Clauses and abusive commercial practices in pre-sale contracts for real estate

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Supreme Decree No. 4732 (hereinafter, the "Decree 4732") and its regulation were issued by the National Government.

Fabiana Vaca Pereira – Associate

Supreme Decree No. 4732 (hereinafter, the “Decree 4732”) and its regulation were issued by the National Government. 

This regulation contains provisions aimed at regulating the presence of abusive clauses and commercial practices in contracts of future sale, sale with reservation of title, and other types of real estate pre-sale contracts, under Law No. 453, law that protects the Rights of Consumers and Users of Consumers.

The regulations also establish the obligation that before the subscription of any real estate pre-sale contract, it must have been first certified by the Ministry of Justice through the Vice-Ministry of Defense of the Rights of Users and Consumers. This certification will validate that the contract does not contain abusive clauses and/or abusive commercial practices.

In order to carry out this certification, the Computerized System for the Certification of Registration of Real Estate Contract Templates (SIRCI) is being created in charge of the Vice-Ministry for the Defense of Users’ and Consumers’ Rights, as a platform through which the users – (i) owners of the property, (ii) builders, (iii) real estate developers or intermediaries must register their contract template before the subscription of their contracts under the pre-sale modality, , which must include a series of formalities and clauses established by the supreme decree and its regulation. Likewise, the technical and legal documentation accompanying the transaction must be attached to this computer platform, as applicable.

The professionals of the Vice Ministry for the Defense of User and Consumer Rights will review the contract template and the supporting documentation uploaded to the SIRCI platform and, if appropriate, will issue the corresponding certification that the contract does not contain any abusive clauses and/or abusive commercial practices as a sworn statement, or if the contract template is not approved, they will issue the observations they consider relevant so that users may correct them and restart the certification procedure. However, it is not determined in detail how the process of rejection and reinstatement of the procedure will be carried out.

Moreover, in line with what was mentioned in the previous paragraph, although the supreme decree and its regulation mention the challenge as a means of claim in favor of the user, it does not establish a procedure in order to defend themselves.

After having established the parameters of this regulation, the real estate sector, including investors, builders, developers of real estate projects, and land developers, among others, are affected by a wave of uncertainty and distrust by leaving in the hands of third parties -not involved and/or interested in the real estate operation being developed- the decision to determine whether the clauses of the contracts to be entered into are abusive or not and whether abusive commercial practices are being incurred based only on their criteria and/or interpretation.

In addition to what is mentioned in the previous paragraph and not less important, it is worth mentioning that real estate transactions may be affected by the delay of such certification process, thus affecting the negotiation between the parties, which tend to have their own time and that many times are closed over the table.

Finally, the enactment of this regulation leads us to question whether this type of regulation would be violating the contractual freedom of the parties to freely determine the content of the clauses of the contracts they enter into, protected by Article No. 454 of the Civil Code, understanding that from now on this freedom will be interrupted or damaged by third parties of the public administration who will not know the essence of the prior negotiation of the parties and what motivates them to carry out such operation.

We recommend the real estate sector to take into account the provisions previously analyzed and even the possibility of adjusting the contracts entered into in the future in order to comply with these new regulations and minimize any future risk in the realization of their real estate projects.

 

 

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