Properties For Sale! New Legislation Governing the Acquisition of Government Real Property Enacted

On September 21, 2020, the Brazilian Ministry of Economy issued Ordinance Nos. 19,832/2020, 19.835/2020 and 19,837/2020, which will come into force on October 1, 2020 and, jointly, govern: (i) the presentation of proposals for the acquisition of government real property; (ii) the criteria for licensing of property appraisers; and (iii) the approval of appraisal reports.

The rules apply to proposals made on government real property that meet the following requirements: (i) in the government’s assessment, there is no interest that determines the maintenance of the property; (ii) the property is not legally characterized as marine land; and (iii) is not under occupation by the interested party.

The exclusion of marine land has its justification, outdated, it is true, and perhaps no longer currently applicable, but congruous with the equally outdated legislation in force. The exclusion of those under the occupation regime, although questionable, is consistent with Law No. 9,636 / 1998, which supports the aforementioned ordinances. Even so, the range of possibilities that the ordinances’ issuance represents is highly significant.

In addition to listing the documentation and information necessary to prepare the proposal, Ordinance No. 19,832/2020 creates a right of first refusal for the interested party in the acquisition that defrays the appraisal report. For the advancement of this right in relation to the winning bid, it is necessary that the report be prepared in accordance with the provisions of Ordinance No. 19,837/2020, by a qualified professional and in compliance with the requirements of Ordinance No. 19,835/2020. This right is also subordinate to the right of first refusal of any (i) assignees of in rem or personal right, tenants or lessees who are current with their obligations with the Brazilian Office of Government Property (in Portuguese, Secretaria da Patrimônio da União – SPU), (ii) condemnee and (iii) regular occupants of functional properties of the government.

Demarest’s Real Estate team is available to provide any further information or clarification on this and related matters.

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