Unrecorded side agreement: the risks and how to regularize a property bought without registration?

Need help with your case? See how to regularize your property in São Paulo.

Buying a property "off the books" (no gaveta) is one of the most common — and riskiest — situations in the Brazilian real estate market. The person pays, receives the keys, moves in, lives there for years... but, at the registry, the property is still in someone else's name. And this, sooner or later, tends to cause problems.

The good news is that almost every unrecorded side agreement can be regularized — and there is more than one way to do so. In this guide, you will understand why an unrecorded side agreement does not transfer ownership, what the risks are of leaving the property this way, and the two main routes of regularization (compulsory adjudication of title and adverse possession) — with a practical example.

What is an unrecorded side agreement and why does it not transfer ownership?

An unrecorded side agreement is the popular name for the private purchase and sale agreement (or assignment of rights) for a property that was never taken to registration. The parties agree on the sale, the buyer pays and takes possession, but the transfer is not recorded in the property record (matrícula) — the document stays "in the drawer."

The problem is legal and simple: in Brazil, ownership of a property is only transferred upon registration of the title in the property record, at the Real Estate Registry (art. 1.245 of the Brazilian Civil Code). "Whoever does not register is not the owner." As long as there is no registration, the buyer has possession and a contractual right, but the formal owner remains the seller — with all the consequences that entails.

What are the risks of an unrecorded side agreement?

Holding a property only under an unrecorded side agreement exposes the buyer to concrete risks:

• Attachment for the seller's debts: because they still appear as owner, the property can be attached for the seller's debts.

• Probate: if the seller dies, the property may be listed in their estate and disputed by the heirs.

• Resale: the seller (or their heirs) may, in bad faith, sell the property again to a third party who registers first.

• No credit or collateral: the buyer cannot finance, pledge the property as collateral or use it formally.

• Difficulty of proof and of transfer: it becomes harder to prove ownership and to transfer the property to heirs with security.

For all these reasons, even an old and "uneventful" unrecorded side agreement should be regularized — it is the only way to turn possession into secure ownership.

How to regularize: compulsory adjudication of title or adverse possession?

There are two main routes, and the choice depends on who sold and on the documentation:

1. Compulsory adjudication of title. It is the route for those who bought from the true owner (there is a chain of owners up to the registered titleholder), paid, but could not obtain the final deed — for example, because the seller refuses or vanishes. The adjudication compels the granting of the title based on the agreement. An important development: since Lei 14.382/2022, it can also be done through the out-of-court route, directly at the registry (art. 216-B of the Public Records Act), which has made the path faster.

2. Adverse possession. It is the route for acquiring ownership through prolonged possession, regardless of whether the sale came from the registered titleholder. It is useful when the seller cannot be compelled (they have died, cannot be located) or when the chain of ownership is unclear. Here, the unrecorded side agreement itself serves as "just title", which may allow ordinary adverse possession (a shorter period); failing that, extraordinary adverse possession is used. Where there is no conflict, adverse possession can proceed through the out-of-court route.

In other words: adjudication when the owner can be compelled to grant the deed; adverse possession when this is not feasible and the route is possession. Determining which applies is the first step of regularization.

A practical example: Mr. Nogueira's apartment

Mr. Nogueira bought, 9 years ago, an apartment in São Paulo through an unrecorded side agreement, from a seller who had duly acquired it from the developer. He paid in full, has lived in the property ever since, but never registered the deed — and now the seller no longer answers and has moved abroad.

Because the seller was the true owner (there is a registry chain up to the developer) and Mr. Nogueira paid in full, the recommended route is compulsory adjudication of title: with the agreement, the proof of payment and the documentation, the granting of the deed is sought — possibly through the out-of-court route (Lei 14.382/2022), which is faster. Had the seller been impossible to identify or the chain been uncertain, the alternative would be adverse possession, using the agreement as just title. In both scenarios, the final goal is the same: registering the property record in Mr. Nogueira's name.

The most common (and costly) mistakes

• Assuming the agreement is enough. Without registration, you are not the formal owner — and the risks remain.

• Putting it off. The more time passes, the greater the risk of the seller's death, attachment or resale.

• Choosing the wrong route. Trying adverse possession when adjudication was appropriate (or vice versa) delays and increases the cost of regularization.

• Losing the documentation. The agreement, receipts and proof of payment are essential — keep everything.

• Buying a new property off the books without checking. Before any purchase, check the property record and the seller's standing.

Checklist: to regularize an unrecorded side agreement

• Locate the agreement and all the proof of payment.

• Obtain the updated property record (matrícula) and check who the registered titleholder is.

• Identify who sold and whether there is a chain up to the registered owner.

• Gather proof of possession and its duration (utility bills, property tax/IPTU, receipts).

• Determine the route: compulsory adjudication of title (if the seller was the owner) or adverse possession (if not).

• Seek a real estate lawyer to conduct the regularization through to registration.

Frequently asked questions about the unrecorded side agreement

What is an unrecorded side agreement (contrato de gaveta)?

It is the popular name for a private purchase and sale (or assignment) agreement for a property that was never taken to registration. The parties agree on the sale, the buyer pays and starts living in the property, but the transfer is not registered in the property record (matrícula) — so, on paper, the seller remains the owner. It is very common, but insecure: without registration, ownership does not transfer, and the buyer is exposed to a range of risks.

Does an unrecorded side agreement transfer ownership of the property?

No. In Brazil, ownership of a property is only transferred upon registration of the deed (or the title) in the property record (matrícula), at the Real Estate Registry (art. 1.245 of the Brazilian Civil Code). Until this happens, whoever bought through an unrecorded side agreement has possession and a contractual right, but is not the formal owner. Hence the importance of regularizing: turning that agreement into registered ownership is what gives the buyer real security.

What are the risks of an unrecorded side agreement?

Several. Because the seller remains the owner on record, the property can be attached for the seller's debts, be included in their probate if they die, or even be sold again to someone else. The buyer also cannot finance, pledge the property as collateral or transfer it with security, and may have difficulty proving ownership. For this reason, even an old unrecorded side agreement should be regularized as soon as possible.

How do you regularize a property bought through an unrecorded side agreement?

There are two main routes. If it is possible to identify the chain of owners and the seller was the true owner, the route is usually compulsory adjudication of title — which compels the granting of the deed and today can even be done through the out-of-court route (Lei 14.382/2022). If this is not possible — a deceased seller, one who cannot be located, or one with no clear link to the registered titleholder — the route is usually adverse possession, in which the agreement itself serves as just title. An attorney determines which applies.

What is the difference between adverse possession and compulsory adjudication of title?

Compulsory adjudication of title is for those who bought from the true owner, paid, but could not obtain the final deed: it compels the granting of the title based on the agreement. Adverse possession, on the other hand, is for acquiring ownership through prolonged possession, regardless of whether the sale came from the registered titleholder — useful when the seller cannot be compelled (deceased, vanished) or when the chain of ownership is unclear. The choice depends on who sold, on the documentation and on the duration of possession.

Is it worth seeking an attorney to regularize an unrecorded side agreement in São Paulo?

Yes. Each unrecorded side agreement has a different story — who sold, whether there is a chain of owners, whether the seller is alive, how long the possession has lasted — and this determines the route (compulsory adjudication of title or adverse possession, judicial or out-of-court). A real estate lawyer in São Paulo reviews the documentation, chooses the fastest and safest route and conducts the regularization through to registration of the property record, removing the risks of the property not being in your name.

Turn your agreement into registered ownership

The unrecorded side agreement solves the present, but defers a problem: as long as the property is not in your name, you are not, legally, the owner — and you are exposed to attachments, probate and even resale. Regularization is what ends that risk and provides real security, opening the doors to credit and to the smooth transfer of the asset.

And there is a solution for almost every case: compulsory adjudication of title, when the seller can be compelled to grant the deed (today, often, through the out-of-court route), or adverse possession, when the route is possession. The essential thing is to choose the right route based on the story of your agreement.

At Falchet e Marques Sociedade de Advogados, a firm in São Paulo (Av. Paulista), we work on property regularization, compulsory adjudication of title and adverse possession — reviewing the documentation, determining the fastest and safest route and seeing the case through to registration of the property record. If you bought a property "off the books," it is worth resolving this before it becomes a bigger problem.

Talk to our team on WhatsApp: +55 11 95901-1854 — and find out the best route to regularize your property.