Statutory lien on property: find out how it works and its advantages

Statutory lien

When purchasing a property, resorting to a type of mortgage is extremely common, either because of the impossibility of having all the necessary resources to pay it off at the time of purchase, or simply because you prefer to leave your money well invested.

When this happens, you need to look for some options — and the fiduciary sale of property is one of the most advantageous. Through this type of loan, the buyer uses the property itself as a form of guarantee to get better interest rates. In a nutshell, fiduciary alienation is nothing more than making a direct financing with the construction company.

Those who want to use this type of credit must be aware of several details of the contract, in addition to having a good knowledge of what the law provides. Want to know more about the subject? Keep reading and check it out!

After all, what is fiduciary sale of real estate?

Basically, the fiduciary sale of property is a type of credit in which the debtor passes to his creditor the ownership of a guarantor asset. In this way, the trustee (creditor) registers in his name all the legal documentation of the property, but the contracting party maintains the right of direct possession of the property, that is, he can continue to use it as housing. In this case, the trustee is the builder and the contractor is the client.

After the debt is fully paid off, the property imposed as collateral becomes property of the debtor again. If he is unable to honor the commitment to pay the debt, the creditor will be able to execute the guarantee without the need to go to court.

What is it for and how does it work?

Due to the speed of execution of the guarantee, the fiduciary sale of real estate has become one of the preferred credit modalities of creditors.

But it is important to remember that if the debtor (trustee) defaults, the construction company can take the property again, since the asset was given as guarantee by the client.

Because of this, the chattel mortgage is used as a form of guarantee for various operations, whether real estate or general credit. In addition to negotiations for the purchase and sale of real estate, AF is also used in complex agreements, such as mergers and acquisitions of companies.

What are the advantages?

Unlike bank financing, which only financial institutions are authorized to carry out, any individual or legal entity may be a creditor of a fiduciary sale. In addition, as mentioned, this credit modality provides a simple way of executing the guarantee, since the procedure only occurs at the Real Estate Registry Office, which avoids costly lawsuits.

For the debtor, the main advantage is that the guarantor asset is no longer part of its equity. Thus, if he has a company that suffers a lawsuit, such as a labor lawsuit, this process will not affect the property.

Who is it for?

As seen so far, fiduciary sale is an important modality of real estate credit. Through it, it is possible to use the acquired asset as loan guarantee, which facilitates the release of funds. In addition, this type of operation is one of the creditors’ favorites, as it is possible to maintain ownership of the asset and have more agility in executing the guarantee.

Thus, due to the security provided, this type of guarantee is widely used in the acquisition of properties in the plant.

What does the law provide?

As this is a highly complex negotiation, there are laws that regulate the fiduciary sale of property in Brazil. According to these regulations – Laws No. 9,514/1997 and No. 13,645/2017 – all the procedure for collecting and executing the guarantee takes place extrajudicially at the Real Estate Registry Office. Thus, it is not necessary to call the Judiciary Branch, which makes the process more agile.

If the debtor defaults, after the grace period provided for in the contract, the creditor gives a period to settle all outstanding amounts. This notification is made through the Real Estate Registry Office. After this period, if the trustee does not pay its debts, the trustee consolidates ownership of the asset.

After 30 days, the lender will hold an auction in which the minimum bid refers to the value of the property indicated in the contract. If the good is not auctioned, a new auction will be held 15 days after the first one, in which case the minimum bid refers to the total outstanding balance and expenses. If the amount collected exceeds the debt, the debtor will receive the difference.

What are the differences between lien and mortgage?

Currently, in addition to statutory lien, mortgages are another form of guarantee used to fulfill real estate purchase contracts in Brazil. The main difference between these two modalities is the form of the collection procedure.

While in fiduciary sale this process occurs extrajudicially at the Real Estate Registry Office, in mortgages it is necessary that the creditor file a lawsuit for execution. Thus, in the second case, there is a congestion of the Judiciary, which makes this procedure longer.

Is it possible to sell an alienated property?

Many trustees are dubious about selling used property as collateral. The answer is quite simple: it is possible, but the creditor must authorize this transaction. In addition, the seller must take some precautions, as he may remain liable for the debt if the procedure goes wrong.

To avoid this situation, it is necessary to include some terms in the purchase and sale agreement, such as the replacement of the seller for the creditor or the existence of a clause in which the buyer is responsible for the full settlement of the outstanding balance.

What precautions should be taken before taking out a loan?

So that the purchase of an apartment does not become a big headache, it is necessary to be careful when hiring a real estate loan. In addition to developing a financial plan that will make it possible to pay off the debt, the buyer must compare the payment terms between different financial institutions.

Another good precaution is to carefully read all documents before signing and, preferably, seek legal counsel during this process. Finally, it is necessary that the acquirer know that there are some extra expenses that must be paid, such as the discharge of taxes (ITBI) and registration of notary fees.

As seen, those who want to finance the purchase of an apartment need to have good knowledge about the fiduciary sale of property. After all, this method of guarantee is one of the most used in the country, as it provides security for the process.

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