The Supreme Court of Brazil authorizes banks to recover debtors’ properties without the need for a judicial decision – 10/27/2023 – Brazil

2023-10-27 16:52:00

The STF (Supreme Federal Court) of Brazil validated this Thursday (26) the possibility that banks and other financial institutions can take properties in the process of financing with debt accumulation without the need for a judicial decision.

There were eight votes in favor of this understanding and two against. The majority of the magistrates followed the vote of the speaker Luiz Fux, who declared during the session this Wednesday (25) that extrajudicial execution does not exclude judicial control, since the debtor can, if any irregularity is detected, resort to the Justice and protect your rights.

The case that raised the debate led to the analysis of a 1997 law that established the fiduciary alienation of properties, which allows the purchased property to be used as collateral for financing. In the fiduciary alienation system, the property remains in the name of the financial institution until the debt is settled. The buyer has the right of use until the financing ends. Once the debt is settled, the borrower must go to the registry to register the property in his or her name. Throughout the contract, if payment is not made, according to regulations, the bank can recover the property extrajudicially, that is, through registration and without the need for judicial intervention.

Translated by AZAHARA MARTÍN ORTEGA

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