National Council of Justice regulates extrajudicial notarial escrow accounts in Brazil

On June 13, 2025, Brazil’s National Council of Justice (CNJ) issued Normative Instruction No. 197, which regulates the provision of notarial escrow account services managed by notary publics.

Specifically, it addresses paragraph 1 of Article 7-A of Law No. 8,935/1994, as introduced by Law No. 14,711/2023, which established the framework for offering this service.

Although the law already allowed notary publics to hold funds in custody, the new regulation marks a significant shift in the landscape, one that is particularly relevant to lawyers, financial institutions, real estate developers, and investors. Notably, the service is not limited to transactions formalized through public deeds.

The extrajudicial notarial escrow account enables notary publics to receive and manage funds deposited into individual accounts that are exclusively linked to legal transactions. This management is contingent upon the occurrence of pre-agreed, objectively verifiable conditions. If such conditions are not met, the notary may refuse to provide the service. In addition, the service provision must comply with principles of legality, transparency, legal certainty, impartiality, and objective good faith.

The instruction authorizes the Notarial Collegiate of Brazil – Federal Council (CNB/CF) to enter into agreements with financial institutions to provide the service. These agreements must provide for responsibilities, fees, and mechanisms for control, security, and auditing. Also, the deposited funds must be segregated from the institutions’ funds.

In order to provide these services, notary publics must be accredited by the CNB/CF, guide the parties involved, verify legal capacity and tax compliance, and register the transaction details in an electronic system. The parties’ request must include detailed information about the transaction, the conditions for releasing the funds, and banking details for potential refunds.

The notary public will also have specific due diligence responsibilities, given that the deposited funds will be segregated and consequently not subject to seizure by judicial or tax authorities due to obligations of the depositor, any party involved, or the notary public, for any reason unrelated to the transaction itself. These obligations include checking for restrictions or risks regarding the service, particularly through civil, labor, and criminal court records. For legal entities, tax compliance certificates are also required.

Funds can only be released after the agreed-upon conditions have been verified. In the event of a dispute between the parties, the notary public must suspend the transaction, draft a notarial instrument, and await a consensual or judicial resolution. If the disagreement persists, the funds will be returned to the depositor according to contractual terms and conditions. Therefore, parties must clearly and objectively establish the conditions that will trigger the release (or not) of the funds.

The related financial institution will be responsible for notary publics’ remuneration regarding notarial escrow account services. Moreover, the notary public will have civil, administrative, and criminal liability for any irregularities in service provision.

The new regulation also assists financial institutions in allocating responsibilities, regardless of whether they provide custody services or not, by assigning the notary public full authority to determine the destination of escrowed funds.

The instruction ensures confidentiality in cases involving non-disclosure clauses and mandates that documents be filed with restricted access. State disciplinary boards may issue supplementary regulations, and the CNB/CF must submit reports every six months to the General Disciplinary Board of the Courts.

Demarest’s Real Estate and Banking & Finance teams are closely monitoring developments and remain available to assist clients with all related matters.