On October 31st, 2023, Law No. 14,711/2023, better known as the “Legal Framework for Guarantees”, which improves the rules related to the treatment of credit and the underlying guarantees and extrajudicial measures to recover credits.

In particular, the new Law has remodeled the parameters and criteria for offering chattels and real estate to secure debts, to expand the scope of offering those guarantees and streamline the foreclosure of the encumbered assets in case of default.

The Legal Framework for Guarantees has promoted relevant alterations in Law No. 9,514/1997 (governs fiduciary transfer of real estate), Law No. 10,406/2002 (Civil Code), Law No. 13,746/2017 (covers the establishment of liens on bonds and other financial assets), Law No. 6,015/1973 (Public Registry Law), Decree-Law No. 911/1969 (establishes rules on the process of fiduciary transfer) and Law No. 13,105/2015 (Civil Procedure Code), along with changes in other isolated rules. Besides this, the new Law contains specific chapters on determined matters, such as extrajudicial enforcement of guarantees on certain assets and rules on lodging formal protests of unpaid debts and the respective notary services.

One of the most important alterations introduced by Law No. 14,711/2023 is the authorization to extend a real estate guarantee to more than one credit transactions simultaneously, so that the fiduciary transfer already constituted can be used as a guarantee of new and autonomous credit transactions of any nature, provided that: (i) the transactions are contracted with the creditor that holds fiduciary ownership; and (ii) there is no obligation contracted with another creditor holding a guarantee on the same property.

Alternatively, the extension of the fiduciary transfer can be carried out with a different financial institution, as long as the creditor institution of the fiduciary transfer is a member of the same credit union system of the creditor financial institution of the original transaction and is a fidejussory guarantor of the original credit transaction.

The following alterations promoted by the Legal Framework for Guarantees also deserve mention:

(i) Creation of the figure of the guarantee agent, with contractual authorization to act in his/her/its own name and in benefit of the creditors by defending their interests, including in court (when a dispute exists about the existence, validity and efficacy of the contractual act that gave rise to the guarantee);

(ii) Authorization for the notaries of protest offices to use electronic media, instant messaging applications and voice calls to send demands to the debtor about the unpaid debts, provided certain requirements are satisfied;

(iii) Proposal of alternative forms to repay debts, with the prerogative (a) of the creditor to authorize the notary to receive payment of a debt already protested, as well as to indicate a possible criterion for updating this value, granting of a discount or installment payment regime; and (b) of the debtor to offer counter-proposals, by means of a national center for shared electronic services, to authorize the notary to receive the payment, stipulate the inflation adjustment index and grant  discounts and installment payment regimes; and

(iv) Facilitation of sending data to interested institutions, with authorization for the civil registry office of natural persons to issue certificates of life, marital status and domicile (physical and electronic) of the individual, with immediate electronic communication of the proof of life, after the formalization of a working arrangement between the institution and the civil registry office, if necessary.

Law No. 14,711/2023 took effect on the date of its publication (October 31, 2023).

More information, including the full text of the Law, can be found at the site of the Office of the President of the Republic (www.planalto.gov.br/).