The extrajudicial enforcement of debts secured by a fiduciary transfer of movable property (alienação fiduciária) is governed by articles 8-B, 8-C and 8-E of Decree-Law No. 911/1969, as added by the Guarantees Law (Law No. 14,711/2023).
The procedure allows the fiduciary creditor to pursue, outside the courts, both the consolidation of ownership and the repossession of the asset, before the Registry of Titles and Documents or, in the case of vehicles, before the Department of Motor Vehicles (Detran). The judicial search-and-seizure action, set out in article 3 of the same Decree-Law, remains available as an alternative, particularly where the contract contains no clause authorizing the extrajudicial procedure.
Below are 5 key considerations that a fiduciary creditor should keep in mind before opting for the extrajudicial route:
1. The extrajudicial procedure depends on an express contract clause: Neither the consolidation of ownership nor the repossession may take place outside the courts without an express, conspicuously highlighted clause to that effect. Absent it, the creditor’s only recourse is the judicial repossession action;
2. Proof of default by return-receipt mail is a condition for the procedure to proceed: The registrar may require the creditor to submit the return receipt for the notice sent to the debtor before starting the extrajudicial procedure. Without this proof, the procedure simply cannot be opened;
3. Delivery of the asset, whether voluntary or forced, is at the creditor’s own risk: If the debtor prevails in a challenge after the asset has already been resold, the creditor owes a penalty of 50% of the originally financed amount plus damages, a risk that only pays off when the debt is not seriously in dispute;
4. Consolidating ownership on paper does not dispense with physical possession of the asset: Unlike real estate, the extrajudicial sale of movable property requires the creditor to hold full possession of the item. Until the debtor voluntarily hands over the asset, the creditor must still carry out the repossession before reselling it;
5. Seizure of the asset may not be carried out by the creditor itself: The creditor, personally or through a hired firm, may locate the vehicle or other asset (article 8-C, paragraphs 4 to 6, Decree-Law No. 911/1969), but the law does not authorize self-help force to retake it. The idea that seizure must be carried out by police authority is a doctrinal view grounded in the constitutional ban on self-help remedies, not an express rule in those paragraphs.
Taken together, these points show the extrajudicial route is faster and cheaper than judicial enforcement, but shifts much of the risk onto the creditor, and only pays off when the debt is unlikely to be disputed and the contract already allows for it.
In practice, before starting the extrajudicial procedure, a fiduciary creditor should check: (i) whether the contract expressly authorizes consolidation and repossession outside the courts; (ii) whether prior notice by return-receipt mail has been arranged; and (iii) whether the debt is solid enough to justify the 50% penalty risk if the debtor’s challenge succeeds.
