Federal Law amends adjustment method of Federal Government’s real estate revenue to simplify procedures for disposal and registration of its properties.

On December 07, 2022, Federal Law No. 14,474, of December 6, 2022, entered into effect throughout the Brazilian territory and brought the following main changes:

(a) changes in the method of adjustment of the Federal Government’s real estate revenue resulting from property value map updates;

(b) simplification of procedures of disposal and registration of the Federal Government’s properties;

(c) new deadlines for the transfer of properties; and

(d) new rules for the delimitation of navy lands.

The main innovations include:

• For the purpose of recording debts related to jurisdiction, occupancy fee, and other extraordinary revenues, the adjustment of property tariffs resulting from the updated property value map must be limited:
  • to 10.06% on amounts collected during 2021, except in the case of correction of registration inconsistencies; or
  • while a regulation is not published, to twice the accumulated variation of the Broad National Consumer Price Index (“IPCA”) for the previous fiscal year, whichever is lower.
• The minimum price for transfer for valuable consideration (acquisition of property through the assignment or transfer of ownership) of full, useful or direct ownership of the Federal Government’s properties will be fixed based on a property’s market value, established by an evaluation report, which will be valid for 12 months.
• The law introduces the possibility of a direct sale, with a discount of twenty-five percent (25%) on the property value, as stated in the first public notice, in case it is subject to competition or public auction that was unattended or unsuccessful for two consecutive rounds.
• At the discretion of the Executive Branch, properties registered as occupations can be sold directly to the holders of the agreement on assignment of use (considering their market value), under any modality or system, provided that they are in compliance with their respective contractual obligations.
• A notice from the Secretariat for Coordination and Governance of Federal Assets (“SCGPU”) will be sufficient for Public Notary Offices to certify any annotation in the registration of these properties referring to:
• disallocation of property belonging to the General Social Security System’s Fund (“FRGPS”); and
• ownership of the Federal Government. The Corporate Taxpayer Identification (“CNPJ”) number of the Secretariat’s central body and the name “Federal Government” must be included.
• The exchange between the Federal Government and the General Social Security System’s Fund was authorized in the following cases:
  • real estate for real estate;
  • real estate for investment fund shares; and
  • shares for shares.

Both the Federal Government and the FRGPS can own the shares or real estate involved in these transactions.

• Property owned by the FRGPS can be transferred to the Federal Government, which will be reincorporated to the FRGPS (upon evaluation of the market value over the previous 12 months and extended for the same period), through the transfer of resources to the Fund provided for in the annual budget law.

The full text of Law No. 14,474/22 can be accessed here.

Demarest’s Real Estate team is monitoring new developments within the sector and is available to provide any further clarifications that may be necessary.