Construction delay in Brazil: what the STJ has ruled (Themes 970 and 996)

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Buyers who purchase off-plan in Brazil and receive the keys late usually hear two arguments from the developer: that the contract allows a grace period, and that the buyer must prove financial loss. On both points, Brazil's Superior Court of Justice (STJ) has already ruled — and it did so under the repetitive appeals procedure: Themes 970, 971 and 996. Those holdings, and only those, carry the binding force of art. 927 of the Code of Civil Procedure and reach similar cases nationwide. The other rulings cited in this article are panel judgments: they help mark out the scope of the holdings, but they do not carry that force.

Before the case law, the date of the contract

Law 13,786/2018 was published in the Official Gazette on 28 December 2018 and took effect on the date of publication. It is the statute that added art. 43-A to Law 4,591/1964 — the provision carrying the grace period of up to 180 days and the monthly compensation of 1% of the amount actually paid.

Ruling on the repetitive appeals concerning construction delay, the STJ held that Law 13,786/2018 does not apply to contracts predating its entry into force (REsp 1,498,484/DF, Second Section, judged 22 May 2019), grounded on art. 5, XXXVI, of the Constitution and art. 6, § 2, of the LINDB. The consequence is straightforward:

• Contract signed on or after 28 December 2018 — where art. 43-A applies, the buyer remains compliant and the contract continues, compensation is 1% of the amount actually paid to the developer for each month of delay, pro rata die, due when the unit is handed over (§ 2), or termination of the contract with a full refund plus the penalty (§ 1). Paragraph 3 forbids combining the two.
• Contract signed before 28 December 2018 — there is no statutory percentage to invoke. The benchmark is the contract's penalty clause (Theme 970) and, where the contract provides a penalty only against the buyer, that clause is used to set the compensation owed by the seller; obligations of different kinds are converted into money through judicial assessment (Theme 971). This is not private arbitration or a holding restricted to contracts without a penalty clause.

That is why the first question in any assessment is the signing date — not the length of the delay.

Theme 996: loss is presumed — and where the holding applies

Scope comes first. Theme 996 (REsp 1,729,593/SP, Second Section, judged 25 September 2019) arose from a purchase agreement entered into under the Minha Casa, Minha Vida programme, income brackets 1.5, 2 and 3, and the ruling limits its holdings to residential units. Outside that scope they do not carry over automatically: the discussion returns to the contract and to Themes 970 and 971.

Within it, the STJ held that the buyer's loss is presumed and is compensated as monthly rent, calculated on the rental value of a comparable property. In practice: you need not show you were paying rent elsewhere, nor that you intended to lease the unit.

The same judgment further held that the contract must set a firm delivery date, untied to mortgage approval; that it is unlawful to charge construction interest after the delivery deadline, grace period included; and that from then on the balance stops being adjusted by a sector index, replaced by the IPCA unless that index is more burdensome to the consumer.

Quantify before negotiating: estimate compensation using the delay period and the appropriate calculation base.

The 180-day grace period: what the statute requires

For contracts reached by Law 13,786/2018, art. 43-A, caput, allows delivery within up to 180 calendar days of the scheduled date, provided this is expressly agreed, clearly and prominently. Within that window the delay is no ground for termination and carries no penalty for the developer.

The requirement of clarity and prominence is not decorative: it is a condition of the benefit itself. A generic grace clause, or one diluted in fine print, leaves room to argue that the statutory requirement was not met.

Once that window closes, and provided the buyer did not cause the delay, the two routes in art. 43-A open up — always for contracts signed on or after 28 December 2018: terminating the contract, with a full refund of everything paid plus the penalty, within 60 calendar days of termination (§ 1); or staying in the deal, while remaining compliant, and receiving the 1% monthly compensation when the unit is handed over (§ 2). Paragraph 3 bars combining one with the other.

Theme 970: contractual penalty and lost profits

Under Theme 970 — a repetitive appeal —, the STJ held that a late-performance penalty clause serves to compensate for late performance and that, as a rule, when set at a value equivalent to the rental value, it rules out cumulation with lost profits.

A hasty reading led many to conclude that penalty and lost profits can never be combined. That is not what the court decided. Note the two limits built into the holding itself: it applies as a rule, and its consequence — ruling out cumulation — is conditioned on a premise: a penalty set at a value equivalent to the rental value.

Supplementary compensation: distinguishing REsp 2,025,166

Before the substance, the weight of the precedent. The ruling invoked at this point is REsp 2,025,166/RS, Reporting Justice Ricardo Villas Bôas Cueva, Third Panel, judged 13 December 2022, DJe 16 December 2022. It is a panel judgment, not a repetitive appeal: it does not carry the binding force of art. 927 of the Code of Civil Procedure that Themes 970, 971 and 996 carry. It works as guidance on the scope of the holding, not as a command addressed to the lower courts.

And what the Third Panel did was not to overrule or rewrite the holding: a panel cannot overrule a holding set by a Section in a repetitive appeal (art. 927, §§ 2 to 4, of the Code of Civil Procedure). What it did was to distinguish — the distinguishing the Code requires of it where the case at hand does not meet the premise of the holding (art. 489, § 1, VI, and art. 1,037, §§ 9 to 13). Theme 970 remains intact, final and unappealable since 8 November 2019.

Why there is no conflict. Where the premise is missing — equivalence between the penalty and the rental value — the consequence of ruling out cumulation does not apply. The headnote of REsp 2,025,166 says so in as many words: allowing cumulation where the contractual penalty bears no equivalence to the rental value happens "without such a course amounting to a breach of Repetitive Theme 970/STJ".

The claim in that case sought lost profits without demanding the lower penalty. This does not allow two full awards for the same loss: REsp 2,067,706/MG clarified that amounts covered by the penalty must be deducted, limiting additional recovery to the excess.

With that caveat made, the reporting justice's reading separates two situations:

• If the penalty clause was set at a value equivalent to rent — no cumulation with lost profits.
• If it was set below the rental value — supplementary compensation may cover only the loss not covered by the penalty, under REsp 2,067,706/MG, Third Panel, decided 22 August 2023, published 24 August 2023. The same loss cannot be compensated twice.

In that case the contract provided a penalty of 0.5% of the amount paid per month of delay. The judgment records that the rental value is "ordinarily taken to be between 0.5% and 1% of the value of the property" — a substantially larger base than the amount already paid. The penalty was therefore held disproportionate to the rental value, and a standalone claim for lost profits was allowed. The quoted range is a reference in that judgment, not a universal statutory rate.

The distinction that decides the case is subtle: 0.5% of the amount already paid is far less than 0.5% of the property's total price, especially in the early stages of a financing plan.

What this changes in practice

• Read the penalty's calculation base, not just the percentage.
• Start with the signing date. It decides whether the 1% in art. 43-A enters the calculation or whether the benchmark is the contract's penalty clause.
• Check whether your case falls within Theme 996's scope (Minha Casa, Minha Vida, brackets 1.5, 2 and 3, residential unit) before invoking the presumption of loss.
• Check that the grace clause was agreed clearly and prominently. That is what the statute requires for it to take effect.
• Do not treat every STJ precedent as carrying the same weight. A repetitive-appeal holding (Themes 970, 971 and 996) is binding; a panel judgment (REsp 2,025,166) is guidance, and has to be argued as a distinguishing of your own case.
• Keep every postponement notice. The sequence of delays tends to weigh in the assessment.

What about moral damages?

Delay alone is normally a contractual breach, not an automatic entitlement to moral damages. There must be evidence of exceptional circumstances going beyond ordinary inconvenience and significantly affecting personality rights. The assessment depends on the individual facts.

Frequently asked questions

Do I have to prove I suffered a loss from the construction delay?

Within the scope of Theme 996 — a purchase agreement under the Minha Casa, Minha Vida programme, income brackets 1.5, 2 and 3, with the holdings limited to residential units — Brazil's STJ held that the buyer's loss is presumed, and compensation is calculated as monthly rent based on the rental value of a comparable property. Outside that scope the presumption does not carry over automatically: the discussion runs through the contract's penalty clause (Theme 970) and through Theme 971 where only the buyer faces a penalty: that clause is a benchmark for the seller’s liability, with judicial conversion into money of obligations of different kinds.

Is the 180-day grace period lawful in Brazil?

Art. 43-A of Law 4,591/1964, added by Law 13,786/2018, allows delivery within up to 180 calendar days of the scheduled date, provided this is expressly agreed, clearly and prominently; within that window there is no termination and no penalty for the developer. That provision reaches contracts signed on or after 28 December 2018: ruling on the repetitive appeals concerning construction delay, the STJ held that Law 13,786/2018 does not apply to contracts predating its entry into force (REsp 1,498,484/DF, Second Section, judged 22 May 2019).

Can I claim both the contractual penalty and lost profits?

It depends on the penalty's value. Under Theme 970 — a repetitive appeal, and binding —, a late-performance penalty set, as a rule, at a value equivalent to the rental value rules out cumulation. In REsp 2,025,166/RS (Reporting Justice Ricardo Villas Bôas Cueva, Third Panel, judged 13 December 2022, DJe 16 December 2022) the Third Panel did not overrule that holding: it distinguished. Without that equivalence, additional recovery may be available. REsp 2,067,706/MG limits it to loss exceeding the penalty, avoiding double compensation. It is a panel judgment, without the binding force of the repetitive appeals. Watch the calculation base: 0.5% of the amount paid is far less than 0.5% of the full price.

Until when does the delay period count?

If the contract continues and the buyer remains compliant, art. 43-A, § 2, applicable to contracts from 28 December 2018 meeting its requirements, provides 1% of the amount actually paid per month of delay, pro rata die, due at delivery. Under Theme 996, the endpoint is availability of direct possession. Termination or an unjustified refusal to accept delivery requires a separate assessment; not every situation has the same period. Earlier contracts follow the contract and applicable case law, not that statutory percentage.

Does a delay entitle me to moral damages in Brazil?

Not automatically. Delay in itself is treated as breach of contract. Moral damages require concrete circumstances going beyond ordinary inconvenience, causing a relevant and demonstrable personal consequence. It is assessed case by case, in light of the evidence.