Condominium Fees vs. Fiduciary Alienation: Risks and Implications for the Real Estate Credit Market

In the corporate and real estate environment, mortgage or housing-financing credit often relies on fiduciary alienation as collateral. This instrument, regulated by the Lei 9.514/1997 and the Brazilian Civil Code, establishes that the property — although pledged as guarantee — remains, by default, in the direct possession of the fiduciary debtor until eventual default. Recently, however, a legal controversy has stirred uncertainty in the market: can a property encumbered by fiduciary alienation be seized to satisfy outstanding condominium fees owed by the fiduciary debtor?

The decision of the Superior Court of Justice (STJ), under the Tema 1.266, intends to provide clarity on the matter. Given the potential impact of this ruling on real estate credit, developers, financial institutions and condominiums, it is vital to understand the legal aspects, practical consequences and risks involved in the new scenario.

Fiduciary alienation, as a fundamental pillar of real estate financing in Brazil, has played a central role in fostering housing credit and propelling the growth of the real estate market in recent decades. Through this guarantee, the creditor acquires a resolvable ownership of the property, offering legal security for the financing and an agile mechanism for enforcement — bypassing many of the difficulties associated with traditional mortgages.

Under the terms of art. 27, § 8º of Lei 9.514/1997, together with art. 1.368-B of the Civil Code, until the property is consolidated and the creditor effectively takes possession, the fiduciary debtor remains responsible for property charges — including taxes, fees and condominium expenses. In this setting, the traditional jurisprudence of the STJ admitted that, in case of default, only the debtor’s acquisition rights could be seized — not the property itself — since it did not belong to his assets.

Nevertheless, arrears in condominium fees have been increasing over recent years, driven largely by rising interest rates and the decreasing deterrent effect of condominium late-payment fines. This scenario has intensified pressure on condominiums, prompting them to seek more effective collection mechanisms, including the seizure of the very property pledged as guarantee. In this framework, the STJ, through its 4th Panel, in decision REsp 2059278/SC, admitted the possibility of seizing the property under fiduciary alienation to pay condominium debt.

This decision marks a departure from the position consolidated by the 3rd Panel, which held that fiduciary alienation places the property beyond the reach of enforcement in condominium executions, allowing only the seizure of acquisition rights. The resulting jurisprudential divergence brings about significant legal uncertainty — with broad and serious consequences.

Firstly, there is a tangible risk of weakening the fiduciary guarantee, which underpins the entire real estate credit system. If property seizure under fiduciary alienation becomes a recurrent practice, real estate credit may become more expensive and less attractive to lenders and investors. The cost of funding may rise and banks may widen the lending spread.

Moreover, the uncertainty around how fiduciary alienation will be treated may discourage new real estate financing operations, directly impacting developers, construction companies and real estate firms — especially those reliant on credit flow to fund developments. As a result, the market may contract, financing costs may escalate, and the supply of available properties may shrink.

From the condominium’s perspective, while enforcement against properties under fiduciary alienation might appear as an effective remedy to recover delinquent maintenance fees, this approach carries systemic downsides. Frequent use of this measure may actually incentivize further default, as delinquent owners realize that non-payment may not result in significant personal liability other than potential loss of property. Additionally, seizing pledged properties can lead to complex legal disputes, delays, and uncertainty over the settlement of condominium debts — outcomes that do not guarantee the liquidity needed for condominium maintenance and services.

Legally, although the condominium debt is characterized by its propter rem nature — meaning the obligation is tied to the property regardless of its owner — the legal framework governing fiduciary alienation expressly provides that, while the property remains under the debtor’s direct possession, he is the one responsible for charges; the creditor fiduciário is not liable. The recent jurisprudential shift, however, contradicts the statutory framework, undermining the legal stability that supports fiduciary guarantees.

On the other side, proponents of the seizure argue from the standpoint of collective equity: condominium fees are essential for the upkeep, security, and services of shared living spaces — and these cannot be compromised. They argue that it would be unjust to force other residents to absorb the cost of one condômino’s default. This argument has social appeal, but the systemic consequences for the real estate credit market, as well as the potential distortion in contract valuation, must not be ignored.

The forthcoming decision on the Tema 1.266 is poised to produce a deep and lasting impact on the real estate market, the financing system, and condominium governance. The legal uncertainty spawned by contrasting decisions threatens not only the solidity of fiduciary alienation contracts but also the predictability needed by financial institutions, real estate developers and investors.

For businesspeople, real estate managers, developers and investment funds, the prudent course is to adopt a preventive stance. Before entering financing agreements backed by fiduciary alienation, it is advisable to carefully assess the risks related to the possible seizure of the property in case of condominium fee delinquency — and consider structuring additional clauses or complementary guarantees to safeguard the credit.

For condominium associations, although enforcement over properties under fiduciary alienation could seem an attractive recourse for debt recovery, they should weigh the costs, feasibility and risks of judicial actions. Alternative mechanisms — such as seizure of acquisition rights, assignment or anticipation of condominium revenues, or extrajudicial execution of credits — might prove less harmful to the system as a whole, while still allowing debt recovery.

Given the complexity and practical consequences of the issue, seeking specialized legal counsel is advisable. Preventive and strategic legal advice can help avoid litigation, protect stakeholders’ interests and preserve the stability of real estate credit operations.