In an amendment to the recent Brazilian legislation on guarantees (so-called “Legal Framework for Guarantees”), the extrajudicial search and seizure of automobiles with fiduciary lien was authorized in the event of the debtor’s default. In other words, the creditor does not need to take legal action to repossess the vehicle, which guarantees greater agility and cost reduction.
The measure tends to generate a reduction in interest on car financing, due to the gain in efficiency in the execution of the guarantee. Although it is difficult to estimate what the real impact will be on financing contracts, it is a positive measure for creditors, increasing efficiency in executing the guarantee – and, consequently, in credit recovery.
In the first version of the Legal Framework for Guarantees (Law 14,711 of 2023), sanctioned in October this year, the possibility of extrajudicial search and seizure of vehicles under fiduciary lien had been vetoed. Only extrajudicial execution of real estate was possible.
