In the Dominican Republic foreigners can easily purchase
property. Owners may choose to title the property in their personal name
or in their Dominican company name. Usually the funds for property purchase
are deposited by the buyer via electronic bank transfer or check to the
trust account of the notary. The funds are then transferred to the seller
from the trust account of the notary after the title is cleared.
Upon completion of the money transactions, the title is transferred
to the name of the buyer or the company and registered with the registrar
of titles in the Dominican Republic.
In the event of the owner's death, property owned in the Dominican Republic
will automatically become the property of the owner's named beneficiaries.
There is a one time transfer tax of 3% of the purchase price of the property.
The attorney fees are an additional 1% of the purchase price. Residency
is not required to buy property in the Dominican Republic, however, our
attorney will be happy to assist you in obtaining residency if desired.
Requiring about 4 months to complete, the residency process is not difficult
and is very affordable.
Is it risky to buy real estate in the Dominican Republic? Many first
time buyers ask this very question. Perhaps they have heard horror stories
of crooked realtors, incompetent attorneys and disorganized government
offices. A newspaper article sometime ago described the corruption in the
Superior Land Court in Santo Domingo (pipes were clogged from files flushed
down the toilets) and wondered how any property owner could sleep well
at night. A visitor to the Registry of Titles in any of the major cities
unfamiliar with the realities of the Third World will certainly be shocked
at the open filing cabinets and the stacks of folders tied with strings
covering the floors. This is the reality real estate lawyers work with
In fact, the risk in buying real estate is very small, if you deal with
a reputable realtor, a competent surveyor and a good real estate attorney:
a combination not as difficult to achieve as some might think. For the
moment, we will concentrate our efforts on the legal aspects of the property
purchase, leaving the discussion of realtors and surveyors for a later
What makes a real estate attorney good? A good real estate attorney
comes up with strategies and methods to neutralize the deficiencies in
the system in order to protect his clients' interest. Mediocre or bad lawyers
neglect to take any special protective measures and end up harming their
clients. The difference may be illustrated analyzing an important aspect
of every real estate transaction: the title search.
In theory, a title search under Dominican real estate law should be
an easy undertaking. You go to the Registrar of Titles in the jurisdiction
where the property is located, show her (in Puerto Plata, it's usually
a lady) the correct Parcel and Cadastral District numbers, and ask for
a certification describing the status of the property. The Registrar will
then search the appropriate registry books and files and upon finishing
her task will issue, under her signature and responsibility, the required
certification detailing all the liens and charges, if any, encumbering
the property. An attorney's obligation in the title search is limited to
requesting the certification. While in many countries, the title search
is done by an attorney who then issues a legal opinion; in the Dominican
Republic the search is by law the responsibility of the Registrar who as
a government officer will attest to and certify the condition of the property
In the real world, the overworked and underpaid Registrar of Titles
has neither the time nor the staff required to do a thorough title search.
As a result, many certifications stating that a certain property is free
and clear are incorrect and the buyer doing a transaction will find himself
later with a lien or mortgage on his property. It is true that as a purchaser
of good faith the buyer will not be legally responsible for the lien. However,
he must go to Court to lift it and this may entail expensive litigation
(maybe against a bank with deep pockets) and time. In theory, the Registrar
is legally responsible for the incorrect certification and should pay from
her own pocket the party with the lien or mortgage who suffered harm because
of his mistake. In the real world, Registrars are insolvent and therefore
unable to compensate their victims.
Under these circumstances, any conscientious lawyer will do the title
search himself, going to the registry and spending the hours or days required
to do a thorough job. The Registrar is usually more than happy to allow
any lawyer to do the work for her and will sign, at the end of our search
and after a cursory review, the legal certification. The real estate lawyer
must learn how to do his job amid the clutter. He or she must know in which
drawer of which desk the Registrar keeps the latest notices of liens. Sometimes,
he or she will go as far as to donate filing cabinets to keep the records
of certain Parcels of interest to his or her clients.
Unbelievable as it may seem, many attorneys don't even take the trouble
of asking the Registrar for a certification, much less inspecting the Registry
themselves. It is a sad truth that the standard of practice in the legal
profession in the Dominican Republic is very uneven. We do have many reputable
law firms with good track records in dealing with foreign clients. Yet
we also have many attorneys who are inept if not crooked. You cannot just
assume that the average lawyer is competent to do even a simple real estate
purchase. Do your homework, consult with your Embassy or your attorney
back home (he'll check legal directories), get recommendations from previous
buyers, and you will end up with a qualified attorney who will make sure
things go right.
To finish on a positive note, the Dominican Supreme Court and the Superior
Land Court have initiated a complete study and overhaul of the land registry
system under the auspices of several international organizations. Noticeable
improvements have been made at the organizational level. Judges and Registrars
are required to attend regular courses and seminars coordinated by the
Supreme Court. Corruption has diminished considerably. Perhaps, sometime
soon, getting a good attorney to assist you in a real estate deal won't
be that important!
Before you buy Real Estate in the Dominican
Upon arrival in the Dominican Republic, you may see places that advertise
properties around the particular destination you are visiting. Be careful
to take the time to investigate properties all over the area you are interested
in, as properties that are advertised do not necessarily reflect the true
market value of all available properties. Knowing how real estate purchases
work in the Dominican Republic, what's involved, the other costs that may
be associated, what questions to ask, etc., will help ensure you make an
informed purchase decision.
You may hear that when a foreigner purchases property in the Dominican
Republic, there are no annual real estate taxes and/or no title transfer
taxes. Neither of these statements are completely true. Depending on the
property purchased, as well as how it is purchased, there may or may not
be an annual real estate tax liability and a title transfer tax. There
are situations where tax exemption can occur, but it is important to find
out where this is legally the case. The best thing to do is to speak with
Real Estate Agents/Agencies or Attorneys/Law Offices to learn what your
options are for the particular property you are interested in purchasing.
If you decide to purchase directly from the owner, there are some things
that you should keep in mind. There is no real estate or governmental body
that sends real estate and property tax reminders to owners if these fees
have not been paid. If an owner does not pay these dues, the government
will ensure they collect any arrears at the time of sale, if not up to
an additional 50% penalty on these arrears as well, before enabling the
title of the property to be transferred. This could prevent the sale from
happening if the seller does not have the money to pay these arrears (and
any penalties), or, depending on what has already been transacted between
the buyer and the seller, put the buyer in a position to pay any outstanding
dues before obtaining title of the property. To prevent this from happening,
ask the seller to provide proof of the previous tax payments that have
been made on the property.
A seller should always be able to provide you with at least a photocopy
of the title to the property so that you can verify with the titles office
that the title is good and that there are no liens against the property.
It is also wise to have the seller provide a recent copy of the tax assessment
of the property, matching it against the title to ensure it fully describes
the property and all of its buildings. If the title office has only registered
the piece of land, and a home or building was built afterwards without
being registered, you could be liable for the arrears in taxes on this
home or building since it was built.
If you are looking into purchasing a new residential property, the developer
may not be able to provide you with anything but a photocopy of the 'master
title' for the entire development. This is okay, but you will need to also
complete a 'contract of sale' if you decide to purchase, to make your purchase
legal and binding. Ensure the 'contract of sale' is notarized by an Attorney
and is filed properly with the applicable department. Once the entire project
is completed, the developer cancels the 'master title' in exchange for
providing individual land titles to each of the project's buyers. Once
the development is completed, the developer should provide you and all
other buyers with an individual land title for your portion of the project,
but to be sure, at the time of sale, along with the 'contract of sale',
Real estate transactions in the Dominican Republic are governed by the
Land Registry Law of 1947 and its amendments. Ownership of property is
documented by "Certificates of Title" issued by Title Registry Offices.
The required steps to convey or transfer ownership of real estate from
a seller to a buyer are the following:
Buyer and seller must sign a "Contract of Sale" before a Notary who will
authenticate it. (Notaries in the Dominican Republic are required to have
a law degree). The Contract of Sale will contain the legal description
of the property, the price and other conditions of sale.
The authenticated Contract of Sale is then taken to the nearest Internal
Revenue Office for review by the tax authorities and payment of the appropriate
taxes (see Taxes below).
The Contract of Sale and the Certificate of Title of the seller are deposited
at the Title Registry Office for the jurisdiction where the property is
located and the sale is recorded.
The Title Registry Office issues a new Certificate of Title in the name
of the buyer and cancels the old Certificate issued previously to the seller.
The time from the filing of the Contract of Sale to the issuance of the
new Certificate of Title may vary from a few days to a few months depending
on the Title Registry Office where the sale was recorded.
Before purchasing property, it is recommended that buyers retain a real
estate attorney to do the due diligence. Although possible, it would be
too risky for the buyer to do it on his own. To start the due diligence,
the seller should provide the buyer or the attorney with the following
Copy of the Certificate of Title to the property.
Copy of the survey to the property or plat plan.
Copy of his or her identification card ("Cédula") or Passport and
that of his spouse, if married.
Copy of the receipt showing the last property tax payment ( IVSS ) or copy
of the certificate stating the property is exempted from property tax.
If the seller is a corporation:
Copy of the corporate documentation, including bylaws, up-to-date registration
at the Mercantile Registry and resolution authorizing the sale.
Certification from the Internal Revenue Office showing the corporation
is current with its income tax filings.
If the property is part of a condominium:
Copy of the condominium declaration.
Copy of the condominium regulations.
Copy of the approved construction plans.
Certification from the condominium administration showing the seller is
current condo dues.
Copies of the minutes of the last three condominium meetings.
If the property is a house:
Copy of the approved construction plans.
Inventory of furniture, etc.
Copies of the utilities contracts and receipts showing the seller is current
with his payments.
Once the documentation listed above is obtained, the attorney should
address every item on the following checklist before the closing:
Title Search : A certification should be obtained from the Title Registry
Office regarding the status of the property, whether any mortgages, liens
or encumbrances affect it. The buyer should insist that his attorney confirm
the results of the Registrar?s search personally by investigating himself
the appropriate files at the Title Registry Office (see Buying Property
in the Dominican Republic: Title Searches ).
Survey : An independent surveyor should verify that the property to be
sold coincides with the one shown on the survey presented by the seller
except when the property is located in a previously inspected subdivision.
Cases have occurred in which a buyer acquires title over a property some
distance away from the one he believes to be buying due to careless work
by a previous surveyor or to fraud by the seller. The survey should be
checked even when the seller provides a government-approved plat.
Inspection of Improvements : A qualified builder or architect should examine
any improvements to be sold (house, condo) to confirm that the plans presented
are correct and that the improvements are in good condition.
Permits : The attorney should confirm that the property to be purchased
may be used for the purposes sought by the buyer. There are many legal
restrictions which should be taken into account before purchasing. For
example, Law 305 of 1968 establishes a 60-meter "maritime zone" along the
entire Dominican coastline, measured from the high tide mark inland, which
in effect converts all beaches into public property. No building is allowed
within the maritime zone without a special permit from the Executive Branch.
Also, in tourist zones, there are building restrictions administered by
the Ministry of Tourism.
Possession : The attorney should check that the seller is in possession
of the property. It should be ensured that no squatters? rights of any
kind exist. Special precautions should be taken with unfenced properties
outside known subdivisions. Fencing them before closing is advisable. If
there are tenants on the property, the buyer should be informed that Dominican
law is protective of a tenant?s rights and that evicting a recalcitrant
tenant is time-consuming and expensive.
Employees : The seller should pay any employees working on the property
their legal severance up to the time of the closing, otherwise the buyer
may find himself liable for the payment later.
Utilities : The attorney or buyer should check that the seller does not
have any utility bills pending by enquiring at the appropriate power distributor,
water, cable and telephone companies.
Many attorneys in the Dominican Republic do not perform the required due
diligence on real estate transactions, limiting themselves in most cases
to obtaining a certification from the Title Registry Office. Sometimes,
the real estate agent and the seller pressure the buyer into a hurried
closing despite the advice of legal counsel.
Taxes and Expenses on Property Transfers
Taxes must be paid before filing the purchase at the Title Registry
Office. Taxes and expenses on the conveyance of real property are approximately
of 4% of the sale price, as follows:
* 3% Transfer Tax (Law # 288-04)
* 1% Document Stamp Tax (Law # 835-45) (Actually,
RD$180 pesos for the first RD$20,000 pesos and 10 per thousand for the
rest of the price of sale).
* Minor expenses such as tax on certified check,
sundry stamps and tips at the Registry.
* Transfer taxes are paid based on the price of purchase
stated in the Contract of Sale or on a minimum of 70% of the market value
of the property as determined by the tax authorities, whichever is higher.
* Buyers wishing to lessen the impact of transfer
taxes have the option of using a loophole in the law which allows the contribution
in kind of property into corporations without paying transfer taxes. For
this, cooperation from the seller is essential.
Promise of Sale
Real estate purchases 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 or Option to Purchase is prepared by an attorney or notary
which is signed by both parties. A deposit or advance payment is normally
paid at the signing of the Promise.
Many attorneys and notaries in the Dominican Republic do not protect
the buyer adequately in the Promise of Sale. Among the most common deficiencies
are the following:
The buyer is allowed to pay a large percentage of the price of sale without
any security or direct interest over the property. In case of misuse of
these funds, the buyer?s remedies may be limited to suing the seller personally.
Many condo buyers in Santo Domingo have suffered through this experience
in the last few years. Generally, the developer uses the buyers? funds,
along with a bank loan, to finance the construction. The bank collaterizes
the loan with a mortgage over the property. When the developer misappropriates
the funds or runs into financial difficulties, the bank forecloses and
the buyers lose both their money and "their" property.
Payments are not conditioned on the availability of clear title or the
adequate progress of construction. Sellers, therefore, can demand payment
or place the buyer into default despite the fact they may not have performed
their basic obligations.
Escrow agents are rarely used. The seller, therefore, has control over
the funds as they are paid.
In the Dominican Republic, as in many Latin American and European countries,
the government provides title insurance. The Land Registry Law establishes
an indemnity fund with which to pay claimants who due, for example, to
an error of the Registrar, are deprived of their property. Unfortunately,
the indemnity fund never collected sufficient funds to become operative
and property owners remain unprotected. Recently, however, it has become
possible to obtain insurance from private insurers ( see Buying Property
in the Dominican Republic: Title Insurance ).
Purchase of Real Estate by Foreigners
There are no restrictions on foreigners purchasing real property in
the Dominican Republic. Formerly, Decree 2543 of March 22, 1945 and its
amendments required that foreigners obtain prior Presidential approval
except in certain cases. Decree 21-98 of January 8, 1998 abolished this
regulation and established as the only requirement that the Title Registry
Offices keep a record, for statistical purposes, of all purchases made
Inheritance of Real Estate by Foreigners
There are no restrictions on foreigners inheriting title to real property
in the Dominican Republic. Inheritance taxes have been recently lowered
to 3% of the appraised value of the estate. If the beneficiary resides
outside the Dominican Republic, inheritance taxes are subject to a 50%
Inheritance of real estate is governed by Dominican law which provides
for "forced heirship": part of the inheritance must go to certain heirs
by law. For example, a foreigner with a child must reserve 50% of the estate
to that child despite the existence of a will or of the law of his country
of residence. To avoid the application of Dominican rules of inheritance
to the estate, it is advisable for foreigners to hold real estate indirectly
through a holding company.