Brazilian Supreme Court (STF) upholds restrictions on the acquisition of rural properties by foreigners: avoid risks in transactions involving rural land.

April 2026 Decision

The Brazilian Federal Supreme Court (STF) has unanimously upheld the validity of restrictions on the acquisition and lease of rural real estate by Brazilian companies controlled by foreign capital.

The decision was rendered at the plenary session held on April 23, 2026, upon conclusion of the judgment of Claim of Noncompliance with a Fundamental Precept (ADPF) No. 342 and Original Civil Action (ACO) No. 2463.

In ADPF 342, the Brazilian Rural Society (Sociedade Rural Brasileira – SRB) challenged Section 1 of Article 1 of Law No. 5,709/1971, which equates Brazilian legal entities whose capital is predominantly held by foreign individuals or entities domiciled or headquartered abroad to foreign companies, thereby subjecting them to the same legal regime applicable to the acquisition of rural real estate by foreigners. The claim argued that such provision had not been incorporated into the 1988 Federal Constitution.

In ACO 2463, the Federal Government and the National Institute for Colonization and Agrarian Reform (INCRA) sought to invalidate an opinion issued by the General Inspectorate of the Court of Justice of the State of São Paulo, which had relieved notaries and real estate registrars from complying with such rules in the cases under analysis.

The debate stems from interpretations adopted by the Federal Attorney General’s Office (Advocacia-Geral da União – AGU) over the years. In 1994, through Opinion No. GQ-22, the AGU concluded that the provision had not been received by the Constitution, based on the then-prevailing concept of a Brazilian company—one incorporated under Brazilian law and having its headquarters and management in Brazil.

Following the repeal of this concept by Constitutional Amendment No. 6/1995, the matter was reassessed in 1998 (Opinion No. GQ-181), maintaining the prior understanding. This position changed in 2010, when the AGU recognized the validity of the provision, asserting that Brazilian companies under foreign control must comply with the same restrictions applicable to foreign companies.

In 2015, the SRB filed ADPF 342 to challenge the constitutionality of Article 1, Section 1, of Law No. 5,709/1971. Upon reviewing the case, the STF rejected the claim of unconstitutionality, confirming both the validity and applicability of the provision, as well as the Federal Government’s authority to authorize foreign or equivalent legal entities to acquire rural real estate. The judgment began in 2021, under the reporting Justice Marco Aurélio, and was concluded on April 23, 2026.

In the same session, the Court also ruled on ACO No. 2,463, filed by the Federal Government and INCRA against the State of São Paulo. The Court upheld the claim, declaring null and void Opinion No. 461/2012-E issued by the State Court’s General Inspectorate, on the grounds of illegality and in light of the Constitution’s reception of Article 1, Section 1, of Law No. 5,709/1971. The decision reaffirmed the authority of the Federal Government and INCRA to grant authorization for foreign or equivalent legal entities to acquire rural real estate.

The action challenged Opinion No. 461/2012, which had exempted real estate registries and notary offices in the State of São Paulo from complying with the restrictions set forth in Law No. 5,709/1971.

Justice Gilmar Mendes emphasized that the rule does not impose a total prohibition on the acquisition of rural property but rather establishes criteria, limits, and oversight mechanisms. These include the requirement of administrative authorizations, caps on land acquisition within municipalities, and the obligation that the property be linked to its economic use.

He further noted that the legislation emerged in a context of significant institutional concern regarding fraud, land concentration, and potential impacts on national sovereignty. Its enactment followed a Parliamentary Inquiry Commission and occurred under the 1967/1969 Constitution.

From a practical standpoint, the decision does not introduce new rules but reaffirms that the limitations set forth in the 1971 legislation remain applicable to foreign companies and those treated as such.

The law provides that the acquisition of rural real estate is subject to compliance with criteria related to land use and territorial limits, and, in certain cases, requires prior authorization from authorities such as INCRA. It also establishes that the acquisition of properties located in areas deemed strategic for national security depends on prior approval from the National Security Council, following a specific procedure.

By bringing closure to a long-standing debate—particularly relevant to Brazil’s agribusiness sector—the STF contributes to greater predictability and legal certainty in rural real estate transactions, reducing uncertainties that have affected the business environment and investment decision-making.

Finally, it is important to note that the decision does not affect fiduciary transfers of rural real estate as collateral in favor of foreign individuals or entities (or those treated as such). This is because the restrictions set forth in Law No. 5,709/1971 do not apply to the creation of security interests over rural property in favor of foreign parties, as fiduciary ownership constitutes a security right rather than full ownership. Likewise, such restrictions do not extend to the enforcement of these security interests, allowing the consolidation of ownership in favor of the foreign creditor or equivalent entity.

Currently, Brazilian companies whose share capital is predominantly held by foreign individuals or entities must obtain prior approval from INCRA to acquire rural real estate in Brazil. This requirement stems from Law No. 5,709/1971 and the interpretation consolidated by AGU Opinion No. 01/2010, which equates such companies, for these purposes, to foreign legal entities.