Compulsory award is a legal process that controls the transfer of property ownership in cases where the seller or rights holder is unwilling or unable to complete the final documentation.
This legal document is crucial for ensuring legal clarity in real estate deals, particularly in awarded purchase and sale contracts.
Compulsory awarding, aside from its primary role, shares similarities with other legal concepts like goods pledging, commonly utilized in asset seizures.
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What does mandatory award mean?
The mandatory award is the process in which the purchaser of a property, or any eligible party, asks a judge or registry office to transfer the property into their ownership.
This situation typically happens when the seller declines to sign the official document of the property purchase after receiving full payment.
Legal foundation: Sections 1.417 and 1.418 of the Civil Code.
By making an unreserved promise to buy a property through a public or private agreement that is recorded in the Property Registration Office, the potential buyer gains the right to purchase the property.
The potential buyer, who has a legal right, can ask the seller or any parties who have taken over the seller’s rights to provide the final purchase agreement as outlined in the initial contract. If this request is denied, the buyer can seek legal intervention to obtain the property.
When is the mandatory presentation?
Compulsory recognition is required in these situations:
- When the buyer has paid the full property value and the seller fails to complete the transfer, the purchase and sale agreement is considered fulfilled.
- If the property is registered under a different person’s name other than the seller, the award can help address the issue.
- When a purchase and sale commitment contract is in place and registered, if the seller refuses to proceed with the transfer, it becomes a binding agreement with no option for withdrawal.
- Since the enactment of Law No 14,382/22, it has become possible to grant mandatory awards outside of court proceedings, as long as there is no disagreement.
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What is needed to support the initiative?
To award the mandatory award action, certain criteria must be fulfilled.
- A formal written agreement is necessary for purchase and sale transactions, either when initiated or upon completion of final payment.
- The property needs to be properly registered and free of any issues that could prevent its transfer.
- The buyer needs to demonstrate the complete payment for the property through receipts, deposits, or similar documents.
- It is advisable to provide a formal notification before taking action if the seller fails to meet his obligation.
What is the time limit for mandatory granting?
The right to initiate the action for compulsory award does not expire according to the Superior Court of Justice (STJ) because it is seen as a potestative right.
That right could deteriorate over time instead of being guaranteed by a prescription, but there is no legal provision for its decay in this scenario.
There is no set time limit for mandatory granting, so there is no specific limitation period.
The right can be forfeited if someone else gains ownership of the property through usucapio.
What is the authority of the mandatory award action?
The authority to decide on a mandatory arbitration proceeding typically lies with the State Judiciary, but certain factors must be taken into consideration.
Territorial Jurisdiction (Mobile Unit)
Actions related to real property rights must be presented in the form of the property situation, as stated in Article 47 of the CPC.
The situation forum of the property holds jurisdiction for cases based on real rights over real estate according to Article 47 of the Civil Procedure Code.
Therefore, the mandatory award process must be supported in the district where the property is situated.
Competence in materials (Common Justice)
The mandatory award pertains to a legal entitlement (transfer of ownership), and the case is adjudicated by the State Court.
Unless there is a factor that falls under the jurisdiction of another domain, such as the Federal Court in instances involving the Union, authorities, or federal public enterprises as interested parties.
Exception in the Federal Justice
If the Union, its federal authorities, or public companies are involved in the case, jurisdiction will be transferred to the Federal Court according to Article 109 of the Federal Constitution.
How does extrajudicial compulsory award function and what is it?
The extrajudicial compulsory award is an administrative process that enables property buyers to register the property directly without involving the court system.
This process is outlined in Article 216-B of Law No. 6.015/1973 (Public Registry Law), which was added by Law No. 14,382/2022. It is typically utilized when the seller or right holder fails to fulfill the obligation to present the final deed of transfer.
Refer to Article 216-B of Law No. 6.015/1973.
Art. 216-B of Law No. 6.015/1973 allows for the extrajudicial transfer of property under a promise of sale or assignment through the property registration service, in addition to the usual legal process.
Extrajudicial compulsory award requirements:
- There should be a contract or document showing the seller’s promise to transfer the property.
- The property must be correctly registered in the property registry office under the seller’s name without any issues in the ownership chain.
- The seller’s inaction or the inability to obtain the document must be proven, or it should be evident that the buyer cannot complete the transfer for various reasons (such as failure or absence).
- All necessary personal and property documents must be fully completed, along with certificates and evidence of payment, to ensure documentary compliance.
Procedure for reporting.
- The first step is for the buyer to submit the application to the appropriate property registry office along with the required paperwork.
- The seller is being informed by the tabeli to proceed with the transfer arrangements.
- The seller typically has around 15 days to raise objections or finalize the transaction after the deadline for expression.
- If there are no valid expressions of disagreement, the registrar can proceed with the compulsory transfer and register the property for the buyer.
Impedance values:
- Disagreement regarding control or ownership.
- Presence of responsibility or documentation in unresolved assets.
- Incomplete documentation.
This method is particularly beneficial for individuals who wish to manage property ownership without going through the usual court delays, while still adhering to legal and documentation requirements.
How is the mandatory reward connected to pawning items?
It is essential to comprehend the link between the mandatory award and the pledging of assets, despite its direct association with property regularization.
If the seller pawns the property due to a debt, the buyer will have priority over it if they can prove the purchase before the pawn.
The mandatory award can be utilized to safeguard the purchaser’s rights, even when challenged by the seller’s debtors.
The buyer who has paid for the property but does not have the official documentation may be affected by any delays related to the property. Mandatory registration ensures their rights are protected.
Practical Advice for Lawyers on Mandatory Adjudication
Compulsory award is a crucial legal tool to facilitate the transfer of property ownership in cases where the seller is uncooperative or unwilling.
Mastering the intricacies of this procedure is crucial for lawyers to protect their clients’ rights.
Explore useful strategies for effective action when faced with mandatory rewards.
Understand when it is necessary to take mandatory award action.
The mandatory award process can be initiated if the purchaser has already fulfilled the obligation to pay for the property, but the seller declines or is incapable of transferring the ownership document.
It is also appropriate if the property is registered under third-party names or if there is a binding purchase and sale agreement that has been properly registered.
Familiarize yourself with the legal foundation.
- Articles 1,417 and 1,418 of the Civil Code guarantee the buyer’s right to request property transfer.
- Art. 216-B of Law No. 6.015/1973 allows for the granting of extrajudicial compulsory.
Identify the necessary prerequisites.
To assist with the process or initiate the out-of-court procedure, please review:
- Ensure that there is a formal and executed contract in writing.
- Property registration requires that the property be registered under the seller’s name or with a clear chain of ownership.
- Collect receipts, deposits, or other documents as evidence of payment made.
- Before taking legal action or contacting the authorities, it is advisable to inform the seller in writing beforehand.
Consider the potential challenges
- Demonstrate that the property was acquired before pawning to protect the client’s rights when dealing with a pawned item.
- Guide the client to organize all personal and property documents before beginning the process to address the issue of missing documentation.
- In case of disagreements over ownership or possession, it will be necessary to resort to the legal process.
Attention to the deadline and adverse possession
The buyer’s rights may be at risk if someone else acquires the property through usucapio, despite there being no time limit for compulsory award.
Agility is essential in protecting the client’s ownership rights.
Utilize real-life instances to support your argument
- A typical scenario involves a buyer who has taken possession of the property, but the seller has either passed away or cannot be located. The compulsory award can ensure that the title deed is provided even under such circumstances.
- The mandatory award can safeguard buyers from the seller’s creditors if they can prove their purchase before the deadline.
Ensures legal certainty for customers
Ensure that the property is legalized in addition.
- All information in the Real Estate Registry is current.
- There are no future burdens or trends that negatively impact the customer.
- The property is appropriate for any upcoming financing or discussions.
The function of mandatory recognition in safeguarding ownership rights
Compulsory award is a crucial mechanism to ensure property rights in deadlock situations.
It guarantees that the buyer has established ownership, whether in a legal or non-legal setting, even when challenged by the seller or third parties.
Lawyers must comprehend the function of this institution and how it relates to scenarios like collateralizing assets to effectively protect their clients’ interests.
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