Publications

Category: Real estate

Bruno Costa, Gabriela Caetano Andrade and Guilherme Alcântara Nunes

The maintenance of a real estate property generates numerous expenses to the owner, from taxes, condominium expenses, garbage collection fees to renovations / construction works eventually necessary. Given that, it is not uncommon for properties to become financially unviable for the owner.

Even when not used in the economic activities developed by the owner, the properties generate expenses. If it does not present financial advantages to the owner, the natural course is to seek the disposal of the property, but in practice, often the disposal becomes impossible or unfeasible.

The reasons vary and include the existence of tax debts that drive away potential buyers, costs for regularization of the property or even lack of liquidity, as is the case of areas that do not arouse economic interest in third parties due to the location of the property or its state of conservation..

If it is not possible to dispose it, expenses continue to accumulate (especially those related to taxes) and may generate expenses with collection lawsuits or even the filing of a tax foreclosure against the taxpayer, owner of the property.

The Civil Code presents a viable alternative to the owner: the waiver of ownership. The measure is established in item II of the Article 1,275 of the Civil Code, composing the list of situations that cause the loss of property.

It is a unilateral legal act, in which the renouncing owner formally and explicitly declares his intention to give up the right of ownership over the property. No approval is required for the act, whether from public agencies or individuals. There are also less conservative understandings that argue that the approval is not necessary even in the cases of condominium buildings.^[1]

From a practical point of view, the renunciation is made through the drafting of public deeds. It is necessary to check if there is any particularity in the rules of the internal affairs of justice of each locality, but, in general, the followed premise is that, if the value of the property is greater than 30 times the minimum wage in force in the country, the act should be practiced by the execution a public deed, taking into account the provisions of the Article 108 of the Civil Code.

The Civil Code also determines that the waiver is subordinated to the registration of the act in the respective service of real estate registry, with consequent cancellation of its enrollment.^[2] If the properties are irregular from a registral point of view in the registry office, therefore, the waiver cannot be executed due to lack of conditions to cancel the enrollment.

Before the registration of the waiver in the enrollment of the property, the renouncing owner remains with the property in its patrimonial sphere, being even possible to disconstitute the act of renounce, keeping the property to himself or alienating it to third parties.

Another important point is that the act of renunciation can never be executed in favor of third parties, otherwise a donation may be characterized.

Also from a practical point of view, after the formalization of the waiver on the respective enrollment, the property becomes a res nullius (no one's thing) and therefore becomes a vacant property. The government can thus collect it or incorporate it into its assets. After three years of collection, if it is unoccupied, the property will pass to the domain of the municipality, if urban, or Federal Government, if rural.^[3]

With regard to debts of a nature propter rem, such as IPTU and ITR, the renouncing owner remains responsible for the payment of debts whose generating fact is prior to the registration of the waiver on the respective enrollment. There should be no posting of debts after the waiver, since they are linked to the property, which no longer exists. In the event that they are constituted, they may not be charged to the renouncing owner.

Although there are few judged lawsuits concerning the waiver of ownership, it is a fully viable measure for the owner who no longer wishes or is no longer able to own a property and bear all the expenses inherent to the property.

^[1] "The waiver is provided in the article 1275, II, of the Civil Code, only subordinated to the registry and nothing, absolutely nothing, imposes approval of the other condominium building occupants for its validity". Court of Justice of the State of São Paulo, Appeal 1016033-15.2018.8.26.0100, tried on February 27, 2019.

^[2] Art. 1,275. Single paragraph. In the case of items I and II, the effects of the loss of ownership shall be subject to the Registration of the transmissive title or the renouncing act in the Real Estate Registry.

^[3] Art. 1,276. The urban property that the owner abandons, with the intention of no longer keeping it in his heritage, and that if it is not in the possession of another, may be collected, as a vacant property, and be transferred, three years later, to the Municipality or to the Federal District, if found in the respective circumscriptions.

• 1 - The property located in the rural area, abandoned in the same circumstances, may be collected, as a vacant property, and be transferred, three years later, to the Federal Government, wherever it is located.
• 2 - The intention referred to in this article shall be presumed in an absolute way, when, once the acts of possession have ceased, the owner ceases to satisfy the tax expenses.

Category: Real estate

Andrea Soubihe, Gabriela Caetano and Guilherme Alcântara Nunes

The National Institute of Colonization and Agrarian Reform (INCRA) released on July 18 the issuance of the Certificate of Registration of Rural Property (CCIR) for the financial year 2022 for owners and possessors of rural properties. The document is available on the electronic platform of the National Rural Registration System (SNCR).

The CCIR is the national register of rural properties, updated annually. It contains key information of registration of the property (such as total area, location, type of operation, land classification, registration number and the competent property registry).

The presentation of the CCIR is mandatory for the performance of annotation and registration acts before Notary Offices and Real Estate Registry Offices, such as the sale, dismemberment, mortgage and lease of the area. The document is also necessary for obtaining agricultural credit from banks and financial institutions.

The issuance of the CCIR takes place exclusively by electronic means, on the SNCR website or in the SNCR Mobile app, available for Android and iOS. The issue will oblige the owner of the property to pay the Cadastral Service Fee, defined according to the area of the property. Payment must be made by August 16, under penalty of payment of fine and interest, in addition to the incidence of monetary correction.

Category: Competition

The Brazilian Competition Law provides that the total or partial consummation of merger transactions prior to the approval of the Administrative Council for Economic Defense (Cade) – a violation known as gun jumping – can be punished with fines ranging between R$ 60,000 and R$ 60 million, as well as non-pecuniary sanctions.

By means of the Resolution 24/19, Cade established a methodology for calculation of fines, aiming at increasing the predictability in the application of sanctions for gun jumping violations. Pursuant to the resolution, the calculation of the total amount of the fine starts with a baseline fine of R$ 60,000, increased according to the time lapse between the closing and the filing of the transaction with Cade, the severity of the violation and the so-called intent of the parties.

The fine may also be reduced depending on the timing of the antitrust filing of the transaction in relation to the launching of an investigation and the condemnation for violating the pre-merger review system.

Three years after the resolution entered in force, Cade imposed gun jumping fines on six occasions, which entailed important developments on the matter, especially with respect to the agency’s interpretation of the parties’ intent when committing the infringement – criterion whereby the fine may be increased by up to 0.4% of the average revenue of the economic groups involved in the transaction.

Cade has already applied the maximum rate for the intent factor in the context of a transaction filed and deliberately closed by the parties before antitrust clearance.

However, in a case in which the merging parties knew they would commit the infringement, but did so for contingency reasons related to a judicial reorganization, the rate applied was considerably lower (0.02%). This indicates that legitimate reasons external to the will of the parties that require early consummation can mitigate the degree of intent of the violators.

The intent rate has been applied even when the violation was committed unintentionally and in good faith. The lowest rate adopted since the referred resolution came into effect (0.001%) took place in a case in which the parties' legal counsel erroneously evaluated that a filing with Cade would not be required.

In another case, in which the infringement resulted from a misunderstanding about the accounting parameters considered for the purposes of turnover calculation to determine whether a filing with Cade was needed, the rate was set at 0.01% on the grounds that the parties did not act with the minimum diligence expected by the authority, albeit in good faith.

There was also a transaction in which the parties claimed not knowing the law and Cade set a rate of 0.04%, exceeding the degree of intent considered in the violation in which the consummation was conscious, but for contingency reasons.

These precedents demonstrate that, in the calculation of gun jumping fines, intent is not exclusively related to the deliberate act of violating the law, as Cade identified that there was intent even in cases in which the parties acted without bad faith, but were not diligent enough in the assessment of whether a transaction should be submitted for antitrust clearance.

Category: Tax

Leonardo Martins and Andre Araujo de Andrade

The Attorney General's Office of the State of Rio de Janeiro (PGE-RJ), through the Joint Service Order - OSC PG-02/PG-03/PG-19 01/2022, regulated the procedures necessary for the administrative settlement of the amounts involved in lawsuits made in court related to the collection of ICMS on the contracted demand for electricity not consumed, pursuant to Summary 391 of the Superior Court of Justice (STJ) and Theme 176 of the Supreme Federal Court (STF).

After intense debate and more than ten years of discussions in the higher courts, the Supreme Court pacified the matter by fixing the thesis that "the demand for electric power is not subject, by itself, to taxation via ICMS, because the calculation base of this tax only includes the amounts related to those operations in which there is effective consumption of electricity by the consumer."

To facilitate and expedite the outcome of the various lawsuits filed by Rio de Janeiro taxpayers, PGE-RJ gave them the possibility of promoting, through administrative means, the settlement of the amounts involved, for subsequent collection of judicial deposits or refund.

It is sufficient for the taxpayer to submit an administrative application to the Attorney General's Office for Appropriate Dispute Settlement and Human Rights (PG-19) – one of the subdivisions of the State Attorney's Office – with all the documentation listed in the act, such as a copy of the application, proof of distribution, copies of the invoices for the five years prior to the action, bank account statement for deposits made (if applicable),  spreadsheet with amounts to be refunded, proof of petition protocol with request for suspension of demand based on the service order itself, among others.

The application will be analyzed by the Tax Attorney (PG-03), which, after verifying the documentation, will forward the request to the Office of Calculations and Accounting Expertise (ACPC) to calculate the portion that can be raised / refunded to the taxpayer.

The taxpayer will then receive a proposal for a consensual settlement on the basis of the calculations drawn up by the ACPC. If accepted, both parties shall file a petition informing about the agreement. At this time, the withdrawal of the amount calculated for the benefit of the taxpayer and the conversion into income to the state of any remaining balance will be required. In the case of a refund, the issuance of a court payment order (“precatório”) or small amount requisition (RPV) will be requested, also according to the agreed calculations.

Interested taxpayers should wait for the public call that will be made on the PGE-RJ website.

It is an innovative initiative, with the clear purpose of giving effectiveness to the decisions from the higher courts and to solve the demands with greater agility and simplification.

Category: Labor and employment

The Federal Senate approved, on August 3rd, Executive Order 1,108/22, which substantially changed the rules regarding meal allowances and remote work, provided for in the Consolidated Labor Laws (CLT). The approved text awaits presidential signature, at which point the executive order will be converted into law. The expectation is that the President fully sanctions the text approved by the Brazilian National Congress.

The following are among the main changes introduced for remote work:

• Equating home office to telecommuting

Remote work performed not preponderantly outside the employer's premises (home office) was equated to telework: from now on, the provision of services outside the employer's premises, preponderantly or not, using information and communication technologies, which, by its nature, does not constitute external work, characterizes a telework or remote work arrangement. In this way, telework and remote work become synonymous for all intents and purposes.

• Tracking of work hours

Only remote employees who provide services on a piecework or task basis are exempt from work time tracking. In other words, employers with more than 20 employees must track the working hours of all employees, including those who work remotely and do not work by piecework or task.

• Contractual adjustment

The provision of services in the remote work modality must be expressly stated in the individual employment contract: due to the equation of a home office to telecommuting, the home office must now also be regulated by individual agreement or internal policy with individual adherence of the employees.

• Interns and apprentices

Adoption of a remote work arrangement for interns and apprentices is now expressly allowed: the rule has achieved what already happens in practice.

• Union classification

The provisions set forth in the local legislation and in the collective labor agreements related to the territorial base of the establishment where the employee is based apply to employees who work remotely. With this, the legislation now expressly states that when the place where the services are rendered is not relevant to the work, the labor union affiliation follows the location of the employer's headquarters, in line with the understanding of the case law.

• Work abroad

Brazilian legislation applies to employment agreements of employees hired in Brazil who choose to perform remote work outside Brazilian territory, except for the provisions of Law 7,064/82, unless otherwise agreed: with this, the legislation has removed the risk of finding temporary transfer abroad, preventing potential disputes involving the topic.

The legislation also brought in some clarifications about remote work:

• the attendance, even if habitually, at the employer's facilities for the performance of specific activities, which require presence at the establishment, does not undo the remote work arrangement.

• employees submitted to remote work arrangements may render services by the day or by piecework or task.

• an individual agreement may determine the hours and means of communication between employee and employer, as long as the legal rest periods are assured.

• employers must give priority to employees with disabilities and employees with children or a child under legal guardianship up to 4 years of age when allocating to remote work or remote work vacancies.

• employers will not be responsible for expenses resulting from the return to live work if the employee has chosen to perform remote work outside the location provided for in the contract, unless otherwise agreed upon.

• the time of use of technological equipment and necessary infrastructure, and software, digital tools, or internet applications used for remote work, outside the employee's normal working hours, does not constitute time on standby, available, or on call, unless there is a provision in an individual agreement or in a collective bargaining agreement, that is, for activities in a remote work arrangement that require employees to be on standby or on call, it would be possible to adjust payment of amounts without undoing the remote work and the system for tracking only exceptions to normal hours to the tracking of the working hours of employees who work by piecemeal or task.

• the remote work arrangement is not to be confused with, nor equated to, the occupation of telemarketing or call center operator.

With the conversion of the executive order into law, the changes introduced by it will produce effects for an indefinite period of time.

Due to the substantial changes introduced, companies that have already implemented telecommuting, home office, or remote work policies (including anywhere office policies) must reevaluate and adjust their practices to bring them into line with the new rules, if they have not already done so.

In addition to the changes to remote work, the legal text also introduced changes regarding the granting of food and meal vouchers. We addressed this topic in other article, also published in the Legal Intelligence Center. Click here and check it out!

Machado Meyer Advogados will continue to monitor the evolution of the matter and its potential developments. Keep up with our publications by subscribing to our newsletter.

Category: Digital Law

Frauds with crypto assets increase day by day. Criminals take advantage of vulnerabilities found in exchanges and smart contracts to transfer crypto assets to digital wallets – which, although monitored, have no personal data linked, which makes it difficult to identify the authorship of the illicit and recover the assets.

To this day, for example, it is not clear what happened in one of the most emblematic cases of crypto theft. In 2014, the Japanese exchange Mt. Gox was reportedly the target of an attack hacker that embezzled more than $322 million in cryptocurrencies, mainly bitcoins.

Brazilian case law has applied consumer law rules in similar cases.^[1] In the understanding of the Court of Justice of São Paulo (TJSP),  the crypto exchange fits into the vendor definition contained in the Article 3 of the Consumer Code (CDC), as a provider of crypto assets intermediation and custody service. For the TJSP, this type of broker must respond objectively for the damages generated by defects related to the provision of the services, as determined by the Article 14.

When it can be pointed out that the exchange provided a defective service that resulted in injury, therefore, civil liability for damages falls on it. But how to set the responsibility when the damage was caused by failure or attack – the so-called hack - on the blockchain itself?

In March of this year, the Ronin network – a sidechain which functions as a kind of bridge between different blockchains, including the one running the game Axie Infinity – suffered one of the biggest attacks already registered in the crypto universe. The hacker took advantage of a vulnerability and hacked private keys from at least four of the network's nine nodes. With this, it managed to drain about $625 million in cryptocurrencies, including ether and USDC.

Such attacks are rare in the crypto world, but they spark an alert above all for underscoring the integrity of the blockchain. Despite the low frequency with which they occur, problems of this nature raise questions about what a secure blockchain would be and to whom to attribute the effective responsibility for the damage suffered.

In order to understand the question it is necessary to establish whether the crypto assets are:

• kept in custody of an Exchange; or
• being negotiated in decentralized finance protocols (DeFi), without being able to identify a custodian organization.

If the assets are in custody of exchanges, the possible loss resulting from an attack on the blockchain can hardly generate any responsibility for the broker. It can be argued, however, that there would be joint and several liability for the losses, since the exchange is inserted in the consumer chain.

Given the case presented, however, there is no way to identify a clear causal link between the service provided by the exchange and the injury. The lack of causal link may also raise the hypothesis of excluding liability for the absence of a defect in the service (art. 14, paragraph 3, I of the CDC) or, by case of fortuitous (art. 393 of the Civil Code).

The situation changes slightly when the crypto assets whose blockchain has been hacked are being traded on DeFi protocols. In this case, the difficulty in assigning liability stems less from legal uncertainty than from the difficulty of identifying the organization responsible for offering the trading and custody structure of crypto assets.

The fact that the registration in blockchain being decentralised does not mean that it is impossible to identify an institution or someone behind the creation of the protocol and its maintenance. In general, this role is played by foundations or even by a group of persons without legal personality.

It is difficult, however, to identify exactly the role of these agents in the creation or maintenance of the protocol. It is also difficult to establish whether the activities performed can characterize the organization or group of people as "suppliers" and thereby attract responsibility for damage to the consumer.

The arrival of new asset and technology modalities raises legal issues that need to be better addressed. Until it is clearly established who is responsible for the damage in cases such as the Ronin network, or even if it is possible to establish some kind of liability in these cases, it can be difficult to find support in the law to obtain compensation for damages caused by hacker attacks.

^[1] Civil Appeal TJ/SP 1001913-90.2019.8.26.0080; Civil Appeal TJ/DF 0730396-17.2018.8.07.0001; Civil Innominated Appeal TJ/SP Case 0011980-92.2016.8.26.0127