Registry office’s jurisdiction for fiduciary assignment
The registry office’s jurisdiction for the fiduciary assignment of agribusiness products and by-products
Brazil’s Law No. 14,421, enacted on July 20, 2022 (“Law No. 14,421/2022”), known as the New Agribusiness Law, was sanctioned by the National Congress with strong support from agribusiness representatives, aiming to improve the rural financing system and access to credit for rural producers.
Among the various modifications, one notable change is the alteration of the registry office’s jurisdiction regarding the fiduciary assignment of agricultural products and their by-products.
Law No. 14,421/2022 shifted such jurisdiction for fiduciary assignment of agricultural products and their by-products from the respective Registry of Titles and Documents (“RTD”) to the Real Estate Registry (“RI”), without amending the excerpt of Brazil’s Public Records Law of 1973 (Law No. 6,015/1973 or “LRP”) that assigns such jurisdiction to the RTD.
Not only that: as this change occurred in a legal instrument dealing with Rural Product Certificates (“CPRs”) – Law No. 8,929/1994 – it gave rise to question about the scope of such a change and whether there was an intention by the legislator to establish the jurisdiction for the fiduciary assignment of agricultural products and by-products’ registration depending on the type of guaranteed instrument.
In other words, the question arises as to whether the RI has also jurisdiction to register the fiduciary assignment of agricultural products and their by-products linked to credit instruments other than CPRs.
To fully understand this issue, a brief overview of the regulatory framework of these legal guarantee systems and the different interpretations given by various legal instruments addressing the subject is necessary.
The Brazilian Civil Code of 2002 (“CC”) in its article 1,361, §1 establishes that the fiduciary ownership of a non-fungible movable good given as collateral is constituted by registration in the relevant RTD located in debtor’s domicile.
According to article 86 of the CC, a good is fungible when it can be replaced by others of the same kind, quality, and quantity. On the other hand, non-fungible goods are those that are irreplaceable due to their intrinsic characteristics. Therefore, non-fungibility is an inherent quality of the thing, not subject to change according to the will of the parties. However, there is room for subjectivity, as to whether something ordinary and easily replaceable can become unique, depending on the intrinsic qualities of such goods[1].
Furthermore, the CC also establishes the need for special legislation to regulate other types of fiduciary assignments, as well as defines its application subsidiarily with respect to special legislation, where compatible. In this sense, please refer to article 1,368-A of the CC.
In the scope of fiduciary assignments celebrated within the Financial and Capital Market, Law No. 4,728 of 1965, in its article 66-B, §1, had already provided for the possibility of fiduciary assignment of fungible goods due to the use of the terms: “goods subject to fiduciary ownership are not identified by numbers, marks, and signs”.
In other words, the fiduciary assignment of fungible movable goods is not a legislative innovation per se, as it has already been widely used by the market. Such legal authorization was of paramount importance, as it allowed agents of the Financial System to subsidize agricultural credit with a more practical and secure guarantee for the creditor, being advantageous for both parties.
In its turn, the LRP establishes the competence of the Real Estate Registry office, the so-called RI, for fiduciary assignment of real property (article 167, item 35 of the LRP) and of the RTD for fiduciary assignment of movable property (article 129, item 10 of the LRP).
It is worth noting that within the registration system, the jurisdiction of the RI tend to be taxonomically listed, and that of the RTD tend to be subsidiary, according to article 127, sole paragraph of the LRP.
However, in apparent contradiction to the provision of the LRP, Law No. 14,421/2022 amended the Law of Rural Product Certificates (“Law No. 8,929/1994”), so that, in its article 12, §4, it stated that “The fiduciary assignment of agricultural products and their by-products, under the terms of article 8 of this Law, shall be registered at the real estate registry office where the assets given as collateral are located, […]”.
Thus, there seems to be an apparent conflict of norms, as agricultural products and by-products are fungible movable goods, for which the general rule imposes registration of fiduciary assignment with the RTD. However, a law that specifically deals with CPRs indirectly changed the jurisdiction for registration of agricultural products and by-products, which are fungible movable goods, without modifying the provision that establishes the jurisdiction for registration of movable goods in the LRP.
The initial question remains: does the registry office’s jurisdiction for fiduciary assignment of agricultural products and by-products depend on the nature of the credit instrument representing the guaranteed debt? Or is it the same for every agricultural product and by-product, regardless of the instrument?
Therefore, a broad understanding of the reasons for such a change and of the registration system is necessary to delineate the involved jurisdictions.
Firstly, due to strict legality, the amendment to Article 12, §4 of Law No. 8,929/1994 should be interpreted according to its literal meaning, and the scope of the registry office’s jurisdiction intended by the legislator should be attributed without limiting the effectiveness of the provision with respect to CPRs.
On the contrary, there is explicit reference to article 8 which – even before the amendments made by Law No. 14,421/2022 – expands the use of fiduciary assignment instruments to any assets related to agribusiness given as collateral, as follows.
Art. 8º The non-identification of the assets subject to fiduciary assignment does not detract the effectiveness of the guarantee, which may apply to others of the same kind, quality and quantity, owned by the guarantor.
§ 1º The fiduciary sale of agricultural products and their by-products may fall on present or future assets, fungible or non-fungible, consumable or not, whose ownership belongs to the assignor, debtor or third party guarantor, and is subject to the provisions set forth in Law No. 10,406, of January 10, 2002 (Civil Code), and in the special legislation regarding the pledge, the rural pledge and the agricultural and commercial pledge and the provisions on the fiduciary assignment of non-fungible assets, in everything that is not contrary to the provisions of this Law.
§ 2º The processing or transformation of the agricultural products given in fiduciary assignment does not extinguish the real link that is automatically transferred to the products and by-products resulting from processing or transformation.
Therefore, the establishment of the jurisdiction for such registration in the RI with respect to fiduciary assignment of agricultural products and by-products given by law Law No. 14,421/2022, which is a law of the same hierarchy as the LRP, of the same specificity, but of later promulgation, implies the tacit revocation of the previous provision regarding agricultural products and by-products. In the name of strict legality and hermeneutics, it seems that the transfer of such jurisdiction for registration, despite the unusual normative gap, is valid, legitimate, and in line with the most recent legislative trend[2].
Regarding such legislative trend, it is noteworthy that historically, the legislator has been shifting the registry office’s jurisdiction of rural guarantees to the RIs to provide greater publicity, operability in accessing information, and legal certainty for creditors and rural producers. A clear example of this is the previous regulation given to rural pledges. As mentioned above, Article 8, §1 of Law No. 8,929/1994 explicitly refers to the regulation given to rural pledges. And, again, it is emphasized that such a provision predates the legislative innovation being discussed here.
Therefore, concatenating the presented reflections, it can be observed that the literal interpretation, hermeneutics, legislative background, market practices, and the express subsidiarity of the RTD impose an extensive interpretation of the change of the registry office’s jurisdiction for the fiduciary assignment of rural products and by-products to the RI, regardless of the nature of the credit instrument that originated it, despite the absence of the same express change in the LRP.
Thus, the most realistic view would be to conclude that the shift of the registry office’s jurisdiction from the RTD to the RI for the fiduciary assignment of agricultural products and by-products is due considering the type of product assigned as collateral and its economic purpose, regardless of the type of credit instrument used.
Therefore, it seems more reasonable to conclude that the provision of Article 129, §10 of the LRP does not apply to agricultural products and by-products. Thus, the registration of fiduciary assignment of agricultural products and by-products must be made in the Book 3 – Ancillary Registry of the RI, same as an agricultural pledge, providing greater publicity to the financial market about all existing burdens on a given harvest, in a single encumbrance certificate, which will certainly bring greater legal certainty to credit granting.
In this way, the literalness of the provision is respected in line with the legislator’s intention and the agribusiness guarantee microsystem, thus pursuing the initial objectives of the legislator to improve the financing system and access to credit for rural producers.
Finally, in conclusion, it is worth noting that despite all the factors that determine the opinions delimited here, the law remains in force and the apparent contradiction persists. Therefore, a solid doctrinal and jurisprudential background is necessary to consolidate the most legalistic and market-friendly position.
[1] VENOSA, Sílvio de S. Direito Civil: Parte Geral. v.1. Grupo GEN, 2023. E-book. ISBN 9786559774678. Available on: https://app.minhabiblioteca.com.br/#/books/9786559774678/. Access on: 23.02.2024. Page 288;
[2] SANTOS, Fábio Ribeiro dos; RIBEIRO, Moacyr Petrocelli de Ávila. Da competência registral da alienação fiduciária de produtos e subprodutos agropecuários no Ofício de Registro de Imóveis. Portal Migalhas, 2023. Available on: https://www.migalhas.com.br/arquivos/2023/5/0CF567DE3711EA_PRODUTOSAGROPECUARIOS.pdf. Access on: 22.02.2024 at 15h39;
Bibliography
- SANTOS, Fábio Ribeiro dos; RIBEIRO, Moacyr Petrocelli de Ávila. Da competência registral da alienação fiduciária de produtos e subprodutos agropecuários no Ofício de Registro de Imóveis. Portal Migalhas, 2023. Available on: https://www.migalhas.com.br/arquivos/2023/5/0CF567DE3711EA_PRODUTOSAGROPECUARIOS.pdf. Access on: 22.02.2024 at 15h39;
- SANTOS, Emanuel Costas. Migalhas – Competência do RI para registro de alienação fiduciária de produtos do agro. SINOREG-MG. Available on: https://www.sinoregmg.org.br/post/migalhas-compet%C3%AAncia-do-ri-para-registro-de-aliena%C3%A7%C3%A3o-fiduci%C3%A1ria-de-produtos-do-agro. Access on: 02.2024 at 15h42;
- VENOSA, Sílvio de S. Direito Civil: Parte Geral. v.1. Grupo GEN, 2023. E-book. ISBN 9786559774678. Available on: https://app.minhabiblioteca.com.br/#/books/9786559774678/. Access on: 02.2024. Page 288;