Termination law: what changes in the real estate market?

At the end of 2018, President Michel Temer signed the Real Estate Sale Law. This legislation was the subject of intense debate in the Chamber and in the Senate, as there were many doubts about its impact on the consumer’s life and on the day-to-day life of the construction companies.

With this new rule in place for property purchases, we decided to publish this article. The aim is to clarify what has changed from the old legislation to the new one. Come on?

Termination Law: why did the law change?

This is a common mistake that people are making when commenting on furniture cancellation legislation. The law has not changed, because, in fact, there was no legislation that talked about this topic.

The cases were judged by case law. This means that judges were based on the way in which similar cases have been tried in the past. This jurisprudence caused most of the cancellations to occur with a 25% retention for what the consumer had already paid.

What are the new rules?

The consumer needs to be aware of the characteristics of the construction company he hired. If the company has “earmarked assets”, the cancellation will be more expensive for the customer: 50% of the amount already paid.

This is because the affected property is a private capital of the company that it makes available to the work, as a guarantee that there are sufficient resources for the construction and delivery of the properties.

Now, if the company has no earmarked assets, something more common to large construction companies, the fine paid for the cancellation will be up to 25% of the amount already paid in the deal.

The developer or builder has up to 30 days after the completion of the works to make payment to the buyer.

Termination for work delay

The Law states that  if the company delays  the delivery of the property in a period exceeding 180 calendar days, from the delivery date stipulated in the contract, the customer is entitled to withdraw from the deal, receiving the full amount paid, corrected by the contract index. In that case, he must file a lawsuit against the company. The judiciary will review the request. The deadline for this reimbursement is up to 60 days.

If he has no interest in giving up the property, or there is no contractual clause stating that the company must indemnify him with the payment of the total value of the property, the company will have to pay him a monthly fine of 1% of the amount paid by monthly payment.

When should I choose to cancel a property?

Canceling should be an option for buyers who are unable to make payments. It is preferable to abandon the business and receive only a part of what has been paid, rather than to go into debt and end up losing more money.

The new law makes that clear. The withdrawal should no longer be made because the buyer no longer finds the purchase attractive or because he has found a better property. This stance harmed the construction companies’ cash flow, causing them to have legal uncertainty to run the buildings. With the termination law this decreases.

 

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