In a recent decision, the Second Section of the Superior Court of Justice (STJ) established that the registration of the seizure in the property’s registry is not an essential requirement for the recognition of fraud against execution in cases of donation of the property between relatives, when this operation characterizes asset shielding to the detriment of creditors.
What is fraud?
Fraud in execution occurs when the debtor tries to hide or transfer his assets in order to avoid paying the debt. In this sense, the donation of the property was considered a form of fraud because the transfer of assets was intended to prevent the property from being seized to pay off the debt.
See also: Fraud against creditors allows seizure of family property
The case judged by the STJ
In the case examined by the Court, a company was a defendant in an enforcement action and had its legal personality disregarded, resulting in the inclusion of its partner in the liabilities and, subsequently, the seizure of its property.
As a result, she transferred the property to her children by way of a donation, with the reservation of usufruct (a provision that guarantees the donor the right to continue using the donated property). The children, in theory, received the property without knowledge of the attachment, since it had not been registered on the property’s registry.
See also: Impossibility of seizing stock optionsWhat the STJ says
What does Precedent 375 of the STJ say?
In principle, the case seems to be in line with Precedent 375 of the Superior Court of Justice (STJ), which states that:
- “the recognition of fraud in execution depends on the registration of the seizure of the property sold or proof of bad faith on the part of the third party purchaser“.
However, Justice João Otávio de Noronha, the rapporteur of the case, highlighted the possibility of relativizing this precedent in situations of asset transfer within the family, especially when the asset remains in the family and there is clear evidence of asset shielding.
In the words of the minister:
- “Although we recognize the important protection afforded to third parties who acquire real estate in good faith without knowing of an enforcement action brought against the insolvent seller, this protection is not justified when the donor intends to shield his assets within his own family.”
The STJ decision and the change in understanding
Thus, the 2nd Section of the STJ established a judgment thesis for the specific case, stating that:
- “The registration of the attachment on the property’s registration is dispensable for the recognition of fraud in the event of a donation between ascendants and descendants that shields assets to the detriment of creditors. The characterization of bad faith in family donations may derive from the family bond and the factual context that demonstrates the intention to frustrate the execution.”
Therefore, this decision is extremely important as it recognizes the relativization of Precedent 375 of the STJ, establishing a precedent to prevent fraudulent maneuvers by debtors aimed at shielding assets to the detriment of creditors.
This understanding further strengthens the effectiveness of enforcement proceedings, preventing debtors from acting in bad faith to evade their obligations.
See also: Unregistered plot purchase agreement is null and void – STJ
Doubts and questions?
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