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

Need help with your case? Calculate your compensation for construction delay in two minutes.

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, which makes the guidance binding on similar cases nationwide.

Theme 996: loss is presumed

This is the most important ruling for buyers. Under Theme 996, the STJ held that once the delivery deadline is missed — counting the grace period already — the buyer's loss is presumed. It consists of being unjustly deprived of the use of the property.

In practice: you do not have to prove you lost money. You need not show you were paying rent elsewhere, nor that you intended to lease the unit. Deprivation alone creates the right to compensation.

The court also defined the form and the end date: compensation takes the form of monthly rent, calculated on the rental value of a comparable property, running until the date direct possession is actually made available to the buyer.

The 180-day grace period is valid — with conditions

The STJ upheld a tolerance period of no more than 180 days, provided it appears in a contractual clause that is express, clear and intelligible. Being in the contract is not enough: it must be understandable to the buyer.

The court also established that the contract must set a firm delivery date, and that this date cannot be tied to mortgage approval or to any other transaction — except for the grace period itself.

Theme 970: contractual penalty and lost profits

Under Theme 970, the STJ held that a late-performance penalty clause serves to compensate for delay and that, 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.

When cumulation is allowed

In 2023, ruling on REsp 2,025,166, the Third Panel clarified the scope of Theme 970. Justice Ricardo Villas Bôas Cueva distinguished 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 — cumulation is allowed.

In that case the contract provided a penalty of 0.5% of the amount paid per month of delay. The court noted that its case law treats as equivalent to rent something between 0.5% and 1% of the property's full price — a substantially larger base. The penalty was therefore insufficient, and claiming lost profits alone was held legitimate.

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.
• Do not accept demands to prove loss. Theme 996 dispenses with that evidence.
• Check whether the grace clause is clear. If obscure or tied to financing, it can be challenged.
• Keep every postponement notice. The sequence of delays tends to weigh in the assessment.
• Mind the end date: compensation runs until possession is handed over, not until the occupancy permit.

Frequently asked questions

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

No. Under Theme 996, decided in repetitive appeals, Brazil's STJ held that the buyer's loss is presumed once the delivery deadline is missed, grace period included. Being unjustly deprived of the use of the property is enough to create the right to compensation, regardless of the purpose of the purchase.

Is the 180-day grace period lawful in Brazil?

Yes. The STJ upheld a tolerance period of no more than 180 days, provided it is set out in an express, clear and intelligible contractual clause. The caveat matters: an obscure or hidden clause can be set aside. The court also ruled that the delivery date cannot be tied to mortgage approval or any other transaction.

Can I claim both the contractual penalty and lost profits?

It depends on the penalty's value. Under Theme 970, a penalty set at a value equivalent to the property's rent rules out cumulation. But in REsp 2,025,166 the STJ clarified that where the penalty falls below the rental value, cumulation is allowed. 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?

Until direct possession is actually made available to the buyer — that is, handover of the keys. Not the occupancy permit, nor the registration date. The STJ set this end point in Theme 996, and compensation is calculated as monthly rent based on a comparable property.

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.