Mistakes when buying off-plan property: which are the most expensive, and how can you protect yourself before signing?

You visited the decorated show unit, fell in love, and the broker warned you: “this offer is only good until Sunday”. Under pressure, many people sign a 40-page contract without reading it — and discover, two years later, that the final “keys” installment has grown 25%, that the project can run 6 months late “within the law” and that walking away costs a quarter of everything they paid. Buying off-plan means purchasing a property that does not yet exist: you trade money today for a future promise, and that is exactly why the law surrounds this transaction with rules of its own.

In this article, we cover the most common (and costly) mistakes in this kind of purchase, what to check about the developer before signing, which clauses deserve extra attention, what the law guarantees if the project runs late, and which extra costs wreck the budget of buyers who failed to plan.

What does the law say when the contract “says nothing”?

Off-plan purchases are governed mainly by three statutes: Law 4.591/1964 (the Real Estate Development Law), the Brazilian Consumer Protection Code (CDC) (Law 8.078/1990) and Law 13.786/2018 — the “Purchase Termination Law”, which since 2018 has standardized penalties, deadlines and the famous summary table. Even when the contract is silent, these legal floors apply: no clause can take away what the law guarantees the buyer. But mind the structural contrast: the law contains abuses; it is the well-negotiated contract that delivers your concrete protection — clear deadlines, defined adjustment indexes, symmetrical penalties.

How do you vet the developer before signing?

The vetting starts with the property record (matrícula), not with the marketing material. An off-plan development can only be sold after the development memorandum is registered with the Real Estate Registry (art. 32 of Law 4.591/1964) — selling without that registration is irregular and exposes the buyer to serious risk. Ask for an up-to-date copy of the property record and confirm:

1. the registration of the development (the “R.” entry for the development on the parent property record);
2. whether the project has segregated project assets (patrimônio de afetação) (Law 10.931/2004) — a regime that separates the project’s cash from the developer’s cash, protecting buyers if the company goes under (this is exactly what thousands of customers lacked in the sector’s famous bankruptcies);
3. the developer’s certificates: tax debts, lawsuits over construction delays and building defects (public search on the TJSP, the São Paulo state court website), and complaints filed with Procon-SP.

It works well when: the developer has a verifiable delivery track record and the project’s assets are segregated. Risk: a newly created single-purpose company (SPE) with no track record and no asset segregation — all your money depends on the health of a single project.

Which contract clauses deserve extra attention?

Four clauses account for most of the disputes:

1. Grace period clause. The developer may provide for an extension of the delivery date of up to 180 calendar days, with no penalty — as long as the clause is express and clear (art. 43-A of Law 4.591/1964, added by Law 13.786/2018). Anything beyond that is a legally relevant delay.
2. INCC adjustment. During construction, the outstanding balance is adjusted by the National Construction Cost Index (INCC), which historically rises faster than general inflation — in peak years, it exceeded 14% per year. After the keys, the index changes (usually IPCA or IGP-M, plus interest). The “keys installment” advertised at the sales stand is not the installment you will actually pay.
3. Termination penalties. If the buyer walks away, the developer may keep up to 25% of the amounts paid — or up to 50% when the project has segregated assets (art. 67-A of Law 4.591/1964). In numbers: someone who paid R$ 100,000 can walk away with R$ 50,000.
4. Summary table. Since 2018, the contract must open with a summary table highlighting the price, adjustment indexes, deadlines and penalties (art. 35-A of Law 4.591/1964). A missing or incomplete summary table is a strong sign of a problematic contract.

What these clauses do is simple to explain to a client: they define who pays the bill for the unexpected — construction inflation, the delay, the walk-away. Whoever signs without reading agrees to pay for all of it.

What can you do if the project runs more than 180 days late?

Once the contractual deadline plus the grace period has passed, the law gives the buyer two choices (art. 43-A, §§ 1º and 2º, of Law 4.591/1964):

• Unwind the deal: a full refund of everything you paid, with inflation adjustment, plus the contractual penalty, within 60 days; or
• Keep the purchase: receive, for each month of delay, compensation of 1% of the amount already paid, payable when you receive the keys.

Pay attention to a point that changes strategy: in Topic 970, the STJ (Brazil’s Superior Court of Justice) ruled that the delay penalty set in the contract cannot be combined with compensation for lost profits — in other words, as a rule you receive the pre-set penalty, not the penalty “plus” the rent you missed out on. And, under Topic 971, a penalty written only against the buyer can be turned around against the defaulting developer. Each contract calls for its own calculation before you choose the path.

Which extra costs wreck the buyer’s budget?

On top of the price, prepare for a package that usually adds up to 5% to 7% of the property’s value at delivery:

• ITBI (property transfer tax): in the city of São Paulo, 3% of the transaction value (or the official reference value, if higher);

• Registration and the public deed at the Real Estate Registry: fees set by value bracket in São Paulo;

• Condominium charges and IPTU (property tax): become due as of the handover of the keys, even if you have not moved in;

• Finishings: the unit is delivered with bare subfloors — cabinets, shower enclosures and light fixtures are on you.

On a R$ 500,000 apartment in the São Paulo capital, ITBI and registration alone consume around R$ 20,000 — money that needs to be set aside, outside the financing.

A concrete example: Pedro, Ana and the Torre Horizonte

In 2023, Pedro and Ana bought a R$ 500,000 off-plan apartment in São Paulo, with delivery promised for March 2025. Before signing, they asked for a legal review: the lawyer confirmed the registered development and the segregated project assets, but pointed out that the INCC could raise the balance by more than R$ 40,000 by the time of the keys — and the couple set that buffer aside. The project ran 8 months late: 180 days “swallowed” by the grace period and 2 compensable months. Since they had paid R$ 250,000, they received 1% per month: R$ 5,000. Without the prior review, they would have discovered the grace period the worst way — with the move scheduled and the truck booked.

The most common (and costly) mistakes

1. Signing at the sales stand, under “last unit” pressure. Risk: accepting the index, the penalty and the grace period without negotiating — and the contract binds you for years.
2. Not checking the development’s registration on the property record. Risk: buying a unit in an irregular development, with the works subject to a stop-work order.
3. Budgeting based on the “price list” installment. Risk: the INCC inflates the outstanding balance and the approved bank financing does not cover the difference when the keys arrive.
4. Ignoring the segregated project assets regime. Risk: if the developer goes under, competing with all the other creditors for whatever is left.
5. Walking away without doing the math. Risk: retention of up to 25% (or 50%) of what was paid, when assigning the contract to a third party could cost far less.

Actionable checklist before signing

• Up-to-date property record with the development registration (art. 32, Law 4.591/64);

• Check for segregated project assets on the property record;

• Certificates for the developer and the SPE + lawsuits at the TJSP + Procon-SP;

• Complete summary table: price, INCC, delivery date, grace period, penalties for both sides;

• Simulation of the outstanding balance with the INCC projected through the keys;

• Reserve for ITBI (3% in São Paulo), registration, condominium charges and finishings;

• Contract review by a lawyer before signing — not after the problem.

Frequently asked questions

Can the developer deliver 180 days late without paying anything?

Yes — if the contract expressly includes the grace period clause, a limit allowed by art. 43-A of Law 4.591/1964 (added by Law 13.786/2018). Within those 180 days, there is no penalty or compensation. The legally relevant delay starts after the grace period: from then on, the buyer can unwind the deal with a full refund or demand 1% of the amount paid per month of delay.

I backed out of an off-plan purchase: how much will I lose?

Under Law 13.786/2018, the developer may keep up to 25% of the amounts paid — or up to 50% if the project has segregated project assets (art. 67-A of Law 4.591/1964). The brokerage commission is also usually deducted. Before formalizing the purchase termination (distrato), it is worth pricing out alternatives, such as assigning the contract to another buyer, which can greatly reduce the loss.

What is the INCC and why does my installment grow before the keys?

The INCC (National Construction Cost Index, calculated by FGV) measures inflation in construction materials and labor. In off-plan contracts, it adjusts the entire outstanding balance during construction — which is why the installments and, above all, the keys installment grow compared with the launch price list. In peak years, the INCC exceeded 14% per year; build that adjustment into your budget.

Do I need a lawyer to review an off-plan purchase contract in São Paulo?

The law does not require it, but it is the cheapest protection in the whole transaction: a prior review identifies the grace period, the adjustment index, asymmetrical penalties and the absence of segregated project assets — and checks the development’s registration on the property record (matrícula) at the Real Estate Registry. In purchases worth hundreds of thousands of reais, the cost of the review is a tiny fraction of the loss it prevents.

Can I claim compensation if the project runs late?

Yes, once the 180-day grace period has run out. The law guarantees, at your choice, termination of the contract with a full refund plus the penalty, or keeping the purchase with compensation of 1% of the amount paid per month of delay (art. 43-A, Law 4.591/1964). Under Topic 970 of the STJ, the pre-set contractual penalty cannot be combined with lost profits — the right calculation determines the best route.

Protection happens before you sign — afterwards, it can only patch things up

The mistakes in off-plan property purchases have one thing in common: they are all avoidable before the contract and expensive after it. Investigating the developer, reading the summary table, projecting the INCC and knowing the 180-day rule turns the biggest purchase of your life into a calculated transaction — not a bet.

At Falchet e Marques Sociedade de Advogados, a law firm in São Paulo (Av. Paulista), we provide prior reviews of off-plan purchase contracts and due diligence on developers, and we act in cases involving construction delays, purchase termination and billing reviews — so that your investment reaches the keys protected.

Talk to our team on WhatsApp: +55 11 95901-1854 — send us the contract or the offer before you sign and get the points of attention for your case.