Brazil’s Supreme Court resumes hearing on restrictions on the purchase and lease of rural real estate by foreigners (ADPF 342)

On March 18, 2026, Brazil’s Supreme Court (“STF”) resumed the hearing of the Motion for Non-Compliance with a Fundamental Precept (“ADPF”) No. 342, which addresses restrictions on the acquisition and leasing of rural real estate by foreigners and Brazilian companies controlled by foreign capital.

ADPF 342, filed by the Brazilian Rural Society (“SRB”), challenges the constitutionality of Article 1, §1, of Law No. 5,709/1971, a provision that extends to Brazilian companies under foreign control the same legal regime applicable to foreign nationals regarding the acquisition and leasing of rural real estate.

In summary, the SRB argues that this provision was not incorporated into the 1988 Federal Constitution, especially after the repeal of Article 171 of the Constitution by Constitutional Amendment No. 6/1995, contending that Brazilian companies – even if controlled by foreigners – should not be subject to the restrictions provided for in Law No. 5,709/1971.

The adjudication of ADPF 342 is proceeding in conjunction with Original Civil Action (“ACO”) No. 2,463, filed by the Federal Government and National Institute for Colonization and Agrarian Reform (“INCRA”), which challenges an opinion by the General Inspectorate of Justice of the State of São Paulo that exempted notaries and registrars from applying such restrictions.

Progress of the Trial

The trial formally began at the STF. As Justice Marco Aurélio had already cast his vote previously, Justice André Mendonça, the current reporting judge for the case, did not vote in this session.

During the session on March 18, the following occurred:

• Reading of the report;
• Oral arguments of the parties and interested parties; and
• Vote of Justice Gilmar Mendes, who concurred with Justice Marco Aurélio’s vote, ruling that ADPF 342 should be dismissed, and ACO 2,463 should be upheld, thereby maintaining the application of the legal restrictions currently in force.

Following the vote, the hearing was adjourned, with proceedings scheduled to resume on March 19, 2026.

Preliminary Outcome

To date, the preliminary outcome indicates:

• A vote to dismiss ADPF 342; and
• A vote to uphold ACO 2,463.

To date, there is no final decision by the STF Plenary.

Impacts and Relevance

The absence of a definitive outcome maintains the current landscape of legal uncertainty, with significant impacts on transactions involving rural real estate, especially those structured with foreign capital participation.

The STF’s decision – whether to maintain or relax the restrictive regime – will be of extreme importance for agribusiness and the investment environment in Brazil, as it will directly influence Brazil’s attractiveness to foreign investors and the legal certainty of real estate and agrarian transactions.

Demarest’s Real Estate and Agribusiness teams continue to closely monitor the progress of the case and remain available to assess the specific impacts of the outcome of ADPF 342 and ACO 2,463 on ongoing or planned transactions and investments.