By: Vitor Ferrari and Ivan Kubala

One of the most beloved investments by Brazilians, if not the most, is real estate.. Many investors profit from buying and selling these assets, so reducing operational and tax costs with this activity is of utmost importance to ensure the return on invested capital is as high as possible.

When a property is purchased, the purchaser must bear the registration costs at the corresponding Real Estate Registry Office, of the bookkeeping of the property and pay the ITBI (tax on the transfer of real estate), which is around 3% of the market value of the property.

Therefore, to know whether or not the acquisition of a certain property is a good investment, the investor must add to the amount paid all the costs that will arise from its incorporation into his personal assets. Thus, his profit margin will certainly be reduced from that which considers only the purchase and resale value of the property.

However, Real Estate Law provides mechanisms for real estate investors to reduce their costs in this type of investment, enabling greater profits.

Among such mechanisms there is the clause of a person to be declared that can be included in the purchase and sale agreement of the property., known in Civil Law as the Right of the Promising Buyer.

This mechanism allows the investor to insert a contractual clause in which he lists a third party to replace him in order to take over the purchase of the property in question. Thus, in the Contract with a Declarable Person, the investor is not the actual purchaser of the property, but merely an intermediary, who has reserved for himself the possibility of, if he wishes, choosing another person to take over his position within a certain period.

The big advantage in this case is that the prospective buyer, the one who will acquire the property with the investor, will not only receive the transaction bonuses., the property and the right to use it, but the burdens too: all the costs of registering the property and collecting taxes.

Therefore, the costs will be collected by the final buyer, and only once. (unlike what happens when the investor buys the asset for himself and resells it, incurring costs twice) which consequently means that the capital obtained from the sale of the property will be greater.

In view of the above, it is understood that the promissory buyer clause in the purchase and sale of real estate is a mechanism provided for by law that allows the investor to have a greater return on the capital invested.

However, it is not something simple to do, and it is essential that competent lawyers specialized in the areas of Real Estate and Contract Law act so that the inserted clause protects the interests of the investor and is within the legal limits, which you will certainly find here.

With the collaboration of Luis Felipe Simão