oversee project construction provided in contract and according to approval granted by the government authorities;
  • obtain a conclusion certificate (Occupancy Permit) for the venture;
  • execute the specification and establishment of the multi-use condominium, so that each unit may have its exclusive owner, annotating the constructed area of the venture
  • deliver to the purchaser the finished units, according to contractual specifications, and transfer to the purchaser the Unit property right, by drawing up a sale and purchase public deed.


Developer Escrow Account and RET

According to Law No. 10.931/04, the developed is provided with the possibility of subjecting the real estate development to the regime of developer escrow account and Special Tax Rulings (RET), which establish several rights and obligations to the developer, resulting in a greater protection for real estate units’ purchasers and to the work financing bank.

The developer escrow account segregates the land, works conducted in it, financial resources and all other assets and rights linked to it from the developer's equity, which shall only be destined to the construction and delivery of this specific real estate venture. This way, the venture subject to developer escrow account shall only be responsible for obligations linked to the execution of its works and delivery of finished units to purchasers, without interaction with other rights, debts and/or obligations of the developers or other developments.

From 01/01/2013, in virtue of Article four of Provisional Measure 601/2012, for each development subject to the special tax rulings, the developer shall be subject to pay an amount equivalent to four percent (4%) of the monthly return, which shall include the following taxes and contributions: 1.71% as Cofins (Contribution for Social Security Financing); 0,37% as Contribution for PIS/Pasep (Social Integration Program/ Civil service/civil servant social security system); 1,26% as IRPJ (Corporate Income Tax); and 0.66% as CSLL (social contribution on net income).

Since 2013, the Company makes use of the "Developer Escrow Account" regime in all real estate ventures. Notwithstanding, Vitacon uses Special Purpose Corporations (SPC) for conducting specific real estate ventures, whose purpose is a total segregation of rights and obligations of each one of the real estate ventures executed by the company, reinforcing safety of the "developer escrow account" and presenting itself, as well, as a more efficient and transparent structure for cases in which the company establishes partnerships with third parties.


Chattel Mortgage

The Law No. 9.514/97 established chattel mortgage on properties with the purpose of facilitating real estate financing in general. With the chattel mortgage method, the creditor owns the assets granted as a guaranty by the debtor. According to Law No. 9.514/97, upon full payment of the debt to the creditor, the chattel mortgage is automatically terminated and the debtor becomes owner of the property.

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