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You may have heard of property lien in the news, possibly mentioned in the midst of corruption cases that are gaining ground in the media. Or in situations of non-payment of child support. But after all, what happens when a property is foreclosed? And can the pledge of financed property be made in Brazil?

Throughout this text, we will explain to you what attachment is. In which cases it is possible or not, and whether the attachment of assets under fiduciary sale is allowed (such as real estate purchased through financing). In this article, we’ll also look at:

Attachment of financed property: when is it allowed?
Property lien: how does it work?
What happens when a property is foreclosed?
Can financed property be pledged?
What is chattel mortgage?
Can family property be pawned?
Can chattel mortgages justify the attachment? What does the STJ say
Attachment of financed property: when is it allowed?

The pledge of financed property is the seizure of the property of an individual or legal entity, by court order, in order to fully pay a debt that that person has with a creditor.

The understanding of the courts today is that the financed property, when not paid, cannot count as a property of its buyer, but of the bank that holds this financing.

Therefore, the pledge of this type of asset is not authorized if it serves to satisfy a third party debt. That is, from an institution other than the bank that has this property as collateral for a credit operation.

In a property loan, the property purchased serves as a guarantee for the operation. This means that, if the buyer does not honor the installments with the bank, that bank can take it to an auction so as not to be harmed by default by that customer. Therefore, we say that the property is alienated to the bank: ownership of this property, in a way, is under the control of the institution, not the buyer.

Property lien: how does it work?

The attachment of property serves to guarantee the payment of a debt. It consists of the seizure, through a court decision, of assets that can be auctioned in order to pay off a debt. The lawsuit, in this case, is filed by those who need to be paid (the creditors).

Several reasons lead to the attachment of a property. Some of them are:

Pay off mortgage debts
Labor debts with employees who worked on the property
child support debt
Default in the social obligations of the property, such as the payment of the IPTU (Urban Territorial Property Tax) or the condominium fee
When the property was pledged for a mortgage loan for any reason other than a mortgage
Acquire the property with dirty or illicit money
When a guarantor of a rental contract has to pay the tenant’s default for whom he is responsible

The report below shows an example of a situation in which a property can be foreclosed: because of accumulated condominium debts.

See how condominium debts can lead to property lien
What happens when a property is foreclosed?

Imagine the case of a property that was mortgaged as collateral for a credit operation. If the person who owns the property does not pay his debt, or delays many installments, the institution that lent the money can collect it in court. This way, the owner of the property will be notified and will receive a deadline to pay off their debt.

If you do not do anything within the deadline, the property can be foreclosed by a court decision. With the pledge, the “owner” loses ownership of the property. And that way, that property can be auctioned off to pay off the outstanding debt. If the amount collected from the auction is greater than the debt, the remainder remains with the debtor.

Can financed property be pledged?

A financed property can only be pledged if the pledge process is carried out by the creditor of the property itself – that is, the bank responsible for financing it. This is the understanding of the courts. If another debt is responsible for the garnishment request, it must be denied.

In March 2020, the 3rd group of the Supreme Court of Justice (STJ) understood that a debtor could not have the property pledged, because it was included as a guarantee for a loan. She had a debt of R$3,000 with the condominium where the apartment was located. The logic is that the property was not an asset that belonged to the debtor, because its property was transferred to the bank through the fiduciary sale.

What is fiduciary alienation?

A fiduciary sale is the transfer of ownership of the property from a debtor (a person, natural or legal) to a creditor (the bank, in the case of housing loans). We say that a property is sold when the bank responsible for the credit retains rights to the property until the outstanding balance is extinguished.

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