The City of Rio de Janeiro published, at the beginning of May, Decree 52.436/23, which regulates the Complementary Law 252/22 and the new procedure for the sale of public real properties in the municipality (hereinafter referred to in this article as just “Property” or “Properties”). The new rules seek to facilitate the disposal of part of the Properties currently underutilized, idle, or deteriorated and promise to generate new resources for the municipal cash, heat the construction industry and attract private investment to the local real estate market.

The main advance is the application of the Proposed Property Acquisition (PPA) – provided for in Federal Law 14.011/20 – which brings private investors closer to the available Properties. The advertisement of the Properties will be in the official gazette of the municipality and on the digital platform with their registration data, location, minimum value of the purchase offer, requirement of documentation, and photographs of the lands or buildings.

Interested parties may submit an acquisition proposal through a request to the Executive Superintendence of Real Estate Assets using the model available on the City Hall's website. The application does not oblige the Public Administration to dispose of the Property or generates subjective rights for the interested party in the acquisition.

In the event of a favorable manifestation of the transaction, according to criteria of convenience and opportunity, the stage of pricing the chosen Property is available to initiated, which will depend on an updated appraisal report (maximum six months).

If the valid appraisal report is pending, the interested parties will have to pay all the costs to present such document, prepared by a qualified professional, to be approved by the Special Evaluation Committee of the Municipal Department of Finance and Planning.

The appraisal reports carried out by (i) entities of the Public Administration with the main activity of urban or real estate development or (ii) banks or other public company do not need the mentioned approval, as well as in case of agreements signed with organs or entities of the federal, state or municipal Public Administration.

The next step is the sale of the Property for the evaluated value through bid  or auction in up to two sessions, the second with a discount of up to 25% of the appraisal value.

On equal terms with the winner of the public bid, the assignee of the real or personal rights, the lessee, and the original interested party in the acquisition that paid for the evaluation of the Property may acquire it.

If more than one interested party holds preemptive rights and there is no agreement between them, a drawn will define the buyer. If the interested party who paid for the appraisal of the Property is not the actual buyer, the costs with the emission of such diligence will be reimbursed - limited to 0.2% of the value of the Property evaluated.

The eventual frustration of the second attempt at bid  or auction will imply the release of the Property for direct sale to any interested party, maintaining the discount of a maximum of 25% of the appraisal value, with the participation of real estate brokers.

The sale of the Property may be satisfied in up to 36 installments upon payment of a signal of at least 10% of the purchase price.

The importation of the federal procedure for the sale of those Properties represents an effort by the City Hall to requalify idle or underutilized buildings and lands and attract new investments for Rio de Janeiro.

The new policy is aligned with the Reviver Centro program, a plan for the urban, cultural and economic recovery of the City Center. The initiative may represent an opportunity to generate new business, which will occupy these Properties acquired at attractive prices, in addition to heating up the local construction sector.

However, some aspects can inhibit the interest of potential buyers. It will be necessary to consider the investment of time and money in the appraisal report and with the real estate due diligence, without guarantee of the purchase due to prior public bid or auction to sell the Property. It is also necessary to consider the mentioned existence of preemptive rights of third parties.

Thus, although the new process allows the sale of properties in attractive conditions, investors will need to evaluate the delay in the purchase and the possibility that it will not materialize.