How to Verify If a Construction Company Is Reliable Before Signing: 8 Objective Criteria
Buying a property off-plan is one of the highest-risk financial decisions a private individual can make. You hand over money now to receive the property in 2, 3, or 4 years — trusting that the construction company will exist, will build, and will deliver on schedule.
Most people choose a construction company based on the price per square meter, the décor of the show apartment, and the sales agent’s pitch. None of these criteria tell you anything about the legal or financial soundness of the project.
This guide lists 8 verifiable, objective criteria — that anyone can check before signing anything.
Why verification matters more than price
Florianópolis has a history of delayed projects, developers that opened and closed, and buyers who spent years waiting for keys that never arrived. It’s not a phenomenon unique to FLN — but the heated vertical construction market on the island over the past 10 years has intensified the problem.
The real risk in a new launch isn’t whether the price per square meter is high or low. The risk is that you sign a contract with a company that lacks the financial strength to complete the work — and have no legal tools to protect yourself when that happens.
The 8 criteria below don’t guarantee that your property will be delivered on schedule. But they drastically reduce the risk of you being in a completely unprotected situation if something goes wrong.
Criterion 1 — Fiduciary Fund Protection (Patrimônio de Afetação): What It Is and How to Check
What It Is
Fiduciary Fund Protection, regulated by Law 10.931/2004, is a mechanism that legally separates the project’s money from the developer’s general assets. In practice, the cash earmarked for Project A cannot be used to pay debts on Project B or the developer’s personal debts.
Without Fiduciary Fund Protection, if the developer goes bankrupt, the money buyers have paid becomes part of the bankruptcy estate along with everything else — and you become an unsecured creditor in an enormous queue.
With Fiduciary Fund Protection, the money from that specific project is dedicated exclusively to its completion, even in the event of the developer’s bankruptcy.
How to Check
Request the Incorporation Memorandum registered at the property registry office. The protection regime must be explicitly stated in the registration. The purchase and sale contract should also mention it.
Direct question to the agent: “Is this project under Fiduciary Fund Protection?” If they hesitate or don’t know, request the Memorandum.
Criterion 2 — Registration of Incorporation at the Property Registry
What It Is
Before any unit is sold, the developer is legally required (by Law 4.591/1964) to register the incorporation at the competent Property Registry Office. Without this registration, the sale is irregular — and the contract can be voided.
The Incorporation Registration consolidates all project documentation: plans approved by City Hall, descriptive memorandum, company certificates, property deed, plot size, construction drawings.
How to Check
- Ask for the Incorporation Registration number and the registry office name
- Visit registrodeimoveis.org.br to locate the correct office by address or zip code
- Request a certified copy of the registration at the property registry office — you have the legal right to obtain it, even if you’re not the owner
- Confirm that the registration is active and that the project being sold is exactly what’s registered (name, number of units, floor areas)
Alert: A project without a registration number means the incorporation hasn’t been formalized yet — premature irregular sale. Do not sign until the registration is complete.
Criterion 3 — Delivery History (Where to Check)
A brand-new developer with no track record is fundamentally different from one with 10 completed projects — even if both pitch the same marketing message.
How to Check Delivery History
- Google + developer name + “delivery” or “delay”: simple search that surfaces complaints
- Reclame Aqui (Brazil’s complaint database): search by CNPJ or company name
- State consumer protection agency: check if there are filed actions
- Legal cases in TJSC (for SC projects): search by company name at tjsc.jus.br/busca-de-jurisprudencia to see if there are rescission actions for delays
- Previously delivered projects: ask for references from completed works. Visit the property, talk to residents, verify if it was delivered on time and to spec
What to Consider: 1 or 2 rescission actions for delays across a track record of 10 projects can be normal. 30 actions across 3 projects is a clear red flag.
Criterion 4 — Company Status and Negative Certificates
The company’s registration status with CNPJ is public and verifiable in seconds.
How to Check
- CNPJ at Receita Federal: consultacnpj.receita.fazenda.gov.br — verify the CNPJ is active and the declared activity matches real estate development
- Federal Tax Compliance Certificate: certidoes.receita.fazenda.gov.br
- Labor Compliance Certificate: tst.jus.br/certidao
- SERASA/SPC for Businesses: some of these checks require registration, but corporate due diligence services provide access to credit restrictions
What to Look For: An inactive CNPJ, an activity different from real estate development, active tax debts, or significant credit restrictions on SERASA are all red flags that warrant investigation before any financial commitment.
Criterion 5 — Who Is the SPE?
What Is an SPE?
SPE stands for Sociedade de Propósito Específico (Special Purpose Entity). It’s a company created exclusively for developing a single real estate project. Each new launch can have its own SPE, separate from the parent developer.
This has important legal implications: you sign a contract with the SPE, not the parent developer. If the SPE fails (or the developer fails to properly capitalize the SPE), the legal situation can be different from what you expected.
How to Check
- Ask for the SPE’s CNPJ (different from the parent developer’s CNPJ)
- Verify that the SPE has the same Fiduciary Fund Protection regime
- Check the SPE’s registration status separately
- Ask: “Does the SPE have a bank account dedicated exclusively to this project, audited by a buyers’ committee?”
Law 10.931/2004 provides for the creation of a Committee of Buyer Representatives to oversee the project’s financial progress. Serious projects encourage this committee. Problematic projects try to avoid it.
Criterion 6 — Does the Developer Build or Just Sell?
There’s a fundamental difference that few people notice:
- A developer that also builds: has its own technical team, manages construction directly, takes end-to-end responsibility
- A developer that only develops: launches and sells the project, then hires a third-party contractor to execute. The risk of discontinuity is higher if financial problems arise
Why This Matters
If the developer faces financial difficulties during construction and the third-party contractor isn’t paid, work stops. The developer might argue the problem is between them and the supplier. But whoever ends up with the unfinished property is the buyer.
How to Check: Ask directly who will execute the work. Request the construction contract or at least the contractor’s name. Research the contractor as well.
Criterion 7 — Does the Developer Have Multiple Projects Underway?
Having multiple simultaneous projects can be a sign of soundness — or a sign of thin financial structure that depends on sales of one project to finance construction of another.
What to Investigate
- How many projects does the developer have under construction at the same time?
- What’s the stage of each one (newly launched, 30% built, ready for delivery)?
- Have there been delays on any of the currently active projects?
A developer with 5 projects all in launch phase may have cash flow heavily dependent on future sales. One with 2 projects — 1 in advanced construction, 1 just launched — tends to have a more solid structure.
There’s no “right” number — but the question is valid, and the transparency of the answer is itself a signal.
Criterion 8 — Is the Standard Contract Fair?
The purchase and sale contract for an off-plan property is long, technical, and was drafted by the developer’s lawyer. Naturally, it tends to favor the developer.
What to Review Before Signing
Delay-tolerance clauses: Many contracts allow 180 days of delay beyond the promised date, without any penalty to the developer. This is legal (most judges accept it), but it’s worth negotiating.
Price adjustments during construction: What index adjusts the price of installments during building? INCC (National Construction Cost Index) is standard — verify if there are additional interest charges on top of INCC.
Asymmetric penalties: If the buyer delays a payment, there’s a fine. If the builder delays delivery, is there an equivalent penalty? Check if the contract imposes symmetric consequences.
Descriptive memorandum: What’s included in the finish? Brands of appliances, type of cladding, quality of window frames. Anything not listed in the memorandum can be substituted with something cheaper.
Financing contingency clause: What happens to your deposit if you fail to get bank financing? Well-drafted contracts provide for full refund. Poorly drafted ones retain part of it.
How to Check: Take the contract to a lawyer specializing in real estate law before signing. An hour of consultation typically costs far less than the risk you’re assuming on a property purchase.
Frequently Asked Questions
What is Fiduciary Fund Protection in plain language?
It’s a legal protection that separates the project’s money from the rest of the developer’s finances. If the developer goes bankrupt, the money buyers have paid doesn’t go into the bankruptcy estate — it stays dedicated exclusively to completing that specific project.
How do I know if the project has Incorporation Registration?
Ask the agent or developer for the registration number and the office name. Then request a certified copy directly from the property registry office in the city — it’s a public document; anyone can request it.
Can the SPE go bankrupt even if the parent developer is doing well?
Technically, the SPE is a separate company. What keeps the SPE solvent is the capital the parent developer injects and revenue from sales. If the parent developer faces financial trouble and stops capitalizing the SPE, construction can halt — even if the parent legally still exists.
Is it mandatory to hire a lawyer to review an off-plan contract?
It’s not legally required, but it’s strongly recommended. The contract contains dozens of clauses that affect your rights for 3 to 4 years. The cost of legal review (typically R$ 500 to R$ 2,000) is irrelevant compared to the property value.
Where can I check legal cases against a builder in Florianópolis?
On the TJSC website (tjsc.jus.br/busca-de-jurisprudencia) you can search by company name or CNPJ and find active cases. Search specifically for “contract rescission,” “delay in delivery,” and “performance of obligation.”
If the project is delayed, what are my rights?
Most contracts allow 180 days of delay without penalty. After that, you can rescind with full refund of amounts paid (adjusted for inflation), or maintain the contract with developer penalty. The penalty percentage varies — the ideal is to have it clearly defined in the contract before signing.
Regente Imóveis acts as a real estate consultant in Florianópolis. This article is for educational purposes. For analysis of a specific project, consult a lawyer specializing in real estate law.
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