Sergio Zahr, Rafael Abdouch and Luísa de Almeida
On October 30th, Law No. 14,711/2023 was published, inaugurating the “Legal Framework of Guarantees”. Among other aspects, this law aims to enhance the management and execution, particularly extrajudicially, of guarantees, providing greater agility in credit recovery. Here are the key points:
Subsequent property fiduciary alienation: The Legal Framework of Guarantees amended the Law on Fiduciary Alienation of Real Estate Assets (Law No. 9,514/1997) to allow the same real estate asset to be successively given in more than one fiduciary alienation. In this case, the previous fiduciary ownership will have preference, but the subsequent ownership can be registered immediately. If the property is foreclosed by the prior fiduciary creditor, subsequent fiduciary creditors will be subrogated to the obtained price.
Guarantee agent: The Civil Code establishes the guarantee agent, a figure appointed by creditors to act on their behalf, capable of managing guarantees and eventually executing them extrajudicially. The guarantee agent is also responsible for acting in lawsuits involving the secured credit.
Extrajudicial execution of mortgages: The Legal Framework of Guarantees introduces several provisions addressing extrajudicial execution, facilitating and encouraging creditors’ access to this form of credit recovery. The law outlines the procedure for extrajudicial execution of credits secured by a mortgage, through notification by the property registry officer, under penalty of extrajudicial foreclosure of the guarantee through a public auction. The law also includes rules applicable to extrajudicial execution in case of multiple creditors guaranteed by the same asset, enabling all to register their credits in this process.
Encouragement of settlement: To encourage parties to reach an agreement regarding debt renegotiation, the new law provides for a negotiation solution before the protest of debt, through the creditor’s proposal to the notary. Communication between the notary and the debtor is facilitated, including the use of instant messaging applications. The law also allows the proposal of measures at any time by the creditor, debtor, or notary to encourage the renegotiation of protested debts.
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