The Fragility of Private Property in Brazil and the Risks for Investors

Brazilian legislation allows various forms of expropriation, which can create uncertainties about land ownership and usage.

1. The Role of the State in Private Property

The 1988 Federal Constitution guarantees the right to property under Article 5, Section XXII, but also imposes restrictions through the social function of property (Article 5, Section XXIII). This means that property must serve a collective purpose, and if it does not, the government can intervene.

Additionally, expropriation can occur due to public necessity, utility, or social interest, as outlined in Article 5, Section XXIV. These interventions affect both urban and rural properties, making it essential for investors to understand the legal framework.

2. Laws Governing Expropriation

Brazilian law establishes different types of expropriation, each with specific criteria:

• Decree-Law No. 3.365/1941 – Regulates expropriation for public utility, allowing federal, state, or municipal governments to acquire private property for infrastructure, security, or urban development projects.

• Law No. 4.132/1962 – Defines expropriation for social interest, often applied in cases of agrarian reform or urban renewal.

• City Statute (Law No. 10.257/2001) – Establishes rules for expropriating urban properties that fail to fulfill their social function, enabling their use for affordable housing.

• Article 243 of the Federal Constitution – Allows confiscatory expropriation of properties used for illegal drug cultivation, without compensation.

3. Possible Expropriation Cases

Expropriation can occur in various situations, including:

• Idle urban properties – If a building or land is not being used according to municipal planning, it may be expropriated for housing projects.

• Unproductive rural properties – Farms that do not meet their social function may be allocated for agrarian reform.

• Areas affected by public works – Construction of roads, railways, and infrastructure can lead to expropriation of private properties.

• Coastal properties – Land near the sea may be classified as federal property and subject to expropriation.

4. Compensation Values

The Constitution mandates that compensation must be fair and prior, but in practice, many property owners struggle to receive adequate payments. Compensation calculations consider factors such as:

• Market value of the property;

• Improvements made;

• Financial impacts of expropriation.

For agrarian reform expropriations, payments may be made through public debt securities, which can lead to delays and depreciation of the amount received.

Conclusion

Private property in Brazil is subject to various government interventions, creating legal uncertainties for investors. The broad scope of expropriation, combined with challenges in compensation, makes it essential for property owners and investors to stay informed about legislation and potential risks. Those looking to invest in Brazil should conduct thorough legal analyses and monitor public policies that may impact their assets.

SOURCES:

https://www.planalto.gov.br/ccivil_03/decreto-lei/del3365.htm

https://www.jusbrasil.com.br/artigos/a-indenizacao-na-desapropriacao/753284689

https://barioniemacedo.adv.br/desapropriacao-direitos-e-principais-criterios-de-calculo-indenizatorio/

https://www.jusbrasil.com.br/artigos/como-a-homologacao-de-areas-de-marinha-impacta-seus-direitos-um-guia-baseado-na-legislacao-brasileira/2427208256

https://www.gov.br/gestao/pt-br/spunotifica

https://mundobrasil.com.br/qual-a-distancia-minima-do-mar-para-construir-uma-casa-legalmente-no-brasil/

https://www.politize.com.br/artigo-quinto/desapropriacao/

https://www.conjur.com.br/2023-set-04/stf-confirma-haver-desapropriacao-terras-produtivas/

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