Don't Let the Seller's Past Become Your Future

Imagine buying your dream home in Brazil, only to find out it came with more than just an ocean view. It also included years of unpaid taxes, overdue condo fees, a few creditor claims, and an ongoing legal dispute you knew nothing about.

Real estate due diligence isn’t just about confirming the seller actually owns the property. A real, significant concern is whether the property or the seller has legal or financial problems that could become your responsibility after the deal closes.

Some debts are tied to the property. Unpaid property tax (IPTU) and condo fees are the most common examples. If you own the property, you also own the debt, even if it predates your purchase.

Other liabilities belong to the seller, yet they often still affect the transaction. A seller with unpaid taxes, labor claims, or other lawsuits may have creditors looking for assets. If the property is one of those assets, a court could place a lien on it or challenge the sale after the fact.

Other issues can delay or prevent the sale altogether. For example, an ongoing probate process may require consent from the estate’s heirs, while an existing mortgage may require authorization from the lender.

So before you sign a purchase agreement, slow down and look beyond the property itself. Your realtor may know the market, but you can’t rely on them to investigate the seller’s broader legal and financial situation. In Brazil, due diligence is what keeps someone else’s problems from becoming yours.