STF authorizes banks to repossess properties from debtors without a court decision – 10/26/2023 – Market

The STF (Supreme Federal Court) validated this Thursday (26) the possibility of banks and other financial institutions taking over, without a court decision, properties with debts that are being financed.

Most of the ministers followed the vote of rapporteur Luiz Fux, who said in a session this Wednesday (25) that extrajudicial execution does not remove judicial control, because the debtor can, if he finds any irregularity, take legal action and protect his rights.

Fux stated that the procedure is not random or unilateral on the part of the creditors, because the contracts had the consent of the parties.

In his vote, Fux said that the instrument reduced “the cost and uncertainty of the possibility of obtaining real estate guarantees” and “allowed a revolution in the Brazilian real estate market”.

He was followed by ministers Cristiano Zanin, André Mendonça, Alexandre de Moraes, Dias Toffoli and Kassio Nunes Marques, Gilmar Mendes and Luís Roberto Barroso.

Edson Fachin and Cármen Lúcia disagreed. According to Fachin, the measure “confers exceptional powers to one of the parties to the legal transaction, disproportionately restricts the scope of protection of the fundamental right to housing”.

In this action, the Supreme Court discussed a 1997 law that created the fiduciary alienation of real estate, which allows the property that is purchased to be used as collateral for financing. The trial deals with contracts through the SFI (Real Estate Financial System).

If payment is not made, according to the rule, the bank can resume the process extrajudicially. In other words, through a notary’s office and without the need for interference from the Courts.

The process has general repercussion and the Supreme Court’s thesis must be applied in all similar processes.

The trial’s reference process is the appeal of a debtor from São Paulo against Caixa Econômica Federal.

The debtor states, in the appeal, that allowing the creditor to repossess the assets without the participation of the Judiciary violates the legal process and that this possibility must be “repudiated by the democratic rule of law”.

“[É] a violent form of extrajudicial collection, incompatible with the principles of natural justice, adversarial proceedings and due legal process, which allows the debtor to be dispossessed of the financed property, before being able to exercise any effective defense”, stated his defense in the case.

In the case in question, the TRF-3 (Federal Regional Court of the 3rd Region) had decided that the possibility does not violate constitutional norms.

At the Supreme Court, both Caixa and the Central Bank defended the instrument.