Full capacity consists in the ability of an individual to acquire rights and exercise duties in the civil order. Minors under the age of 16 are considered absolutely incapable due to not being able to carry out the acts of civil life in person and in themselves. In turn, those who are subjected to a certain restriction in their acts, or in the manner and exercise them, i.e., (i) young people between 16 and 18 years old, (ii) habitual drunks and those addicted to drugs, (iii) those who, for transient or permanent reasons, cannot express their will and (iv) the prodigals are considered relatively incapable.
In order to recognize the relative incapacity of the last three groups mentioned, it is necessary to interdict them through the institution of guardianship through specific legal action. The guardian judicially elected to assist the relatively incapacitated is responsible for the role of administering his assets,for his benefit, in order to assist him in the practice of the acts of civil life.
The validity of the entire legal transaction requires the full capacity of the parties involved or, in support of those considered relatively incapable, the proper assistance of their guardian, in order to ensure that the manifestation of will actually meets the interests and expectations of those involved. This premise is also essential in all real estate transactions: purchase and sale, leasing, institution of usufruct, and donation of real estate properties.
In March 2021, the 1st Chamber of Private Law of the Court of Justice of São Paulo upheld a ruling that annulled a donation of property made by the elderly who, a few months before being legally recognized as relative incapable due to mental disability, had donated his only real estate property, in which he resided, to his neighbor, with a lifetime enjoyment reserve for himself. The medical report produced proved that the elderly already lacked lucidity at the time of the donation, which justified the annulment of the legal business.
At the time of the trial at first instance, the bad faith of the donee was recognized in the transaction, since it was clear the low cognition of the donor about the acts of life in general. As a consequence, the beneficiary was ordered to pay compensation for moral damages in favor of the elderly fixed at R$ 10,000.
The important point of this decision is the recognition that the donation of a real estate property by relatively incapacitated is subject to annulment, even if the judicial interdiction procedure is not yet completed at the time of the transaction to acknowledge the relative incapacity of the donor.
Any real estate transaction must have the prior verification of the fulfillment of the requirements for the conclusion of a legal business, starting with the capacity of the agents involved. The fact that a person is not legally prohibited, therefore, does not prevent the annulment of a real estate contract if it is found that, at the time of the transaction, he already manifested inability to perform certain acts alone, or in the way of exercising them.
This court decision sets a precedent for families to seek the annulment of previously concluded real estate transactions in the course of the interdiction process in order to protect the one who has not yet been declared incapable at the time of the transaction. In turn, on the other side of the contractual relationship, there is a need to act more diligently to ensure that the person who negotiates cannot be considered relatively incapable, which would jeopardize the validity of the intended legal business.
Although such a decision may create legal uncertainty, in view of the subjectivity in the characterization of relative disability not yet enacted, we believe that the protection of the relatively incapable not yet recognized as incapable should prevail. Also, the conduct of a robust real estate due diligence, including obtaining a negative certificate of interdictions and guardianship on behalf of the counterparty, mitigates possible risks of future questioning of the validity of the legal transactions. In the case of transactions with individuals, whenever there is doubt about the civil capacity of any of the parties, it is recommended that the signing of contracts take place in person and without representation by prosecutors.