The Superior Court of Justice (STJ, Brazil’s high court for non-constitutional federal law) has decided to review and clarify the limits on amounts retained by sellers in real estate contract terminations. The measure directly impacts the real estate development sector, affecting the dynamics of purchase and sale contract terminations.
The Concept of Contract Termination and Retention
In the real estate market, contract termination (distrato) occurs when a property purchase and sale agreement is undone before completion. This can happen for various reasons, including buyer withdrawal or the inability to maintain payments.
When a contract is terminated, the common practice is for the seller to retain a portion of the amounts already paid by the buyer. This retention is intended to cover administrative and operational costs generated by the uncompleted transaction. However, defining the exact amount that may be retained frequently sparks legal debates.
The Review by the STJ
The STJ’s recent movement aims to clarify these rules. By analyzing the matter, the superior court seeks to establish clearer parameters regarding the limits of seller retention.
The absence of well-defined limits can create uncertainty for both real estate development companies and buyers. For companies, clarity on retention percentages is essential for financial planning and structuring new developments. For buyers, the definition prevents the retention of amounts that could be deemed disproportionate.
Outlook for the Real Estate Development Sector
The expectation is that the STJ’s analysis will result in guidelines standardizing the understanding of courts across the country. Standardizing these rules is an important step toward increasing legal certainty in the Brazilian real estate market, reducing the volume of litigation involving contract terminations.
This content is for informational purposes only and does not constitute legal advice. For guidance on specific matters, consult a qualified lawyer.
