*What steps will reproduce the problem?*

    hactar% mkdir demonstração
    hactar% cd demonstração
    hactar% cp ~/tmp/*(.) .
    hactar% git init
    Initialized empty Git repository in /tmp/demonstração/.git/
    hactar% git annex init
    init  ok
    (Recording state in git...)
    hactar% git annex add .
    add Equipment Consumption.ods (checksum...) ok
    add Personal.vcard (checksum...) ok
    add Trampo.vcard (checksum...) ok
    add blah.txt (checksum...) ok
    [ more git output ]
    hactar% git commit -m initial
    [master (root-commit) d16bafb] initial
     42 files changed, 42 insertions(+)
    [ more git output ]
    hactar% cd /var/tmp
    hactar% git clone ssh://localhost//tmp/demonstração demonstração
    Cloning into 'demonstração'...
    remote: Counting objects: 176, done.
    remote: Compressing objects: 100% (134/134), done.
    remote: Total 176 (delta 1), reused 0 (delta 0)
    Receiving objects: 100% (176/176), 17.23 KiB, done.
    Resolving deltas: 100% (1/1), done.
    hactar% cd demonstração
    hactar% git annex init
    init  ok
    (Recording state in git...)
    hactar% git annex status
    supported backends: SHA256E SHA1E SHA512E SHA224E SHA384E SHA256 SHA1 SHA512 SHA224 SHA384 WORM URL
    supported remote types: git S3 bup directory rsync web hook
    trusted repositories: (merging origin/git-annex into git-annex...)

    git-annex: fd:14: commitBuffer: invalid argument (invalid character)
    failed
    git-annex: status: 1 failed

*What is the expected output? What do you see instead?*

I expect that "git annex status" will complete successfuly and show information about all repositories.
Instead of that I get the "git-annex: fd:14: commitBuffer: invalid argument (invalid character)" error above.

*What version of git-annex are you using? On what operating system?*

This is with Debian's git-annex_3.20121001_i386.deb installed on an Ubuntu 12.04 system.
Using Ubuntu's original version (3.20120406) the error message is a bit different (here I used the name acentuação instead of demonstração):

    trusted repositories: git-annex-shell: //tmp/acentuação: changeWorkingDirectory: does not exist (No such file or directory)
    Command ssh ["-S","/var/tmp/acentua\231\227o/.git/annex/ssh/localhost","-o","ControlMaster=auto","-o","ControlPersist=yes","localhost","git-annex-shell 'configlist' '//tmp/acentua\195\167\195\163o'"] failed; exit code 1

> I think this is the last unvalid utf-8 bug in git-annex. At least,
> the last one I hypothesized exists. It's in the union merge code. I will
> try to look at it again soon; the last 2 times I looked at that code
> I could not see an easy way to make it allow invalid utf-8 encoded data.
> --[[Joey]] 

>> [[done]], although I am no longer so sure this was the last utf-8
>> encoding bug.. --[[Joey]]