Brazil’s Supreme Court (STF) Upholds Restrictions on Rural Land Purchases by Companies with Foreign Capital

This page is a translation of the original Portuguese text, provided for convenience. It deals with Brazilian law. If there is any discrepancy, the Portuguese version prevails. Read the original in Portuguese

The full bench of Brazil’s Supreme Federal Court unanimously concluded its judgment on the acquisition of rural property by Brazilian companies controlled by foreign capital, and upheld the validity of the restrictions in Law 5.709/1971.

Judgment Concluded Unanimously

On April 23, 2026, the full bench of the Supreme Federal Court finished reviewing two cases challenging the constitutionality of Article 1, paragraph 1, of Law 5.709 of 1971. For purposes of acquiring rural property, that provision treats Brazilian companies whose controlling shares are mostly foreign-owned as if they were foreign legal entities, and subjects them to the same land-ownership limits.

The judgment resumed after Justice Alexandre de Moraes requested time to review the case file, and it ended unanimously. Before the pause, five justices had already voted to keep the restrictions. When the case returned, Alexandre de Moraes, Luiz Fux, Dias Toffoli, and Edson Fachin joined the reporting justice, making the final tally unanimous in favor of the law.

The two cases reached the Supreme Court by different routes. In ADPF 342 (a constitutional claim of noncompliance with a fundamental precept), the Brazilian Rural Society argued that the Constitution does not allow different treatment among domestic companies based on the origin of their controlling capital, especially after Article 171 was repealed by Constitutional Amendment 6 of 1995. In ACO 2.463 (an original civil action filed directly in the Supreme Court), the Federal Government and Incra (Brazil’s National Institute of Colonization and Agrarian Reform) argued for full application of the law and sought to invalidate an administrative interpretation that had excused notary and registry offices (cartórios) from enforcing these restrictions.

Constitutional Grounds Cited by the Court

Over the course of the sessions, the justices debated whether the 1988 Constitution allows Brazilian companies to be treated as foreign for purposes of land-ownership limits. One side argued that treating them alike would violate constitutional principles. The other argued that it is a legitimate tool for protecting national sovereignty and national territory.

The lead opinion held that the right of property is not absolute and may be limited by law, especially when it involves strategically important assets such as rural land. Its reasoning relied on Articles 172 and 190 of the Constitution, which authorize the regulation of foreign capital and limits on the acquisition of rural property by foreigners.

Under this reading, distinguishing companies by the origin of their controlling capital is legitimate because it bears directly on who actually holds power over the land. The court also noted that restrictions on foreign capital in sensitive areas are nothing new in Brazil’s constitutional system; they apply equally to sectors such as health care and the media.

The right of property is not absolute and may be limited by law, especially when it involves strategically important assets such as rural land.

Another central argument was constitutional reception, the doctrine under which a law enacted before the current Constitution remains valid if it is consistent with it. Law 5.709 of 1971 remains valid because it rests on provisions of the 1988 Constitution that authorize both the regulation of foreign capital and limits on land acquisition by foreigners. The court pointed to the law’s longevity as further support for its legitimacy, out of respect for the principle of legal certainty.

Practical Effects on the Land Market

Under the decision, Brazilian companies whose controlling shares are concentrated in foreign investors remain subject to the specific regime for acquiring rural property. That regime includes size limits, Incra authorization in certain cases, and registration at the notary office only if the rules are met. In practice, the Supreme Court’s ruling ends the uncertainty that had hung over these transactions since 2010, when the issue resurfaced as an administrative dispute.

The court rejected the argument that the law is outdated. It described the Brazilian model as moderate and consistent with international practice, and noted that some foreign legal systems impose even stricter controls on land purchases by non-nationals. For those working in rural estate planning, the ruling preserves the existing legal framework and confirms the need for a detailed review of a company’s ownership structure before any transaction involving foreign capital.

The ruling also affects mergers and acquisitions in agribusiness, corporate reorganizations, and investment funds with foreign participation. Under the Court’s guidance, real estate registry offices must apply the requirements of Law 5.709 of 1971 whenever they identify foreign control anywhere in the buyer’s ownership chain. For guidance on agrarian and constitutional matters, you can learn about the firm’s practice areas.

Frequently Asked Questions

Which companies does the foreign-capital decision affect?

The decision covers companies organized under Brazilian law but mostly controlled by foreign individuals or legal entities. When these companies acquire rural property in Brazil, they are subject to the restrictive regime of Law 5.709 of 1971, which sets limits on land area, requires authorization in certain cases, and imposes specific oversight by notary and registry offices.

Who must check whether the restrictions apply to a land purchase?

The responsibility falls on the buyer, the notary responsible for the registration, and, where the law requires it, Incra. Real estate registry offices must now closely examine the origin of the buyer’s capital before drawing up the deed, or the act may be void. Legal advice in advance becomes essential to avoid a refusal to register the deed and future disputes.

Why did the Supreme Court find the law consistent with the Constitution?

The justices concluded that Articles 172 and 190 of the Constitution carried over the earlier law and expressly authorize the regulation of foreign capital and limits on the acquisition of rural property. The decision also stressed national sovereignty and the strategic importance of rural land, and rejected the argument that the right of property is absolute.

As informações deste artigo são de caráter informativo e não substituem consulta jurídica individualizada. Cada caso possui particularidades que exigem análise específica.