Condominium Fees vs. Fiduciary Sale (Alienação Fiduciária): Risks and Consequences for the Real Estate and Business Market

In the business and real estate environment, mortgage or housing finance collateral is frequently based on the fiduciary sale (alienação fiduciária, a trust-based property transfer used as loan collateral) mechanism. This instrument, governed by Law 9,514/1997 and the Civil Code, establishes that the property — although transferred as collateral — generally remains under the direct possession of the fiduciary debtor (devedor fiduciante) until an eventual default occurs. Recently, however, a legal controversy has generated uncertainty in the market: can a property encumbered by a fiduciary sale be subject to seizure (penhora) to satisfy condominium debts owed by the fiduciary debtor?

The ruling by the Superior Court of Justice (STJ), under Topic 1,266, aims to resolve this question. Given the impact of this decision on real estate credit, developers, financial institutions, and condominiums, it becomes essential to understand the legal aspects, practical consequences, and risks involved in this new context.

Fiduciary sale, as an essential milestone for real estate financing in Brazil, has played a central role in stimulating housing credit and developing the real estate market over the past decades. Through the fiduciary guarantee, the creditor acquires resolvable ownership of the property, granting legal certainty for financing and agility in the eventual enforcement of the guarantee, without the obstacles of a conventional mortgage.

Under the wording of Article 27, Paragraph 8 of Law 9,514/1997, combined with Article 1,368-B of the Civil Code, until the consolidation of ownership and the creditor's formal transfer into possession, the fiduciary debtor remains responsible for charges on the property, including taxes, fees, and condominium expenses. In this scenario, traditional STJ case law held that, in the event of default on these obligations, only the debtor's acquisition rights — not the property itself — could be seized, since the property did not form part of the debtor's assets.

However, defaults on condominium fees have increased in recent years, particularly due to rising interest rates and the diminished deterrent effect of condominium fines. This trend has increased pressure on condominiums, which have sought more effective means of collection, including targeting the very property given as collateral. It was in this context that the STJ, through its Fourth Panel, in the judgment of Special Appeal (REsp) 2059278/SC, allowed the seizure of a fiduciarily transferred property to settle a condominium debt.

This decision breaks with the understanding consolidated by the Third Panel, which held that fiduciary sale excluded the property from the list of assets subject to seizure in condominium collection proceedings, allowing only the seizure of the fiduciary debtor's real right of acquisition. The divergence between these rulings introduces significant legal uncertainty. The implications are relevant and multifaceted.

First, there is a concrete risk of weakening the fiduciary guarantee itself, which forms the backbone of real estate credit. If seizure of the property becomes a frequent practice, credit becomes more costly and less attractive to creditors and investors. The cost of funding tends to rise, and bank spreads may increase.

Furthermore, uncertainty in how fiduciary sale is treated may discourage new real estate credit transactions, directly affecting developers, construction companies, and real estate businesses — especially those that depend on credit flow to finance projects and developments. The consequence may be market contraction, higher credit costs, and, ultimately, a reduction in the supply of properties.

From the condominiums' perspective, although the possibility of seizure represents an alternative for recovering debts from defaulting unit owners, it also brings negative systemic consequences. The recurrent use of this measure could encourage further defaults, if unit owners perceive that non-payment does not carry effective sanctions. Moreover, the seizure of fiduciarily encumbered properties can lead to complex judicial disputes, delays, and uncertainties in settling condominium debts — which does not guarantee the liquidity needed to maintain the condominium's common services.

From a legal standpoint, although the condominium obligation is characterized by its propter rem nature — that is, tied to the property regardless of who the owner is — the legal framework governing fiduciary sale expressly established a distinction for properties given as collateral: liability remains with the fiduciary debtor as long as they hold direct possession, and does not extend to the fiduciary creditor. The shift in case law, therefore, contradicts the legal framework and undermines the legal certainty of the system.

On the other hand, part of the case law justifies the seizure based on the essential nature of condominium expenses for maintaining security, cleaning, and common services — so as to prevent the burden from falling on other unit owners. This is an argument grounded in collective fairness, but it overlooks the systemic effects on the real estate credit market, as well as the imbalance it may cause in the pricing of existing contracts.

The STJ's ruling on Topic 1,266 will have a deep and lasting impact on the real estate market, the financing system, and the dynamics of condominiums. The uncertainty generated by these divergent rulings compromises not only the security of fiduciary sale contracts, but also the predictability relied upon by financial institutions, developers, and investors.

For business owners, real estate managers, developers, and investment funds, it is prudent to adopt a preventive stance. Before signing financing agreements secured by fiduciary sale, it is recommended to carefully assess the risks related to the seizability of the asset in the event of condominium default, as well as the possible need for additional clauses or supplementary guarantees to protect the credit.

For condominiums, although pursuing enforcement against a property under fiduciary sale may seem like an attractive solution for debt recovery, it is important to weigh the costs, feasibility, and risks of litigation. The use of alternative instruments — such as seizure of acquisition rights, offsetting of condominium revenues, or extrajudicial enforcement titles — may prove less harmful to the system as a whole, without compromising the fiduciary guarantee.

Given the complexity and practical consequences of this issue, it is advisable to seek specialized legal counsel. Preventive and strategic action can help avoid litigation, protect the interests of all parties involved, and ensure the stability of real estate credit transactions.