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Supreme Court Confirms Extrajudicial Execution and Allows Repossession of Delinquent Properties Directly at Notary, Reducing Timeframes from Years to Weeks and Significantly Altering the Dynamics of Real Estate Credit in the Country.
In a decision considered historic, the Supreme Federal Court confirmed the validity of extrajudicial execution of guarantees outlined in the Legal Framework for Guarantees (Law 14.711/2023).
The understanding allows banks and creditors to repossess properties given in fiduciary transfer directly at the notary when there is default.
The decision, published at the end of July, reviewed ADIs 7,600, 7,601, and 7,608 and formed a majority of 9 votes to 2 in favor of the constitutionality of the procedure.
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In practice, the repossession of the asset no longer depends on judicial action and follows an administrative procedure outlined in Law 9.514/1997.
With the change, the process of consolidating ownership in the name of the creditor occurs at the notary after notifying the debtor and the expiration of the legal period for settling the debt.
From the notification, which can be made by mail or through a traceable electronic means, the debtor has 15 days to cure the default — that is, to fully pay overdue installments, interest, and fees.
If payment is not made within this period, ownership is consolidated in the creditor’s name, and the property proceeds to auction, initially with a minimum bid.
If no buyer appears, a second auction is held with no reserve price.
The immediate effect is a significant reduction in the time between default and repossession: estimates mentioned in the sector indicate a drop of about 18 months (via judicial action) to something close to 60 days in the notarial procedure.
What Changes in Practice with the Decision
The notary takes on the operational role that previously depended on the Judiciary.
The Supreme Court understood that the registrar acts as a neutral agent, ensuring valid notification and minimum contradiction.
The consolidation does not prevent the debtor from resorting to Justice.
The possibility of filing a revision action or consignation action remains even after the transfer of ownership, discussing clauses, charges, or any abuses.
The scope is broad.
The new procedure includes properties financed by fiduciary transfer in the Real Estate Financial System, mortgages signed after the entry into force of Law 14.711/2023, and also vehicles and agricultural machinery given as collateral.
The most visible impact is likely to occur in the housing market, which primarily operates with fiduciary guarantees and, according to Abecip, recorded nearly 500 thousand contracts in the first half of 2025.
On the operational side, the notarial procedure requires the borrower to pay closer attention.
Address, email, and phone number registered with the real estate registry must be up to date, as digital notification has legal effects.
Experts advise monitoring official communications, keeping payment receipts, and, in the case of delay, negotiating before the end of the 15-day deadline.
Debtor Rights Are Still Preserved
Although the extrajudicial path accelerates repossession, procedural guarantees have not been discarded.
Anyone receiving the notification and believing there is undue charging can present an administrative defense to the notary, gather documentation, and bring the discussion to the Judiciary — even after the auction, through appropriate actions when applicable.
The cure of default within 15 days ends the procedure, with the property returning to its regular status.
Financial institutions, in turn, are encouraged to maintain accessible renegotiation channels, a measure stimulated by regulatory guidelines from the Central Bank.
Direct Impacts for Banks and Borrowers
For banks and fintechs, the acknowledgment of extrajudicial execution reduces costs, shortens timeframes, and lowers credit risk.
This tends to reflect in healthier portfolios and potentially smaller spreads for compliant profiles.
Real Estate Registries will play a central role in consolidation and auctions, increasing demand and revenue related to the process.
Borrowers who keep their payments up-to-date may benefit from greater predictability and more competitive credit policies.
On the other hand, delinquent debtors lose the so-called “last stronghold” of extending the process through judicial means.
The time to react becomes short, requiring document organization and immediate action to avoid losing the asset.
Timeline of the Supreme Court Decision
The judgment concluded on June 30, 2025 in the virtual plenary of the Supreme Court, which analyzed three direct actions of unconstitutionality regarding provisions of the Legal Framework for Guarantees.
The announcement of the result occurred on July 22, 2025, consolidating the understanding of the constitutionality of extrajudicial execution of guaranteed assets, including fiduciary alienated properties.
This positioning reinforces precedents from the Supreme Court and STJ that already allowed subsequent judicial review, without nullifying the administrative procedure when legal formalities are observed.
Reactions from Experts in the Real Estate Sector
The decision was received as a signal of the dejudicialization of credit conflicts and greater alignment of Brazil with international practices.
Professor Henrique Silveira from FGV Direito SP stated that the Supreme Court’s understanding “unburdens 120 thousand ongoing real estate executions and brings the country closer to the OECD average of 90 days for the repossession of guarantees.”
In the view of lawyer Marina Corrêa, who worked on the actions, there was a “partial victory for consumers,” as the court is said to have prohibited abusive practices in collection and required traceable electronic notification to enhance the safety of the procedure.
Next Steps for Regulation and Technology
The trend is for national regulation of notification and consolidation acts by the National Justice Council, with standardization to be defined by specific provisions.
Notarial systems should integrate with ONR/RI Digital to allow the registration of consolidation and the conduct of electronic auctions, increasing transparency and competition.
While the rules are being standardized, interested parties are advised to consult the local notary about notification flows, accepted communication formats, and auction schedules in the municipality.
Practical Guidelines for Those with Financed Properties
Those who financed a property through fiduciary transfer need to adopt a preventive stance.
In case of delay, it is crucial to calculate the charges, verify the accuracy of the billing, and initiate negotiations with the institution before the legal deadline expires.
It is also advisable to maintain an active registration on electronic platforms of the respective notary, where available, to monitor official notifications.
If the debt is disputable, seeking legal assistance quickly can preserve rights and avoid additional costs.
Why This Decision Matters to Consumers
The validation of the extrajudicial procedure drastically shortens the interval between the first default and the loss of the property.
This faster sequence imposes contractual discipline, attention to the 15-day deadline, and continuous document preparation.
At the same time, it pressures creditors to offer effective renegotiation and to adhere to notification standards that ensure unequivocal awareness on the part of the debtor.
In a more predictable credit environment, those who know the step-by-step of the procedure reduce risks and gain time to act — have you checked if your contact details are correct at your registry?
Podem até levar a leilão porém o dono da casa pode negar a passe do imóvel morando na casa até que o banco entre com ação judicial de despejo,, ou seja nem a polícia pode tirar os moradores enquanto o juíz não decidir,, isso se chama posse!!