Restrictions on HIS and HMP units require caution from landowners in land swaps, under penalty of property damage and litigation.

Credits: Political Crumbs

In recent years, social housing (HIS) and affordable market housing (HMP) have gained prominence in the real estate market, driven by public policies aimed at expanding access to housing.

In this context, landowners – owners of land who negotiate the sale of their properties to a construction company or developer for the construction of a project – have been increasingly sought after by developers interested in developing projects classified as HIS (Social Housing) and HMP (Municipal Housing).

Many of these negotiations are structured through real estate exchange or payment in kind, modalities in which the landowner hands over the land and, in return, receives the promise of payment of the price through autonomous units of the future development.

Although this business model may represent a significant opportunity for asset appreciation, it requires caution. In practice, it is observed that many landowners enter into deals without fully understanding the severe legal and economic consequences arising from classifying the project as Social Housing.

Price, rental and usage restrictions for HIS units.

Social Housing is a public policy instrument aimed at producing housing for low-income families. In the municipality of São Paulo, this matter is primarily governed by the Strategic Master Plan (municipal law 16.050 of 2014), the Land Subdivision, Use and Occupation Law (municipal law 16.402 of 2016), and subsequent regulations that established control and oversight mechanisms for the production of these housing units.

In negotiations with developers, landowners often focus on the number of square meters they will receive as payment, neglecting to analyze the legal nature of the units.

This point became critical after the enactment of municipal decree 63.130/24 (supplemented by decree 64.244/25), which imposed maximum and non-negotiable limits for the sale of units classified as HIS and HMP:

Article 6-A. Considering the purchasing power of each income bracket eligible for the housing units, sales must respect the following maximum limits:

I – HIS 1 Units: R$ 266,000.00 (two hundred and sixty-six thousand reais);

II – HIS 2 Units: R$ 369,600.00 (three hundred and sixty-nine thousand and six hundred reais);

III – HMP Units: R$ 518,000.00 (five hundred and eighteen thousand reais).

In addition to the price ceiling, which is often much lower than the market value in the region, the legislation requires that the buyer fall within restricted income brackets, as can be seen in paragraph 2 of the aforementioned article 6-A:

§ 2 For the purposes of characterizing the typologies of HIS 1, HIS 2 and HMP, the following ranges will be observed:

I – HIS 1: Up to 3 minimum wages of monthly family income or up to 0.5 (half) a minimum wage per capita per month;

II – HIS 2: Up to 6 minimum wages of monthly family income or up to 1 (one) minimum wage per capita per month;

III – HMP: Up to 10 minimum wages of monthly family income or up to 1.5 (one and a half) minimum wages per capita per month.” (NR)

From the landowner’s point of view, the impact is devastating, and these limitations may even make it impossible to receive these units as a form of payment, especially when there is no compatibility between the landowner’s monthly family income bracket and the rules applicable to the sale and allocation of the units.

Imagine a plot of land in a highly valued area: the owner gives up the property expecting to receive high-end units, but discovers that the units promised in the payment in kind are classified as HIS (Social Housing). He will face a very limited consumer market and resale values ​​fixed by law, that is, if he himself manages to receive these HIS units as payment, should his income exceed the limits stipulated in the applicable legislation.

Even more serious, or perhaps even more so, is the restriction on enjoyment. The intent of the law is to guarantee the beneficiary’s own housing, not to encourage investment. Therefore, the landowner who planned to keep the apartments to generate passive income may have problems trying to rent out their units, since the intended use of the property cannot alter the social purpose of the program.

The duty of transparency and the application of the Consumer Protection Code.

It is not enough for the developer to state that payment will be made upon future delivery of units, as it is their duty, imposed by objective good faith (article 422 of the Civil Code), to expressly clarify the typology of the units, the urban planning limitations, and the economic restrictions that will affect the property.

The omission of this information in the pre-contractual phase constitutes a serious flaw, and jurisprudence offers solid support for the landowner’s defense. The Superior Court of Justice (STJ), in the judgment of REsp 686.198/RJ, established the understanding that the landowner who does not act as an investor or co-developer and who carries out the so-called “on-site exchange,” accepting to receive autonomous units as payment for the price, is equivalent to the figure of a consumer.

CIVIL LAW. INCORPORATION. ON-SITE EXCHANGE. LAND OWNER AND CONDOMINIUM OWNERS. EQUALIZATION. RESCISSION OF THE SALE CONTRACT. COMPENSATION. LIMITS. FINANCIAL ADVANTAGE GAINED BY THE LAND OWNER.

• The owner of the land being incorporated does not always actively participate in the development as a developer. Often, the developer enters into a purchase and sale agreement with the property owner, undertaking to pay the price, in whole or in part, with units in the development. This modality is provided for in Article 39 of Law 4.591/64 and is known as “on-site exchange”.
• In this circumstance, the landowner will assume the legal status of a mere co-owner, on equal terms with any other purchaser of units in the development. The landowner’s role is equivalent to that of a consumer, according to Article 2 of the Consumer Protection Code (CDC), with the developer acting as the supplier. The property owner only differs from other purchasers because they pay for their autonomous unit with the land itself on which the development was built, but this circumstance does not alter the consumer relationship.
• The nature of the relationship between the landowner and the other purchasers, however, is not one of consumer law, but rather civil law, both upon the regular completion of the project – when they will all be co-owners – and upon the termination of the land sale contract – in which case a civil obligation of reparation will arise for the landowner, aiming to prevent unjust enrichment.
• The obligation to indemnify, as stipulated in article 40 of Law 4.591/64, must be limited to the financial benefit obtained by the landowner, which should not be confused with the total amount paid by the other purchasers to the developer.
• In practice, assuming all units in the development are of equal value, the total cost of the building should be determined by dividing it by the total number of buyers, excluding the landowner. The result will correspond to the value of the construction portion added to the unit by each buyer.

Special appeal not admitted.

(REsp 686.198/RJ, rapporteur Justice Carlos Alberto Menezes Direito, rapporteur for the judgment Justice Nancy Andrighi, Third Panel, decided on 10/23/07, DJ of 2/1/08, p. 1.) (emphasis added)

This attracts the application of the Consumer Protection Code (CDC), guaranteeing the injured landowner protection against abusive clauses, the objective liability of the developer and, above all, the reversal of the burden of proof.

The legal solution: Conversion into damages.

Therefore, in cases where the developer unilaterally imposes a requirement that the landowner receive social housing units as payment, the solution to the contractual imbalance created by the developer is not to subject the landowner to substantial losses, nor to the receipt of legally bound properties. The solution, supported especially by Article 234 of the Civil Code, is to seek judicial redress for the conversion of the obligation to deliver a specific item into damages.

By resorting to the Judiciary, the landowner can refuse units with social uses incompatible with what was legitimately expected and demand that the developer pay compensation corresponding to the full value of the free and unencumbered square meter practiced in the region.

It is therefore up to the Judiciary to curb obscure contractual practices, restoring the economic and financial balance of real estate transactions and ensuring that the Social Housing institution fulfills its housing role, without serving as a means of illicit enrichment for developers at the expense of landowners’ assets.

Lucas Cucio Guisordi

Lawyer, graduated in Law from the Centro Universitário das Faculdades Metropolitanas Unidas – FMU and member of the Strategic Civil Litigation team at Ferraz de Camargo Sociedade de Advogados. Registered with the OAB/SP under number: 469.658