Fiduciary Sale is a property guarantee model, furniture or real estate, which is based on transfer of goods as payment of a debt, from an agreement signed between the creditor and the debtor.
The chattel mortgage, also known as disposal in guarantee, is a very common practice in Brazil, mainly in car and real estate negotiations, where the good is acquired by the buyer based on a credit paid in installments.
In this case, the purchased vehicle, for example, is guaranteed by the debt. The car will only be registered in the buyer's name when the buyer pays all the payment for the purchased item.
If there is a default in the payment of the credit, the asset is taken from the debtor by the creditor.
Assets under the fiduciary alienation regime must not be sold to third parties by the buyer/debtor (before the debt is settled), being the latter only free to enjoy the property.
In Brazil, all aspects relating to how the chattel mortgage should be applied are present in the Law No. 9,514, of November 20, 1997.
See also: the meaning of Disposal of assets.
