New Construction vs. Resale Property in Brazil

Quick answer: Buying off-plan (na planta) can save you 15-30% versus a comparable ready unit, and developers offer their own financing that doesn’t require bank approval. But you’re betting on the developer delivering on time, on spec, and at all. Resale property lets you walk the unit, verify the title, and move in immediately — but you pay market price and typically need cash or bank financing. For foreigners, the title verification advantage of resale is significant.

Comparison Table

Buying Off-Plan (Na Planta)

“The off-plan discount is real — but so is the INCC adjustment that silently inflates your total cost by 20-30% over a three-year construction period. Every foreign buyer needs to model the true all-in cost, not just the launch price.” — Zachariah Zagol, OAB/SP 351.356

How It Works

Brazilian developers sell units before and during construction. The typical process:

Launch phase (lancamento): The developer releases the project — usually with a flashy showroom (decorado), floor plans, and a marketing blitz. Prices are lowest at launch, often 20-30% below projected delivery price. This is when investors and savvy buyers get in.

Construction phase (2-4 years): You pay installments according to a payment schedule:

• Down payment (entrada): 10-20% at signing
• Monthly installments during construction: 1-2% of total price per month
• Intermediate balloon payments (parcelas intermediarias): at specific milestones (foundation, structure, finishing)
• Balance at delivery (saldo nas chaves): 30-60% of total price

Delivery (entrega das chaves): The developer completes construction, obtains the habite-se (occupancy permit), and hands over the keys. You pay the remaining balance — either in cash, through bank financing, or via continued developer installments.

The Price Advantage

Off-plan pricing is lower for a simple reason: you’re taking risk the developer would otherwise bear. You’re funding construction (reducing the developer’s bank borrowing) and accepting delivery uncertainty.

Typical price evolution for a well-located Sao Paulo unit:

This means a 50m² apartment bought at launch for R$600,000 could be worth R$750,000-800,000 at delivery. The 25-33% appreciation happens before you even occupy the unit.

Caveat: This assumes a good developer, good location, and stable market. In downturns (2015-2017, for example), off-plan buyers saw zero appreciation or even declines. The appreciation is not guaranteed.

The INCC Trap

Your installment payments during construction are adjusted by INCC (Indice Nacional de Custo da Construcao) — a construction cost index published monthly by FGV. INCC has averaged 6-10% per year recently.

Example: You sign a contract for R$600,000. After 3 years of construction with 8% average annual INCC, the total contract value becomes approximately R$755,000. Your “R$600,000 apartment” now costs R$755,000 — and you still owe the balloon payment at delivery.

This isn’t a bug — it’s how all Brazilian off-plan contracts work. The justification is that construction costs rise, so the developer needs to cover increased expenses. But many buyers don’t fully understand the impact until delivery day.

Developer Due Diligence

Before buying off-plan, investigate the developer thoroughly:

Financial health:

• Is the developer publicly traded? (Check CVM filings for financial statements)
• How many projects has the developer completed in the last 5 years?
• Are there complaints on Reclame Aqui (Brazil’s consumer complaint platform)?
• Check for lawsuits: certidao de distribuicoes civeis in the developer’s name

Legal protections:

• Is the project registered as patrimonio de afetacao (Lei 10.931/2004, Art. 31-A)? This legally separates the project’s funds and assets from the developer’s general estate. If the developer goes bankrupt, the project’s funds are protected. This is non-negotiable. Never buy off-plan without patrimonio de afetacao.
• Is the incorporation (memorial de incorporacao) registered at the Cartorio? This is required by Lei 4.591/1964, Art. 32. Without it, the developer cannot legally sell units.
• Is there a fiduciary guarantee (alienacao fiduciaria) or equivalent security?

Delivery track record:

• How many of their previous projects were delivered on time?
• Average delay (check Reclame Aqui complaints)
• Construction quality of delivered projects (visit completed buildings if possible)

Your Rights as an Off-Plan Buyer

Brazilian consumer protection law (CDC — Codigo de Defesa do Consumidor) provides significant protection:

• Delay beyond 180 days: You can cancel the contract with full refund plus monetary correction, or demand completion with damages (Lei 13.786/2018, Art. 43-A)
• Contract cancellation by buyer (desistencia): You can cancel, but the developer retains a penalty of up to 25% of amounts paid (patrimonio de afetacao projects) or 50% (non-patrimonio projects). Lei 13.786/2018 formalized these limits.
• Construction defects: Developer is liable for structural defects for 5 years (CC Art. 618). CDC provides additional protections for apparent defects (90 days) and hidden defects (discovered later).
• Unit mismatch: If the delivered unit differs materially from the specifications in the memorial de incorporacao, you can demand correction, price reduction, or cancellation.

Buying Resale (Pronto)

“For foreign buyers on a timeline — relocating for work, retiring to Brazil, or investing remotely — resale is almost always the better choice. You can inspect, verify the title, and close within 60 days.” — Zachariah Zagol, OAB/SP 351.356

The Advantages for Foreigners

What you see is what you get. You walk the unit, check the plumbing, meet the neighbors, and evaluate the building’s condition before committing. There’s no guessing about construction quality.

Title verification is possible. The property has an existing matricula at the Cartorio. Your attorney can verify the entire chain of ownership, check for liens and lawsuits, and confirm the property is clean. With new construction, there’s no title history — you’re trusting that the developer has clean title to the land and proper incorporation registration.

Immediate occupancy. Close the sale, register the property, move in. No 2-4 year wait. For foreigners relocating to Brazil on a timeline, this matters.

No INCC adjustment. The price you negotiate is the price you pay. No construction cost inflation creeping up your total obligation.

The Disadvantages

Higher price. You pay full market value. No launch discount. The developer’s margin and construction appreciation are already priced in.

Limited financing. Without developer financing, you need cash or a bank mortgage. Bank mortgages require Brazilian residency and credit history — hard for most foreigners. Cash is the most common resale purchase method for foreign buyers.

What you see may include problems. Older buildings have maintenance issues, outdated electrical/plumbing, structural concerns, and condominium disputes. Due diligence must include physical inspection and review of the condominium’s financial health and meeting minutes.

Tax basis issues. The seller’s declared property value may be far below market value (common in Brazil — property is often declared at purchase price from years ago). This means the capital gains tax owed by the seller is high, and some sellers try to pass this cost to the buyer or manipulate the transaction price to reduce it.

Resale Due Diligence Checklist

Frequently Asked Questions

Is off-plan buying safe in Brazil?

With proper due diligence, yes — but it’s not risk-free. The two biggest risks are developer bankruptcy and delivery delays. Patrimonio de afetacao registration mitigates bankruptcy risk. Lei 13.786/2018 provides remedies for delays. But you should only buy from developers with a proven track record of completing projects.

Can I sell my off-plan unit before delivery?

Yes. This is called “cessao de direitos” (assignment of rights). You sell your contractual position to a new buyer. The developer must consent (usually in the contract) and may charge an assignment fee (1-3%). If the unit has appreciated since your purchase, you realize the gain. Capital gains tax applies on the difference between what you paid and what you received.

Which appreciates more — off-plan or resale?

Off-plan typically shows higher percentage appreciation during the construction period (because you bought at a discount). Post-delivery, both appreciate at roughly market rates. The off-plan “extra” appreciation is really just the risk premium you earned for buying early.

What about buying from another investor who bought off-plan?

Common in hot markets. An investor buys at launch, pays 30% during construction, then sells their position at delivery for a profit. If you’re the secondary buyer, verify: (1) the assignment contract is valid, (2) the developer consents, (3) the total amounts paid match the developer’s records, and (4) any INCC adjustments are properly accounted for.

How do I evaluate a building’s condition for resale?

Hire an engineer or building inspector (many exist in major cities). They’ll check structural integrity, plumbing, electrical, waterproofing, and common-area maintenance. Also review the condominium’s financial statements — a building with a large maintenance reserve fund is better maintained than one running on assessments.

What about coastal property — new or resale?

Both new construction and resale coastal properties may sit on terreno de marinha (federal land within 33m of high tide). Verify the SPU (Secretaria do Patrimonio da Uniao) status before purchasing either type. New coastal developments should have SPU clearance; resale properties should have documented foreiro/ocupante status.

Is buying from a bank foreclosure auction a good deal?

Bank foreclosures (leilao extrajudicial) can offer 20-40% discounts. But they come with risks: prior occupants who won’t leave, pending lawsuits, unknown physical condition, and fast payment deadlines. For foreigners, I recommend resale through normal channels unless you have experienced local counsel managing the auction process.

Which Should You Choose?

Buy new construction if:

• You can wait 2-4 years for delivery
• You want to lock in a lower price with potential appreciation
• You need developer financing (can’t get bank mortgage)
• You’re buying as an investment (flip at delivery or rent new unit)
• The developer has a strong track record and patrimonio de afetacao

Buy resale if:

• You need immediate occupancy
• You want to inspect before buying
• You prefer verified title history
• You’re paying cash
• You’re risk-averse (no construction or developer risk)
• You’re buying in an established building with known quality

How ZS Can Help

Whether you’re buying off-plan or resale, the legal work is different but equally important. For new construction, we review the developer’s incorporation documents, verify patrimonio de afetacao registration, and negotiate contract terms that protect you against delays and defects. For resale, we run full due diligence on the matricula, certidoes, and condominium status. At ZS Advogados, we handle both routinely for foreign buyers. Contact us to discuss your purchase.