Realestate Buying Process

The buyer tours the area, views real estate, meets other owners, and sees a good overview of the DR. He chooses either a condo or villa for purchase – new or resale.

A detailed Offer to Purchase is prepared by Drhomeshow, signed by the buyer, and then presented to vendor/developer/listing real estate brokerage in Dominican.

The vendor agrees and signs of on the price and conditions as set out in the Offer to Purchase. Buyer meets with property lawyer for in depth instructions and information .Please read details of buying guide provided by Guzmán Ariza (One of the most respected law firms in the Dominican Republic) provides basic information about the country and its legal system and is available in Spanish, English, Chinese, French, Italian, German, and Russian.

Buyer wires the deposit to their lawyer’s trust/escrow account. Monies are held pending the next contract and completion of lawyer’s due diligence on the property (clean title, condo fees, liens)

This document is similar to the Offer of Purchase but is prepared by the property lawyer in Spanish.

It outlines the conditions of the sale (English version provided).

Buyer sends the balance of the monies (unless it is a progress draw construction, then the monies are sent at scheduled intervals during construction).

Or A Contrato de Venta. This is the final contract that is used to convey the property from the seller to the buyer. Often, in the case of a resale or quick sale, the law firm will go directly from an Offer to Purchase to the signing of a A Contrato de Venta and delete the preliminary step of signing a Promise of Sale.

The buyer receives ownership of the property, land titles is notified and title changes hands. In the case of a company then a new company is established with the buyers owning the shares, or in the case of a resale, the share ownership is transferred to the buyers upon completion of the transaction

The following information was obtained from Guzmán Ariza, one of the most respected law firms in Dominican Republic. We encourage all of our buyers to visit Guzmán Ariza website for additional details. Please note we make all efforts to provide you with up-to-date information through our website and we provide the basic and most relevant details to the best of our knowledge. When buyer meets with the property lawyer in order to finalize “Accepted offer “ , buyer’s lawyer will provide in depth instructions and information regarding the property and the process to the buyer.

The Dominican Civil Code and Property Registration Law 108-05 govern substantive real estate law and the recording and conveyance of land ownership, respectively. Condominium Law 5038 of 1958, as amended, regulates the creation and governance of condominiums.

Since 1920, the Dominican Republic employs the Torrens system for real estate registration purposes. The government maintains a register of land holdings and guarantees indefeasible title to the properties included in the register, which must undergo an exhaustive judicial process called saneamiento before being registered. Title registrars ensure that only legally valid changes are made to the register, and issue a certificate of title for each property in the register as legally-binding evidence of ownership. In a property purchase under the Torrens system, the buyer is not required to look beyond the record at the register. Moreover, any interest affecting or limiting the ownership rights of the registered owner, such as usufruct, antichresis, emphyteusis, easement, right of use, mortgages, and liens, must be registered in order to be valid and enforceable against third parties, who can rely on the information on the land register as to the ownership of a property and any other right or interest that may affect it.

As in most jurisdictions under the Torrens system, there are still some properties in the Dominican Republic that have not undergone the saneamiento process and are, therefore, still unregistered. However, most properties in the country – and almost 100% of commercial properties – fall under the registered category. Unregistered property is governed by the French “ministerial” system, whereby deeds affecting real estate are filed at a specific register that only serves as a recorder of documents, without any type of guarantee.

The National Agency for Title Registration Title Registers and the Agency for Cadastral Measurements are in charge of administering and assisting land registration. Special land courts have exclusive jurisdiction to hear property disputes.

Condominiums can only be built on registered real estate. Registering a condominium involves the following steps:

• Obtaining a construction license.
• Preparation by a licensed surveyor or architect of detailed plans of common areas and private areas.
• Approval by the Agency for Cadastral Measurements of the plans.
• Preparation by the developer of the condominium regulations.
• Registration of the condominium plans and the regulations at the local Title Register.
• Issuance by the Title Register of a certificate of title for each individual condominium unit and of another certificate of title for the common areas.

A condominium exists legally only after it has been registered at the local Title Register.

Dominican condominium law differs widely from its American counterpart in several aspects. For instance, once the condo regulations are registered, it is very difficult to make changes in voting rights, common areas, etc. In addition, special majorities are legally required for important decisions, despite any provisions to the contrary in the regulations. It is, therefore, extremely important to obtain the counsel of an experienced Dominican condominium attorney throughout the condominium formation process, especially in the drafting of the condo regulations.

Real estate transactions in the Dominican Republic do not usually follow the North American pattern of a written offer tendered by the buyer to the seller, followed by the seller’s written acceptance. Instead, after verbal agreement is reached by the buyer and seller on the price, a binding promise of sale contract, prepared by a real estate attorney, is signed by both parties.Depending on the wishes of the parties, the attorney may proceed with the due diligence before preparing the promise of sale or, alternatively, prepare the promise of sale conditioning the purchase to the results of the due diligence to be done in a specified term

Dominican real estate law is very different from American or English real estate law– a simple agreement on the price and the real estate object of sale may constitute a valid purchase even without any money exchanging hands. For this reason, it is strongly recommended to both parties in a real property transaction not to sign any documents or make deposits without consulting an experienced real estate attorney.

The promise of sale contract is a formal document, binding on both seller and buyer, signed by them in the presence of a notary public. From a practical point of view, it is more important than the deed of sale since it generally contains a complete and detailed description of the entire transaction up to the time when the purchase price has been paid in full and the property is ready to be conveyed to the buyer. A welldrafted promise of sale should contain the following provisions:

• Full names and particulars of the parties.
• Legal description of the property to be purchased.
• Purchase price and payment terms.
• Clause conditioning the transfer of ownership to the buyer.
• Default clause.
• Date of delivery of the property to the buyer.
• Due diligence required or done.
• Representations by the seller and remedies in case of misrepresentation.
• Obligation by seller of signing the final contract of sale upon receipt of final payment.

Performing due diligence is the most important step in every real estate transaction. Closing a real estate transaction properly, it has been said, is probably one of the largest icebergs in the practice of law, in the sense that most of the lawyer’s work and worry –especially regarding due diligence– cannot be seen by the parties involved. A proper due diligence in the simple purchase of a lot in the Dominican Republic entails as a minimum, the following:

• Determining the legal status of the property at the Title Register.
• Hiring an independent surveyor to verify the cadastral survey of the property.
• Confirming that the property to be purchased may be used for the purposes sought by the buyer.
• Investigating if property taxes have been paid.
• Investigating if a third party is occupying the property.
• Investigating the property’s environmental status.
• Ensuring that the seller, especially if a corporation, has the authority to sell and can convey clear title.

Any real estate project, subdivision or infrastructure must apply for and obtain environmental approval from the Ministry of the Environment and Natural Resources, pursuant to General Law on the Environment and Natural Resources 64-00, which regulates environmental pollution, the generation and control of toxic and hazardous substances, and the treatment of domestic and municipal wastes, among other matters.

• An environmental licence is needed for projects with a high level of potential environmental impact,which requires an environmental impact study, measures to prevent, mitigate or c ompensate the environmental impact, and a special program for environmental management and adaptation.
• An environmental permit is needed for projects with a moderate level of potential environmental impact, whose negative effects can be avoided or minimized by measures of mitigation, prevention or compensation, which must be set forth in a special program for environmental management and adaptation, requiring an environmental impact study.
• An environmental certificate is needed for projects with a low level of potential environmental impact, which only requires compliance with current environmental regulations.
• A certificate of minimum impact is needed for projects with a minimum level of potential environmental impact, which only requires compliance with current environmental regulations

The final contract of sale is also a formal document binding on both parties, and signed by them in the presence of a notary public. It is used primarily for conveying the property from the seller to the buyer. In case of a cash purchase, it is simpler and cheaper to go directly from verbal negotiations to the signing of the final contract of sale than taking the preliminary step of signing a promise of sale.

Once the final contract of sale has been signed and authenticated, a request is made to the Internal Revenue Agency (DGII) for the appraisal of the property. The DGII verifies that there are no property taxes outstanding and sends an inspector to the property to determine its fiscal value. The buyer must then pay conveyance taxes in the amount of 3% of the fiscal value and obtain a local tax number if.he or she does not have one.

Once the conveyance taxes have been paid, the buyer can proceed to file at the local Title Register to have the property conveyed to his or her name. The filing consists of the authenticated final contract of sale, the certificate of title issued to the seller and the documentation provided by the DGII. If everything is in order, the Title Register proceeds to record the sale and a new certificate of title is issued in the name of the buyer. The certificate of title in the name of the seller is cancelled.

The property is deemed to belong to the buyer from the time the sale is recorded at the Title Register, although the time for the issuance of the new certificate of title may vary from a few weeks to a few months, depending on the Title Register involved.

A 1% annual tax is assessed on real estate properties owned by individuals, based on the cumulative value of all the properties as appraised by government authorities. Properties are valued without taking into consideration any furniture or equipment to be found in them.

For built lots, the 1% is calculated only for values exceeding 7,019,383 DOP (about $150,000). For unbuilt lots, the 1% tax is calculated on the actual appraised value without the exemption.

The real estate tax is payable every year on or before March 11, or in two equal instalments: 50% on or before March 11, and the remaining 50%, on or before September 11. The amount of the exemption is adjusted annually for inflation.

• farm properties;
• homes whose owner is 65 years old or older, and has no other property in his or her name; and
• properties owned by companies, which pay a separate tax on their company assets.

There are no restrictions on foreign Individuals or entities owning or leasing real estate in the Dominican Republic. The process for purchasing or leasing real estate for foreigners is exactly the same as for Dominicans.

There are no restrictions on foreigners inheriting title to real property in the Dominican Republic. Inheritance of real estate is governed by Dominican law which normally provides for “forced heirship”: part of the inheritance must go to certain heirs by law. Nevertheless, a conflict of laws statute, enacted in December 2014, allows foreigners to have the law of the jurisdiction where they reside determine the rules of inheritance applicable to the real estate located in the Dominican Republic. For this reason, it is strongly recommended that foreign individuals who purchase Dominican real estate seek legal advice on how to benefit from this provision. Mortgages

Similarly to sales, mortgages are granted by a formal document, signed by the parties – in this case, the debtor and the creditor –, and authenticated by a notary public. Once signed and authenticated, the mortgage deed, along with the certificate of title of the debtor and the receipts issued by the Internal Revenue Agency acknowledging payments of the mortgage registry tax (2% of the amount of the mortgage), the real estate tax, and other sundry taxes, if applicable, are filed at the local Title Register. If the documents are in order, the Title Register proceeds to register the mortgage and issues a special certificate to the creditor attesting to the existence of the collateral.