Content published on the Blog Fausto Macedo, in Estadão:
https://politica.estadao.com.br/blogs/fausto-macedo/diminuicao-de-espaco-do-fiador-traz-mais-agilidade-nas-negociacoes/
Reduced role of the guarantor brings more agility to negotiations
Juliana Assolari*
March 19, 2019 | 05h00
Perhaps the most widespread arrangement in the real estate market, the lease guarantee through a guarantor has lost ground in recent years, according to data from Secovi.
Although it is a slow decline, it already indicates a change in the leasing landscape and brings more agility to negotiations, since the guarantee through a guarantor is more bureaucratic in the gathering of documentation. Not to mention that, for the landlord, particularly with respect to defaulting tenants, the slowness of the judiciary in these cases means that recovery of the property takes years to occur.
In an ever-larger market, increasingly faster processes are necessary. Currently, there are various contract arrangements such as surety insurance and also bank guarantee which, in addition to bringing legal certainty to contracts, are faster and less bureaucratic procedures. It is important to stress that the rights of landlord and tenant are guaranteed by law in either of these two arrangements.
The capitalization bond is another arrangement that has been increasingly adopted as a guarantee, particularly in commercial lease contracts, and has an approximate cost of between six and ten times the value of the rent. The money is deposited into an account with monthly yield and, at the end of the contract, the tenant receives the adjusted amount, should the contract be terminated without default.
However, another very common procedure, the security deposit of three months’ rent, is the one that brings the least security, since in cases of default on condominium fees, property tax (IPTU), rent, or even damage to the property, often the deposit of three months’ rent is not enough to cover the losses in an eventual eviction action combined with reimbursement.
What is recommended, in this type of situation, is to include in the lease contracts the monthly payment of rent with reimbursement of the condominium fee and property tax (IPTU) and, from the second month of default, to initiate the judicial procedure, since, in this type of guarantee, no security deposit is required from the landlord for the granting of the eviction injunction.
With a prospect of improvement in the economy, the tendency is for it to be reflected also in the real estate market, including in interest in renting. For this reason, it is important to understand all the guarantee arrangements, assess the risks, and know how to proceed in the event of any negative contingency.
*Juliana Assolari, specialist in Contracts and partner at Lassori Advogados
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