Publications

Category: Real estate

In the judgment of the Special Appeal 2.059.278/SC (REsp 2.059.278/SC), which took place at the end of May, the Superior Court of Justice (STJ) issued a decision in favor of the condominiums on the possibility to execute and to auction properties in default with the condominium quotas, even if these properties are recorded with fiduciary alienation resulting from financing for acquisition.

The decision is unprecedented because, historically, the STJ has always positioned itself in the sense of not allowing the pledge and auction of the property for condominium debts, in cases where the property was the object of fiduciary alienation to guarantee its acquisition.

The understanding was that the responsibility for paying the condominium expenses would fall on the fiduciary debtor as long as he was in direct possession of the property. In other words, it would be a debt of the debtor, not liable to be satisfied with the foreclosure of the property that, in a resolute character, temporarily ceased to be part of his patrimony.

The charge could only be assigned to the fiduciary creditor (usually banks or financial institutions) after the consolidation of ownership for them. This understanding also aligns with Law 9,514/17 (Law of Fiduciary Alienation), to the extent that, in the event of consolidation of the property by default of the debtor, the fiduciary creditor receives the property in the state in which it is, even with the previous condominium debts, since these debts are obligations of a propter rem character – that is, are tied to the property.

In contrast to the already consolidated guidance, the STJ held that the rights of the fiduciary owner should not override the rights of the common owner. Thus, the property can now be pledged and auctioned in case of debt with the condominium.

The decision of the STJ, in a way, consolidates the understanding expressed in some state courts (such as the Courts of Justice of São Paulo, Rio Grande do Sul, Goiás and Mato Grosso do Sul), which have been issuing decisions allowing the pledge and auction of the property whose acquisition was guaranteed by fiduciary alienation of the property itself.

These decisions are based on two main points:

• in the risk-taking of the fiduciary creditor through the covenant with the fiduciary debtor; and
• in the protection of the community, since the other condominium owners were paying for the unit in default.

However, due to the mismatch of the decisions of the state courts with the jurisprudence of the STJ until then consolidated, the case of a condominium in Santa Catarina was taken to the Court. At the time, the STJ issued the decision contrary to its own jurisprudence in favor of the fiduciary creditors.

When analyzing the arguments presented, the STJ also focused on the social issue, considering that the default harms other residents.

The STJ's change of understanding also reflects the protection of collective rights in overlap with individual interests. The court used objective and actual economic factors as the criterion for its decision.

There is still no evidence to state whether the decision rendered in REsp 2.059.278/SC is isolated or whether, with it, the STJ signals the possibility of changing its position and rediscussing the issue.

Therefore, we recommend that fiduciary creditors review their preventive debt default measures when agreeing to fiduciary alienation agreements and reassess the risks to be imputed in their negotiations. We also suggest analyzing the cases with pending issues that are in progress, to verify the possibility of alternatives that satisfy the condominium credits, without prejudice to the credit to be received due to the fiduciary alienation.

Category: Tax

The House of Representatives approved, in plenary session on July 7, the Bill of Law 2.384/23, which resumes the casting vote at the Administrative Tax Court (Carf). The approved text is the replacement suggested by the rapporteur, Mr Beto Pereira (PSDB / MS).

The Bill of Law, an initiative of the President, was being processed under an emergency regime and was blocking the agenda of the plenary, according to constitutional determination. It was presented after the end of the validity of Provisional Measure 1.160/23, which had resumed, in January, the casting vote at Carf.

These are the main points addressed by the substitute approved by the House of Deputies:

• The resumption of the casting vote in Carf. Under the terms of the initial wording of the Bill of Law, the tie-breaking vote in the Carf judgments must be declared by the president of the judging panel, which is always a representative of the National Treasury.

• The rapporteur added to the text of the Bill of Law the provision for the exclusion of penalties, interest and possible representation for criminal purposes to proceedings whose result is favorable to the Public Attorney by casting vote. The change promoted by the rapporteur stems from partial acceptance of an agreement made between the government and the Federal Bar Association at the beginning of the year.

• The payment of the tax credit determined by casting vote may be made, with the reduction of fine and interest, through the use of NOLs (for both IRPJ and CSLL), including from controlled or controlling company.

• The qualified penalty in cases of evasion, fraud and collusion is limited to 100% and, depending on the taxpayer's compliance history, can be reduced to 1/3 or no longer applied. The percentage of 150% will be applicable only in cases of recidivism.

• The limit of 60 minimum wages is maintained for the purpose of filing a voluntary appeal to Carf. The original wording of the Bill of Law included an increase of this threshold to one thousand minimum wages.

• The possibility of conducting oral argument in trials held at first instance. Until then, the trials held in the first instance were not public, neither was it possible for the representative of the taxable person to follow up the discussions of the oral defense.

• Dismissal from the presentation of a guarantee, until the judgment, for the judicial discussion of the tax credits resolved favorably to the Public Attorney by casting vote, provided that the taxpayer proves the ability to pay the tax credit under the terms defined in the law.

• Provision, during the four months following the conversion of the bill into law, of special conditions for the payment of tax credits not yet constituted. The goal is to encourage regularization by taxpayers.

Regarding the resumption of the casting vote and the reduction of penalties and interest in judgments decided by this mechanism, the bill makes reference to the tax administrative proceeding, but does not make it clear whether such changes will also be applied to customs proceedings.

Another point that draws attention is the lack of isonomy upon granting of benefits to cases of up to 60 minimum wages. By the provision of the bill, only cases that reach Carf will have the reduction of penalty and interest if the result is favorable to the Public Attorney by casting vote. The benefit is no longer granted to the cases of lower values judged at the first instance.

After the consolidation of the substitute approved by the plenary of the House of Representatives, the project will be submitted to the analysis by the Senate. Due to the request for urgency, the proposal must be analyzed within 45 days, counted from the date of receipt. After this period, all other legislative deliberations of the Senate will be suspended until the analysis of the bill of law (according to article 64, paragraph 2, of the Federal Constitution).

The legislative recess will take place between July 18 and 31, which may interfere with the consideration of the text by the Senate.

Category: Tax

The Tax Reform was elected as a priority to unlock Brazil's economic growth and improve the business environment. The proposal already approved in the House of Representatives seeks to unify the main consumption taxes and create a simpler and fairer taxation model.

In this ebook, we summarize what you need to know about the text of the Tax Reform to be considered by the Senate and how Machado Meyer can help you identify the impacts of possible changes for your business.

Category: Real estate

The Strategic Master Plan (PDE) outlines principles and guidelines for São Paulo's urban development policy, aiming to order the development of the city's social functions and socially fair and ecologically balanced use. Check out what will change with the revision of the PDE, sanctioned by the Mayor Ricardo Nunes' signature at the end of June 2023.

Category: Real estate

The configuration of residential developments in the city of São Paulo has been undergoing a transformation over the last few years. This is due to the management, urban development and, particularly, regarding the assumptions  of the Municipal Strategic Master Plan (PDE) and the law of parcel, use and occupation of the land, known as the Zoning Law.

In 2014, the PDE outlined São Paulo's urban development policy, to order the development of the city's social roles and socially just and ecologically balanced use. Among its strategic objectives was to accommodate urban growth in underutilized areas, endowed with infrastructure and that were in the vicinity of the public transport network.

The PDE also provided for the revision of  the Zoning Law, having as one of its guidelines the focus on real estate production to drive local commerce through active facades on the ground floor of the buildings. The Zoning Law was eventually enacted in 2016 and regulates public and private action on the forms of land use of the city, focusing on a planned, functional, environmentally sustainable and democratic growth.

To accommodate urban growth and foster the approximation of workplaces and housing, the Zoning Law implemented, in the regions of the so-called structural axis of urban transformation (Eixos de Estruturação da Transformação Urbana) – places near the bus lanes and along train and subway stations – construction incentives for real estate developers, establishing as a requirement the mixed use of the developments.

One of the benefits brought by the law is not to compute the areas of non-residential use, since they add up to 20% of the computable built area of a mixed-use development, thus waiving the payment of onerous grant.

Another incentive is the better use of parking spaces provided they are located in the structural axes, the legislation deems not computable the area of up to one parking space per housing unit of residential use and up to one parking space every 70m² of area built for non-residential use.

Given these incentives, what was seen in the São Paulo landscape was the proliferation of mixed developments in these axes, with residential and non-residential buildings co-existing in the same land – especially the studios (small apartments), next to luxurious residential developments and with larger footage.

The challenge occurs at the moment of the literal interpretation of the articles on which these legal advantages are based.

According to the Zoning Law, land use and occupation are divided into broad categories, residential and non-residential. The non-residential category (R) has subcategories, including subcategory R1, whose nature is that of non-residential use compatible with the residential neighborhood. Among the uses foreseen in the NR1 subcategory are those related to lodging and housing services, the so-called R1–12.    

The definition of subcategory R1–12, however, carries a semantic load that generates uncertainties for the real estate market, investors and legal operators.      

The expression "housing", contained in the legal text, was interpreted by some as legal permission for the establishment of permanent residence in NR units, especially in the studios, which spread in the vicinity of the São Paulo subway and train stations.

For others, the legislature's intent was only to authorize certain groups of activities in R1–12, but only for a temporary stay and with commercial, institutional or service characteristics, typical of non-residential real estate.    

Currently NRs are a reality and, to prevent them from becoming land stock, they end up being used as permanent housing, and not transitory.

Deemed as NR units, these studios do not yet fall under the assumptions of subsidized financing, which also does not seem to be an attraction for an ordinary buyer. The result is that this type of unit, in general, becomes an option for real estate investors.

In addition, the price of the studios does not contradict the rationale of the market. Land closer to train, subway or bus lanes in São Paulo is already, by nature, land with a more expensive square meter, which rules out any kind of democratic transformation or correction of inequalities intended by the law.

Faced with the interpretative doubt  and the volume of studios NRs  that      are now part of the São Paulo landscape, what is characterized is a production of units in large scale, integrated to the use R1–12 and driven by the benefits of the Zoning Law, but that were not well absorbed by the public to which they are intended. Currently they are the object of survey by the market, which intends to have both legal certainty and financial return.    

The challenge is huge and some options are being tested, such as the use  of long stay  and short stay leases, with housing added to services (as a service), in order to try to rule out the residential characteristics of a non-residential product.

Both the PDE and the Zoning Law are constantly revised to clarify, adjust, or correct misuse of purpose. It is in progress, for example, the proposal to revise these instruments, which began with the interim review of the PDE (approved in the 2nd vote by the City Council and awaiting the mayor's approval). The Zoning Law will be the next to be reassessed, with relevant impacts for new real estate developments in the city, including mixed-use ones. One of the goals is to remove some incentives to try to curb the construction of more compact units, especially those with the amount of square meters less than 30m².

It is understood that the provisions of the PDE and the Zoning Law, which, by nature, are already lengthy and complex, depend on further regulation, both to meet the intention of the legislator and bring legal certainty to operators and investors, and even to accommodate the new interfaces between the legislation and the living and dynamic organism that is the city.

Category: Labor and employment

Signed on July 3rd by President Luis Inácio Lula da Silva, Law 14,611/23 establishes that the equality of wage and compensation criteria between women and men will be mandatory in cases of work of equal value or in the exercise of the same position.

Over the last few weeks, since the bill was approved by the Senate and sent for presidential signature, the issue has generated great debate and speculation among companies about what the real impacts resulting from the new law will be.

According to an article published by Reset, Santander recently released a report on the gender pay gap at companies listed on the Ibovespa Index. There are also several other studies - including public ones - that deal with the subject, considering only the amount of wages paid to men and women who occupy the same organizational level (coordinators, officers, etc.).

From a strictly legal point of view, however, these studies are not sufficient to confirm any existing gender wage differences at companies. In order to legally identify this fact, the data compared must consider all the legal requirements set forth in article 461 of the Brazilian Labor Law (CLT):

• identity of position;

• work of equal value, with equal productivity and equal technical perfection, provided to the same employer and in the same business establishment;

• difference in length of service for the same employer not exceeding four years; and

• difference in time in the position not exceeding two years.

In other words, legal analysis cannot take into consideration only the name of the job or the organizational level to compare salaries between women and men.

It is even fully legitimate for officers in different positions to earn different salaries, regardless of gender: the chief legal officer may earn a different salary than the chief financial officer, who, in turn, may earn a different salary than the chief operating officer. In these cases, there is no problem or violation of the rules of the CLT and Law 14,611/23, regardless of whether the positions are held by men or women.

Law 14,611/23 did not change the existing equal pay rules. It has, however, exposed companies to more severe legal consequences in the event of violations of the above-mentioned requirements and, consequently, to greater financial risks.

Moreover, by establishing the obligation to publish a semi-annual report on salary transparency and compensation criteria, it gives more visibility to possible inequalities.

This obligation is, without a doubt, the most important new feature introduced by the new law. Because of this, companies must conduct legal analyses considering their specificities and the work characteristics of each of their employees, in order to ascertain whether or not there is wage inequality between men and women.

This study, which should be carried out with the active participation of the companies' legal departments, will be essential to identify any legal risks and correct preparation of the salary transparency report and compensation criteria.

We detail below the new items introduced by Law 14,611/23:

Obligation to publish salary transparency report

Private legal entities (companies, associations, and foundations, for example) with 100 or more employees must publish, every six months, a report on salary transparency and compensation criteria.

The reports should contain anonymized data and information that allow for an objective comparison between salaries, compensation, and the proportion of management positions filled by women and men, accompanied by information that can provide statistical data on other possible inequalities arising from race, ethnicity, nationality, and age.

If unequal pay or compensation criteria are identified, the private legal entity must present and implement an action plan to mitigate the inequality, with targets and deadlines. The participation of labor union representatives and employee representatives in the workplace must also be assured.

In the event of non-compliance, an administrative fine of up to 3% of the employer's monthly payroll will be applied, limited to 100 minimum wages.

Increased fine for companies in the event of wage discrimination

In the event of proven wage discrimination due to sex, race, ethnicity, origin, or age, in addition to payment of wage differences, the employer will be responsible for paying an administrative fine equivalent to ten times the value of the new monthly wage due to the person discriminated against (the fine will be doubled in the event of recurrence). Until then, the fine was one regional minimum wage, doubled in the event of recurrence.

Payment of the fine and salary differences due to the employee discriminated against does not rule out the right to an action for moral damages.

Measures to guarantee equal pay for women and men

Law 14,611/23 establishes the following measures to guarantee equal pay and compensation criteria between women and men:

• establishment of salary transparency mechanisms and remuneration criteria;

• increased monitoring against wage discrimination and pay criteria between women and men;

• availability of specific channels for complaints about pay discrimination;

• the promotion and implementation of diversity and inclusion programs in the workplace that include training of managers, leaders, and employees on the subject of equity between men and women in the labor market, with measurement of results; and

• fostering of the training of women to enter, remain in, and rise in the labor market on equal terms with men.

The new law, however, does not define who will be responsible for implementing each of the above measures. Increased enforcement against pay discrimination is certainly an obligation of the Executive Branch. The other measures, on the other hand, could be implemented by both public and private entities.