The liability of the fiduciary creditor in real estate developments now follows a functional, rather than a formal, criterion.
What has changed in the liability of the fiduciary creditor
The liability of the fiduciary creditor in real estate developments has reached a new milestone at the STJ (Superior Court of Justice). On 3 September 2026, the Second Section unanimously held that the financing bank is not liable for defects or delays in the construction works. In other words, the financial agent in the strict sense does not have standing to be sued in claims brought by purchasers. The exception applies where the institution acts beyond the role of creditor.
The ruling settles a long-standing divergence between the private law Panels. On the one hand, one Panel took the view that a bank supervising the works acted as an executor and could therefore be a defendant. On the other hand, the other Panel held that the fiduciary assignment of receivables does not turn the financier into a builder. The second reading has now prevailed.
The legal basis lies in Law No. 4,591 of 1964 (the Brazilian statute governing condominiums and real estate developments). Under that statute, financing and security interests do not transfer to the creditor the obligations of the developer or of the builder. This includes the fiduciary assignment of the project’s receivables. Receiving such credits as security therefore does not create a duty to deliver the works.
In addition, the court adopted a functional, rather than a formal, criterion. In practice, what matters is what the bank actually did, not the contractual title it holds. Supervising the progress of the works and making the release of instalments conditional upon that progress is not sufficient. Such acts are typical of a party protecting its own credit.
Who is affected by the decision
Purchasers of units under construction feel the most direct effect. Until now, many included the bank as a defendant in order to increase their chances of obtaining compensation. That strategy is now likely to fail where the bank acted solely as a creditor. The claim should therefore target the developer and the builder.
Financial institutions also gain predictability. The financing of real estate developments usually involves the fiduciary assignment of receivables and supervision of the works. Following the decision, those mechanisms no longer entail the assumption of liability for the construction. The legal risk of the transaction is therefore reduced.
Finally, developers and builders will now concentrate the exposure. Without the bank as a co-defendant, they alone are liable for defects and delays. This point calls for attention in cash management and in the governance of projects.
Exceptions to the liability of the fiduciary creditor
The decision does not create immunity for banks. If the institution goes beyond the credit function and takes part in acts of execution of the works, it remains liable. The STJ has already recognised this situation in cases of banks acting as executors of government housing programmes. In those cases, the role assumed went well beyond the granting of credit.
However, the decision did not specify which concrete conduct characterises action beyond the role of creditor. That gap is likely to concentrate the evidentiary debate in future cases. Likewise, there is no information on the modulation of effects or on application to pending proceedings. Nor is it stated whether the decision is binding or whether there is any time limit for it to take effect.
What to do now
Purchasers with ongoing claims should review their procedural strategy. First, it is worth assessing whether there is evidence that the bank interfered in the execution of the works. Then, if there is none, efforts should be concentrated against the developer and the builder. This avoids expenditure on a defendant that the courts are likely to exclude.
Banks and funds that finance real estate developments should review their contracts. In short, supervision and instalment release clauses must reflect the role of creditor. Any interference in the management of the works may characterise action beyond that role.
Developers, in turn, should strengthen construction risk management. Without the possibility of sharing liability with the financier, control over deadlines and quality becomes more important. In addition, insurance policies and completion guarantees for the project should be reviewed.
The decision provides a clear criterion, but the definition of its limits will still depend on the specific cases. The firm is monitoring the matter and keeps other legal news commented on by the firm up to date.