The Brazilian Superior Court of Justice (STJ), when ruling on Special Appeal No. 2,187,412, involving rural lease agreements, held that the loss of property by the lessor results in the termination of the lease, with no obligation on the new owner to keep the lessee in possession of the land until the end of the originally agreed term.
Below are 3 key points to help agribusiness companies understand what was actually decided and how this impacts lessors, lessees, and purchasers of rural properties:
1. Loss of property by the lessor terminates the rural lease agreement: In the case at hand, the former owner of two rural areas, who had entered into lease agreements, lost ownership of the land to a third party as a result of a court decision. At the time the contracts were executed, there were no annotations on the property records indicating any pending lawsuits. The lessee, who was conducting rural activities on the land, sought to remain in possession, arguing that he was a good faith third party and that the new owners should be subrogated into the rights and obligations of the original lessor. The Minas Gerais Court of Justice rejected this argument, and its decision was upheld by the 3rd Panel of the STJ, which concluded that once the lessor loses ownership, the lease agreement is terminated and the lessee has no right to remain on the land until the contractual term expires.
2. Special regime under the Land Statute limits lessee protection: The core basis of the decision is the special legal regime applicable to rural leases, primarily governed by the Land Statute (Law No. 4,504/1964) and Decree No. 59,566/1966. The provisions of the Civil Code apply only on a subsidiary basis. Article 92, paragraph 5 of the Land Statute grants protection to the lessee in cases where the change of ownership results from voluntary conveyance or the creation of a real encumbrance on the property—situations in which the rural activities may continue under the terms of the lease. By contrast, Decree No. 59,566/1966, in Article 26, item VIII, expressly provides that the lease is terminated upon loss of ownership of the rural property. In such cases, there is no legal provision requiring compulsory continuation of the contractual relationship in favor of the lessee.
3. STJ rejects automatic subrogation of the new owner and waives the need for an eviction action: In assessing the special appeal, the STJ summarized its understanding that, when loss of ownership results from a court decision, the purchaser is not automatically subrogated into the contractual position of the former owner. Forcing the new owner to maintain the lease would mean imposing a contractual burden to which they never consented. On this basis, the STJ also ruled out the need for the estate or the new owner to file a separate action for termination or eviction to take possession of the land, since the lease agreement is automatically terminated upon loss of ownership and the vacation of the property follows from the very end of the contractual relationship.
For the land market and for transactions that may lead to judicial loss of property, this precedent provides guidance on the “breaking point” of the lease relationship, making clear that lessee protection does not go so far as to require the new owner to assume a contract they never agreed to, and reinforcing the central role of the Land Statute as the governing framework in these scenarios.
