Buyback fund: protection against loss of value

Picture a scene, built here as an illustration. A physician bought an off-plan apartment in a high-end coastal development. Five years later, a job offer in another state forces her to sell. The unit is good and the building is impeccable, but a qualified buyer does not show up within the time she has. The question she never asked at signing now returns with interest: who takes the unit if I need to leave?

A Buyback Fund exists to answer that question before anyone has to ask it. Brazilian law has long known the opposite path. Article 505 of the Civil Code lets the seller of real estate reserve the right to take it back within three years, returning the price and reimbursing the buyer's expenses. That is the repurchase clause, and it protects the seller. The fund reverses the direction: it gives the buyer the right to hand the unit back at a price set in advance, paid from a reserve built with part of the development's own revenue.

No Brazilian statute carries that name. The instrument is assembled by contract, with pieces from civil law, consumer law and capital markets regulation. A price list proves desire. Only a segregated reserve proves the promise.

Buyback is a put option for the owner, and the Civil Code already supplies the parts

Legally, the fund offers a unilateral promise. The fund, or the company that runs it, commits to buy if the owner wants to sell, within agreed terms and deadlines. Article 466 of the Civil Code states the essentials: under a unilateral promise, the beneficiary must act within the stated period, or the promise lapses. For the owner, the exercise window stops being fine print. Miss the deadline and the door closes.

A right of first refusal obliges the buyer to offer the property to the original seller before passing it to a third party, and the period to exercise it cannot exceed two years for real estate. We recommend combining both logics. The owner holds the option to sell to the fund, and the fund holds first refusal when the owner prefers the open market. The unit then returns to the commercial curation inventory instead of circulating at a discount.

Whoever writes the price list cannot write the exit price alone

The most seductive version of the instrument promises to buy back at the current list price. If each phase launches above the last, the curve seems to only go up. The catch is that the developer writes the list. Brazil's Consumer Protection Code, in art. 51, voids any clause that lets the supplier change the price unilaterally. A buyback price that depends only on a list controlled by one party opens exactly that dispute.

The defensible alternative is an objective formula. The buyback price becomes the higher of two values: the price paid, adjusted by a public index, and the price of the last unit actually traded. A declared discount then covers the cost of resale. Indexing matters because a nominal gain is not a real gain. According to series 13522 from the Central Bank of Brazil, twelve-month IPCA inflation stood at 4.22% in August 2026. A price list that rises less than that is, in real terms, falling.

A buyback fund does not sell appreciation. It sells the certainty of an exit with price, deadline and cash defined before anyone needs it.

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Without a segregated and sufficient reserve, the promise is risk shifted to the buyer

A promise with no money set aside is a developer liability under another name. Brazil's condominium development law, in art. 31-A, offers the ring-fenced estate known as patrimônio de afetação: land, works and related rights stay apart from the developer's general assets. But the law earmarks it for finishing the building and delivering the units. A fund that operates after delivery needs its own structure: an escrow account with withdrawal rules, a named administrator and, when volume justifies it, a bank guarantee or surety insurance.

Sufficiency is the other half. The fund must be sized for stress, not for the average. The risk is that requests cluster when the secondary market cools, precisely when reselling a repurchased unit takes longer. Idle money also has a cost. With the Selic target at 13.75% a year at the end of September 2026 (series 432, Central Bank), every real held in reserve is money that does not fund construction or reduce debt. An honest design discloses the size of the reserve, the replenishment rule and how many buybacks it can absorb without resale.

Buyback is not contract termination, and each exit charges its own toll

Before delivery, a buyer who walks away falls under the termination rule added to the development law in 2018 as art. 67-A. The buyer recovers what was paid, adjusted, minus the brokerage fee and a penalty of up to 25% of the amount paid. If the project sits in a ring-fenced estate, the penalty may reach 50%, and the refund is due within 30 days after the occupancy permit. Outside that regime, payment comes in a single installment 180 days after termination. A fund that overlaps this rule must state when it starts to apply.

After the deed, a buyback is a new purchase and sale, with municipal transfer tax, registry fees and capital gains. For individuals, the income tax law charges 15% on the portion of the gain up to R$ 5 million, with higher rates above that. The gain on the sale of a residential property is exempt if the seller reinvests the proceeds in another residential property in Brazil within 180 days. An owner who exercises the option without running these numbers learns late that the exit door has a price.

When the fund promises yield, the property enters securities territory

Brazil's securities law, in art. 2, treats as a security any collective investment contract offered to the public that pays returns arising from the efforts of the promoter or third parties. In plain terms: if you buy expecting someone else to make the money grow, and the offer was public, the securities regulator (CVM) may reach the deal. The CVM has a dedicated rule for the hotel case, covering contracts that promise returns tied to the results of a hotel run as a condominium.

In InnovaSphere's reading, this is the line that matters. Buying back a home through a price formula is liquidity protection. Promising yield, or tying the buyback price to the results of an operation run by others, moves the contract toward collective investment. The fund should be presented as an exit guarantee, never as a return. When the product has an income component, such as units in a rental pool, regulatory review comes before any marketing material.

The brochure is part of the contract

Art. 30 of the Consumer Protection Code makes sufficiently precise advertising part of the contract. What is announced becomes a clause, and the same code treats as misleading any omission that leads the consumer into error. If the brochure says "guaranteed buyback" and the contract has a queue, a cap and a lock-up the brochure leaves out, the gap will be resolved against whoever advertised. That is why a mature fund publishes its rules as clearly as its price: exercise window, lock-up, order of service, cap per period, formula and reporting.

A well-designed fund is rarely triggered, and that is the measure of success

The instrument rests on a useful paradox. When the rule is credible, an owner who could leave tends to stay, because the door is known to exist. The buyback becomes a floor of confidence: it eases pressure for rushed resales and protects the price of neighboring units. The right indicator is not how many buybacks the fund made. It is how many it could make without stress, and how many repurchased units went back to market at the reference price.

That requires a destination for every repurchased unit: standardization works if needed, return to inventory with priority in commercial curation, and replenishment of the reserve from the resale proceeds. A fund that buys back and never resells becomes an accidental landlord, carrying condominium fees, taxes and idle capital. The development's management Platform should log every request, deadline and payment, so the owner can follow the queue without having to ask.

Worked example: how much a 3% fund really absorbs

The figures are InnovaSphere hypotheses, not market data or a projection for any real development. Appreciation and inflation compound yearly. The reserve earns nothing, to isolate the effect of the contribution.

With a 3% contribution, the fund covers two full requests without resale. From the third onward, the promise depends on market speed or an outside guarantee. If the contract advertises unlimited buyback, six requests open a R$ 3.1 million hole. The right design picks one remedy (a larger contribution, a third-party guarantee or a cap per period) and puts the choice in writing.

When it does not pay off

When the development has few units, a reserve built from a percentage of each contract is too small to absorb even one request. A clear right of first refusal solves the problem with less cost and complexity.

When the regional secondary market is thin and cyclical, the risk is that requests arrive together, just when reselling is hardest. Without a third-party guarantee, the promise becomes a concentrated developer liability, and the project's credibility comes to rest on a reserve that does not match the risk.

When the fund is used as a yield argument rather than a liquidity one, it loses its reason to exist. The messaging starts to suggest guaranteed returns, pushes the contract toward collective investment and creates regulatory exposure out of proportion to the benefit.

Checklist before offering a buyback fund

1. Define the buyback price formula with legal counsel, using a public index and a verifiable market reference.
2. Keep the reserve in an escrow account with withdrawal rules and a named administrator.
3. Size the fund for simultaneous requests and document how many buybacks it absorbs without resale.
4. Set lock-up, exercise window, queue and cap per period, consistent with the contract summary sheet.
5. Model transfer tax, registry fees and capital gains for the owner who exercises the option; InnConta, a group company that brings tax and asset matters under one accountable lead, can run those numbers alongside legal counsel.
6. Send any income component or results-linked return to a capital markets lawyer for review.
7. Submit balance, contributions and withdrawals to periodic independent audit and publish the report; Valida Auditoria, a group company, separates what is verified from what is merely declared.

Frequently asked questions

Is a buyback fund provided for by law?

Not under that name. It is built by contract, using Civil Code figures such as the unilateral promise. It must comply with the Consumer Protection Code and, if returns are promised in a public offering, with CVM regulation.

Is buying back at the current list price safe for the buyer?

It depends on who controls the list. If only the developer sets it, the price may not reflect the market. A public index plus a reference to closed deals protects both sides better.

Does buyback replace contract termination?

No. Before delivery, the termination rule of the development law applies. Buyback is usually designed for after delivery and works as a new purchase and sale, with its own costs and taxes.

Who pays the taxes on a buyback?

The capital gain belongs to the owner who exercises the option, with a possible exemption if the proceeds go into a residential property within 180 days. Transfer tax and registry follow the contract and municipal law.

How can I tell whether the fund really has the money?

Ask for the fund rules, the escrow account details, the replenishment rule and the latest audit report. If these documents do not exist, the promise rests solely on the financial health of whoever made it.

Legal basis

• Civil Code (Law No. 10,406/2002): arts. 463 and 466 (preliminary contract and unilateral promise), 505 to 508 (repurchase clause) and 513 (right of first refusal).
• Law No. 4,591/1964: art. 31-A (ring-fenced estate, Law No. 10,931/2004) and art. 67-A (termination, Law No. 13,786/2018).
• Consumer Protection Code (Law No. 8,078/1990): art. 30, art. 37, § 1, art. 48 and art. 51, X.
• Law No. 6,385/1976: art. 2, IX (collective investment, Law No. 10,303/2001).
• CVM Resolution No. 86/2022, amended by CVM Resolution No. 221/2024 (hotel collective investment).
• Law No. 8,981/1995: art. 21 (capital gains for individuals, as worded by Law No. 13,259/2016).
• Law No. 11,196/2005: art. 39 (exemption with reinvestment within 180 days) and art. 40 (reduction factors).