The Bill of Conversion 12/2017 (“Bill”), authored by Senator Romero Jucá, was approved Wednesday, May 31, by the Senate, stemming from the Provisional Measure No. 759/16 ("MP 759"), already approved by the House of Representatives on May 24. The Bill regulates rural and urban land regularization, among other measures, and among the main changes brought by the Bill in relation to the text of MP 759 are included:

(i) the increase in the target public of land regularization in areas owned by the Federal Government, within the scope of the Amazônia Legal (“Legal Amazon”), as addressed in Federal Law No. 11.952/2009. According to the text of MP 759, one of the requirements for the regularization of occupancy is the proof provided by the occupant in relation to the occupation, as well as the direct, reserved and peaceful exploitation of the property prior to December 1, 2004. Considering the amendment proposed by the Bill, occupations prior to July 2008 will be eligible for the procedure.

(ii) changes of the rules regarding the direct sale of residential properties owned by the Federal Government or, its entities from the indirect administration. According to the Bill, occupations after July 22, 2008 will be eligible (from the text MP 759/16, occupations after December 1, 2004 would be eligible). The limit concerned with the area of eligible properties was significantly increased, as stated in the text of the Bill, increasing from 1,500 to 2,500 hectares.

(iii) possibility of acquisition of rural lands located outside the Legal Amazon and owned by the Federal Government and the National Institute of Colonization and Agrarian Reform (INCRA) by their occupants with waiver of bid proceeding. The price for the referred proceeding will follow the same criteria applicable to the properties located in the Legal Amazon.

(iv) direct sale of properties under emphyteuse regime and those registered in occupation, observing the established requirements.

(v) accountability of the seller for collecting the amount correspondent to the transfer duty ‘laudêmio’, in the onerous transfer between inter vivos of the use domain and  the registration of occupation of land owned by the Federal Government, or cession of rights related to them. With respect to the fine imposed as a result of the non-communication to the Federal Properties Management Office (SPU) about the onerous transfer, the rate increased from 0.05% to 0.5%, calculated with a basis on value of the land, excluding improvements.

(vi) Urban Land Regularization (Reurb), which is also addressed by the Bill under the concept of informal urban centers, in the categories “Reurb-S” and “Reurb-E”, intended for the low-income population and informal urban centers occupied by people of higher income, respectively. Having the aim of  promoting social integration and job creation, the Bill defines who, and through the use of which instruments, may request the urban land regularization. One example of a mechanism for such regularization is landholding regularization, by which the public authority will issue a Certificate of Land Regularization (CRF), a document  that should include the approved regularization project, as well as other information regarding occupation of the property.

(vii) the transfer of abandoned private urban properties to municipalities or Federal District, thus considered those whose taxes are not paid within five years. In addition, the Bill changes the procedure rule for the extrajudicial recognition of usucapio provided for in Article 216-A of the Public Registers Law: thus, in the event that the holder of registered rights or registered in title registry (concerning neighbors’ properties or properties with the usucapio) is notified and does not expressly object within 15 days, their silence will be interpreted as agreement. The original wording of Article 216-A had interpreted ‘silence’ as a disagreement with the procedure.

(viii) changes in Law No. 9.514 of November 20, 1997, which provides for the property’s fiduciary alienation. In accordance with the new text, after the annotation of the consolidation of the fiduciary property in the patrimony of the fiduciary creditor and until the execution of the second auction, the right of first refusal will be assured to the fiduciary debtor to acquire the property for a price corresponding to the value of the debt plus the tax charges and expenses due for the new acquisition of the property, including costs and emoluments.

(ix) national implementation and operation of the System of Electronic Real Estate Registry (SREI) by the National Operator of the System of Electronic Real Estate Registry (ONR), a non-profit legal entity established under private law that will be created by the Institute of Real Estate Registry of Brazil (IRIB) and approved by the National Office of the National Counsel of Justice. With its operation, SREI will facilitate the exchange of information between registry offices, the Judiciary, the public administration and the public in general.

(x) institution of the National Record File Code (CNM), which shall consist of a single numbering of real estate record files in national scope. The characteristics and implementation of the CNM will be regulated by the National Justice Office.

(xi) applicability of all legal devices of the Bill to the island of Fernando de Noronha and other oceanic and coastal islands of the country, under current property legislation. This subject deserves a detailed analysis, considering the current discussions about the autonomy of the land management of the territory of Fernando de Noronha, between the State of Pernambuco and the Federal Union.

The text of the Bill has more than a hundred articles and, as we have seen, changes several legal texts of the most varied matters, whose content is not exhausted in this article. The text of the Bill is now pending the sanction of the president of the Republic.

Observations in this update about Brazilian law are by Tauil & Chequer Advogados. They are not intended to provide legal advice to any entity; any entity considering the possibility of a transaction must seek advice tailored to its particular circumstances.