Seguro Fiança, Apartment Renting Hurdle in Rio

By Rob Sawers, Contributing Reporter

RIO DE JANEIRO, BRAZIL – Anyone who has made the transition from ‘temporado’ to resident by signing a long-term rental lease in Brazil knows that finding the right apartment is just the first step in settling into a new home. Perhaps the biggest roadblock for foreigners, beyond negotiating an affordable apartment in Rio’s sky-high real estate market is an additional line item on the budget called the ‘seguro fiança’ – or insurance deposit.

Perhaps the biggest roadblock to a new apartment in Brazil is the seguro fiança (deposit insurance), Rio de Janeiro, Brazil, News

Perhaps the biggest roadblock to a new apartment in Brazil is the seguro fiança (deposit insurance), image by luigi diamanti/FreeDigitalPhotos.net.

Americans and Europeans might compare it to a security deposit, but the seguro fiança is not returned or applied to the rental costs. The seguro fiança is a form of insurance that a renter pays which in effect combines a down-payment, a credit and tax history check, and requires proof of income, all conducted through a third-party insurer.

The insurers that offer the seguro fiança service conduct this risk assessment to verify if the renter is reliable and capable of paying rent for the full duration of the lease, which is usually thirty months (2.5 years). Realtors often require the seguro fiança if the renter is not able to provide a local guarantor, or fiador, in Portuguese.

The fiador is much more accountable than most foreigners are used to thinking of a guarantor, and requires a Brazilian who owns property in the area, who literally takes the responsibility for the full lease term. Few Brazilians have this type of patron available, and even less-so for foreigners, so the seguro fiança has become the norm.

Though time-consuming, this requirement does significantly protect the realtor, in that they can be comfortably certain that they will not be taken advantage of or lose money on the property. The cost for the renter is significant however, as the seguro fiança is typically two or three times the value of a month’s rent, plus condominium fees and taxes.

For example, someone looking for an apartment in the range of R$2,500 monthly rent, add on another R$500 in condominium fees and taxes, and then up to three times that amount is the cost to move in, R$9,000. Don’t forget in Brazil appliances are not included, so renters need to purchase or bring their own stove and refrigerator as well.

Most 30-year lease apartments in Rio will require either a fiador or seguro fiança, Rio de Janeiro, Brazil, News

Most 30-month lease apartments in Rio will require either a fiador or seguro fiança, photo by Eurico Zimbres/Wikimedia Creative Commons License.

One British expatriate living in Rio, we’ll call him Don (wishing to remain anonymous), was required by his new landlord to get this insurance. “Finding a flat that you like is only the beginning. The paper chase for the seguro fiança is probably the hardest part of the whole moving process, and certainly the most painful.”

Even finding a broker to provide the insurance is difficult for anyone less-than-fluent in Portuguese. Don describes: “There are only two companies that provide a seguro fiança service in Rio (that I could find). For both of these, you need to have a clean tax record, and above all a proof of income that will cover all the expenses of renting the flat. It means basically that you have to have a well paying job, with a signed carteira de trabalho (work card), and a work contract.”

One such company is Corretora Brokers de Seguros Ltda., based in Copacabana. The company did not respond to our inquiries even when referred by a real estate company regarding an apartment rental.

The housing search in Rio generally starts on zap.com.br, the classifieds section of O Globo, but the majority of these apartments do require a lease, a fiador or the Seguro Fiança, and a very long time commitment. So foreigners in Rio might have better luck with roomates, long-term temporary apartments, often found in the classifieds. Probably the easiest way, though, is to know someone personally and arrange an informal sublet.

14 Responses to "Seguro Fiança, Apartment Renting Hurdle in Rio"

  1. conor  August 24, 2011 at 11:31 AM

    when you say the cost is 9000 to move in, I think what you mean to say was that you have to prove that you earn 9000 per month, and then you have to pay fees etc, that’s my understanding…

    it should be noted that this all stems from a system in which a non-paying renter can take months or years to evict. If you don’t have an ex-pat job try craiglist or airbnb for rentals in Rio they don’t usually require SF or a fiador.

    The same rules apply for commercial properties, which is crazy especially if you want to rent in Zona Sul. Eg – a small cafe/bar for, say, R$8k per month (excluding luvas, and under-the-table payment for the “privilege” to get the lease – depending on size, location, and condition – R$ 100k to 300k), you need a fiador or SF. There is not exact science for how the fiador can be secured, the Landlord will send your fiador’s details to a special company to have the details verified and assessed. The fiador is liable for the rent if you don’t, so there is a massive trust element, and you’re gonna have to know this person well. For 8k a month you’d need a Brazilian with their own property (when cannot be sold during the lease), would have to be worth around 200k+, and then to prove an income (ie paying tax on an income) of say R$10k+ per month. Not many gringos are lucky to have such friends. Also, if the gringo doesn’t pay the rent, both he and the Fiador are brought to court, and if your fiador friend wanted to conduct other business such as buying other properties, businesses etc, he’s now on a blacklist and unable to do so, and probably no longer your friend!.

    Alternatively, you can go for SF, which would mean you have to prove that you earn approx R$30,000 (yes 4 zeros) per month in Brazil, so good luck with that…

    It is said that the laws changed in relation to all this last January and that all this was meant to change, but it has not. It seems that the slow judicial process and the strong tenants rights make Landlords reluctant to rent without these securities.

    It’s a crazy system, dealing back to a time 20 years ago and more when everyone in Rio knew each other, and the juicy properties stayed within the wealthier families. I know lots of Cariocas who hate this system – it exempts many emerging business people from the middle and lower class who don’t have a rich dad/uncle/grandfather to go fiador. If Rio is to develop and grow into a cosmopolitan city (if it wants or needs to is another question) then a complete overhaul of this system will be needed…

  2. conor  August 24, 2011 at 11:40 AM

    PS – if you don’t reach the criteria, it may be worth offering 3/6/12 months rent up front, and could work depending on the owner

  3. Peter  August 24, 2011 at 4:46 PM

    We have found that the 12 month up front lease payment works best. Everyone is protected. The landlord has his money, and no one else needs to be involved. If you work it right, you can get a nice discount from the 12 months as well (up to 20% in the right areas).
    For gringos and gringas the single most important thing should be the schools and their location. Everything else is secondary.
    And remember kiddies, patience is a virtue.

  4. Tom  August 25, 2011 at 3:17 PM

    Hi Peter,
    Sorry, I didn’t understand your point about the location of schools. I can think of cases where I would not want to be near a public school because of the noise, etc. Can you please clarify? Thanks

  5. Maria  August 30, 2011 at 1:29 PM

    Thanks for you article. We never use Seguro Fiança. Most our contract are 3 months rent. It has been working better that way in 6 years of business. Thanks!!!!

  6. William  August 31, 2011 at 12:13 PM

    Another aspect of Seguro Fiança that you failed to mention is that if you happen to default on your apartment (cannot pay the rent for whatever reason)… the Seguro Fiança will pay the landlord (including penalties) and then subrogate back against you. This is NOT insurance… it is a total ripoff for landlords and the “seguro” companies. As far as I am concerned… if you rent property… you are taking a chance by investing. That means you are subject to loosing money or making money. The landlord should do his due diligence and then – if the renter defaults – he (the landlord) should take his knocks. In the US… a landlord gets a 1 month “security deposit” that is held against default, and then returned to the renter, when the renter leaves the property in good condition. Someone needs to get the laws of Brazil changed… get rid of this archaic method of securing rental property. It only makes the land owners (and companies providing the seguro fiança) richer, while creating a huge liability for the renter who would purchase property if they had money.

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  8. Antony  October 23, 2011 at 8:41 AM

    The Segura Fianca is archaic and Brazil should overhaul the system in line with most other countries. These type of systems along with their Cartorio process exists only to make the wealthy, wealthier and it has nothing to do with due process or anything else. It is this type of bureaucracy (read corruption) that impedes Brazil from being the country of which it is really capable and a powerhouse, but alas this is highly unlikely due to their old corrupt Portuguese laws and processes.

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  12. Tom  June 27, 2013 at 1:57 PM

    This system is absolutely archaic! It is really a ripoff.

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