Why is Rural Property Due Diligence Essential?

Risk Mitigation:

It identifies problems, conflicts, points of attention, debts, lawsuits, environmental issues, and other situations that can lead to significant losses, even death. It helps prevent unpleasant surprises and financial loss. It also helps prevent scams and fraud, such as selling the same property to multiple people or selling by someone who is not the legitimate owner.

Photo of a farm is for illustrative purposes only.

Thorough analysis of property deeds from the last 30 days.

   Fraud are very common with brazilian property tittle

Unfortunately, some Land Registry Offices (RGI - Registro de Imóveis) and some Brazilian Notary Offices perform illegal acts on property deeds, on Brazil Real Estate documents .

Sometimes, these are frauds that involve the cancellation of the property's original deed. Other situations of illegal acts on property deeds can be a more sophisticated scam with a court order and not just fraud in the deed by an isolated act of a dishonest notary.

🚩🚩🚩 Alert for fraud and scam risk: When someone suggests canceling a property deed to change ownership or tries to evade a due tax and not pay it, or tries to resurrect a deceased person with a fake signature or uses a void digital signature from some startups out there...

🚩🚩🚩🚩🚩 Alert for fraud and scam risk with the deed: When the deed number is new, but the property is old.

Here is a list of the basic initial documentation required for researching Brazil rural properties. It's important to verify some of the items on this list before visiting the properties:

Environmental Analysis:

• Compliance with the Forest Code: Verify if the APPs (Permanent Preservation Areas) and Legal Reserve are in accordance with the law. Analyzing the CAR (Rural Environmental Registry) is the starting point.
• Environmental Licenses: If there are activities that require licensing (deforestation, water use permits, specific agricultural activities), verify the validity and regularity of these licenses.
• Infraction Notices and Embargos: Research with environmental agencies (IBAMA, state agencies, INEMA) for the existence of fines, embargos, or Terms of Conduct Adjustment (TAC) related to the area.
• Environmental Liabilities: Investigate possible soil or water contamination, especially if there have been potentially polluting activities in the area.
• Additional Restrictions: Verify if the area is located within Conservation Units, indigenous lands, Quilombola territories, or other areas with specific legal restrictions.

1. Research on the Funai website: It is essential to verify if the area is at risk of being considered indigenous land. To do so, include:

• Map analysis
• Certificate of Indigenous Rural Activity
• I emphasize that if the area is identified as indigenous land, its commercialization is not allowed.

1. Verification of Quilombola areas: Consult the Palmares Cultural Foundation (FCP) and the National Institute of Colonization and Agrarian Reform (INCRA). The Self-Recognition Certificate, issued by the Palmares Cultural Foundation (FCP), is the document that attests to the recognition of a Quilombola community. I inform you that in case of identification as Quilombola land, the land cannot be sold.
2. National Register of Archaeological Sites (CNSA): Consultation with the National Register of Archaeological Sites (CNSA) maintained by IPHAN.
3. Property Deed:

• Preferably updated within the last 20 days.
• Verify at the competent Real Estate Registry Office or request a full copy of the property deed online.
• It is very important to analyze the entire history to confirm the chain of ownership (who the previous owners were), the existence of encumbrances (mortgages, liens, usufructs), lawsuits related to the property, whether the description matches reality, and if there is any risk of a problem, crime, or nullity in any real estate transaction with this property in this document.
• Discard the risk of classic scams: Void signatures, asset concealment, post-dispute/divorce asset violence, money laundering, false power of attorney scams, fraud, embezzlement, among other risks.
• Verification of Possession: In some cases, especially in older occupation areas or with complex histories, investigate the possession status to avoid conflicts with squatters.

1. CNIB Certificate: A document from the Brazilian system that integrates judicial and administrative orders on the unavailability of assets.

• Certificates of No Encumbrances and Repersecutory Actions: Obtain certificates that attest to the non-existence of debts or lawsuits that may affect the property's ownership.

1. Certificate of Negative Debt (CND).
2. Rural Property Registration Certificate (CCIR): A document issued by Incra.
3. ITR (Rural Territorial Property Tax): Proof of payment of the Rural Territorial Tax (ITR).
4. Certificate of No Encumbrances and Alienations.
5. Rural Environmental Registry (CAR).
6. Georeferencing.
7. Research for Environmental Licenses and research for environmental fines, embargos, infraction notices with the environmental police, and checking the history with the environmental police.

Photo of a farmer from a stock image is for illustrative purposes only.

1. Analysis of the Seller and Buyer:

• Negative Certificates: Obtain negative certificates for tax debts (federal, state, municipal), labor debts, and civil and criminal actions in the name of the sellers (individuals or legal entities and their partners). Significant debts of the seller can put the sale at risk (fraud against creditors).
• Corporate Status (if a legal entity): Analyze the articles of incorporation, verify if the person signing has the authority to sell the property, and if the company is in good standing.
• Property Regime (if an individual): Verify the seller's marital status and property regime, as a spousal signature may be required for the sale.

• Personal Documents and Process Research:
• CPF Number
• Photos of ID, identification document, photos with identification data, date of birth, and signature.
• CNPJ (Brazilian Corporate Taxpayer Registry)
• Passports, photos of the pages with identification data and signature.
• Birth certificate or marriage certificate, divorce certificate, marriage certificate with the spouse's death annotation.
• If there is a company: Articles of incorporation, CNPJ.
• Criminal Background Certificate (Criminal distribution certificate).
• Bankruptcy and Judicial Recovery Certificate.
• Estate distribution certificate.
• Consultation on the website to see if there is an arrest warrant issued in Brazil and if they are on the Interpol list, court websites:
• Consultation of the National Council of Justice's National Database of Arrest Warrants (BNMP/CNJ) in Brazil.

• List of wanted criminals in various countries on the Interpol website.

1. Consultation with Inema.
2. Certificate of Debts Related to Federal Tax Credits and the Federal, State, and Municipal Active Debt.
3. Certificate of Interdiction and Tutelage.
4. Certificates: Labor Action Certificate (CAT) or Negative Labor Debt Certificate (CNDT).
5. Search and risk analysis for invasion and, when possible, investigate the risk of expropriation and a history of conflicts and violence.
6. Search for lawsuits, including labor and criminal lawsuits.
7. Checking the SPU website:

• Verification if the property is owned by the SPU (Secretariat of Union Heritage).
• Verify if there is unpaid DARF (Federal Revenue Collection Document).
• I inform you that SPU lands and properties cannot be sold outside of a Brazilian federal government notice. What happens is authorization of possession, change of possession, and there is an annual DARF payment fee to the SPU for Brazilian citizens.
• Common Scam: A void private contract for the purchase and sale of properties owned by the Union (Brazil) or a public deed for the sale of property possession with years of unpaid SPU DARF.

1. Check the quality of the neighbors.
2. Analysis of valid signatures, e-notary, e-cnpj, e-cpf.
3. Conclusion:

• In this article, I presented a brief summary, as each case is unique and may require other procedures, with various extra documents beyond those listed in this article.

Recommendation:

• A bit of the complexity and specificities of rural properties Due Diligence relevance and the distinct risks from urban properties in Brazil, it is highly recommended to hire a specialized service like our detail-oriented professional team with a good reputation and relevant training.
• Sometimes is need a multidisciplinary team, each in their respective roles, with OAB (Brazilian Bar Association), CRECI (Real Estate Brokerage Council), and CREA (Regional Council of Engineering and Agronomy) from the state of the property.

Image for illustrative purposes only.

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