Real Estate Fund, Brazil, Asset Management

Foreign Owners banned from owning land in Brazil

by manoj on August 9, 2010

Background

Over the last few years, there have been regular reports in the media about Brazil banning foreigners from owning land in Brazil.  Brazil law restricts foreigners from owning rural lands, maratime and land close to borders.  If a foreign does buy a farm for example he must emmigrate to Brazil within a finite period or the contract is null and void and he loses his money.

The only way foreigners can own land is to set up a Brazil company that owns the land.  Obviously many foreign companies own land ranging from mining companies, land development companies, land banking, developers, venture and private equity companies and companies involved in agriculture.

Current Situation

Foreign  investors  buying land in Brazil could face problems as the country seeks to restrick foreign ownership.  There may be a real issue related to food security or one used as a political issue as a run up to elections in October.

Foreign owned Brazilian companies with rural land could face title deeds being revoked under tough measures that are currently being drawn up, it has been confirmed.
 
Government officials have confirmed that official policy is that foreigners should not be allowed to buy agricultural land. The Agrian Development Ministry said the government wants to tighten restrictions on foreign ownership of farm lands.

Denise Mantovani (Ministry spokeswoman)  confirmed published remarks by Minister Guilherme Cassel, who said that the government does not want foreigners to buy agricultural land in Brazil.
 
‘10 million acres of land had been registered by foreigners as of 2008 and that between 2002 and 2008, foreigners invested $2.43 billion to buy land ….We do not need foreigners to produce food in Brazil. This is the policy of President Luiz Inacio  Lula da Silva. Because of food security, Brazilian lands must remain in Brazilian hands,’
 
Current law says that large rural properties can only be purchased by Brazilian citizens or residents it is often ignored. ‘Foreigners often bypass that rule by setting up companies in Brazil, which are controlled abroad, to purchase land. This is a foreign company and this is what we want to control,’ said Mantovani.
 

“I am not a xenophobe but our land is finite. The population grows and demands food,” the minister said.

Mantovani said that representatives from several ministries were preparing a constitutional amendment to further restrict foreign ownership of land.

She said the amendment being drawn up “could include the revoking of land titles already purchased by foreigners.” She did not provide details.

Most foreigners purchase land to raise cattle and grow soybeans and other crops in the states of Mato Grosso, Mato Grosso do Sul, Sao Paulo, Bahia and Minas Gerais.

We are going to draw up an amendment that will make it clear that foreigners can invest in any field, except land.” the minister said.

It is unclear when the amendment will be debated in Congress.

 
 
 
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