REAL ESTATE BUYING PROCESS IN THE DOMINICAN REPUBLIC
Be glad to know that the DOMINICAN REAL ESTATE GROUP INT'L. specializes is serving foreign buyers and international investors looking for a reliable and professional REAL ESTATE COMPANY to attend to ALL their Real Estate needs.
Real estate transactions in the Dominican Republic are governed by Property Registry Law No. 108-05 and its Regulations, in force since April 4, 2007. Ownership of property is documented by “Certificates of Title” issued by Title Registry Offices.
The REAL ESTATE BUYING PROCESS in the DOMINICAN REPUBLIC is very simple and very friendly to foreign buyers and international investors. The steps to purchase real estate in the DOMINICAN REPUBLIC are not the same as, but are very similar to those of north America.
The following is an outline of the buying process in the DOMINICAN REPUBLIC, and the detailed buying process is described at the bottom of this page.
STEPS TO BUY REAL ESTATE
#1. CHOSE THE REAL ESTATE AGENT / REALTOR
Carefully chose the person you will be working with i.e. make sure it is a realtor you feel comfortable with, who speaks your language, understands your needs, and is a real estate agent who is knowledgeable and resourceful.
It is recommended to work with only 1 realtor, but the right one!
#2. CHOSE YOUR PROPERTY
Go visit a few predetermined properties, and pick the property that will best suit your needs. Whether land, commercial or residential properties, discuss your needs with your realtor, and he/she will help you select the right property for you based on your needs, their knowledge of the area, and their resources.
#3. MAKE YOUR OFFER
After selecting your property, the next step is to make is an offer to purchase. This is a detailed offer that includes the price you are offering and the terms of payment. This offer will be prepared by your real estate agent and signed by you, before it is presented to the seller or developer.
#4. SEPERATION DEPOSIT
Once the offer is negotiated and accepted, the next step is the deposit and the due diligence. As the buyer you will select the attorney who will handle the transaction - your real estate agent should recommend you one or a few reputable attorneys for you to select the one you want to work with.
Then, the "separation deposit" is made to take the property off the market, typically between $2,000 and $5,000.
#5. PAYMENTS & DUE DELIGENCE
Within 15 days after the separation deposit is made, the "reservation deposit" and part of the legal fees are paid usually by bank wire transfer. The reservation deposit is between 10 % and 20% of the purchase price and the legal fees of 1.5% of the purchase price are paid.
At this time the attorney prepares the PROMISE OF SALE CONTRACT to be signed by both the seller & the buyer.
NOTE: In the DR title companies are NOT used, it is the attorney who does the due diligence to insure that the title and the property are clean.
#6. WELCOME HOME!
Closing is usually scheduled 21 to 30 days after the reservation deposit and the agreed percentage of the legal fees are received.
Before the closing takes place the balance of the purchase price and of the legal fees are to be wired, as well as the government 3% "Title Transfer Fee."
At closing the final contract is signed, the keys to your new property are handed to you, and a celebratory bottle of champagne is opened!
Steps & Legal Issues Involved in a Real Estate Transaction
The STEPS & LEGAL ISSUES IN PURCHASING REAL ESTATE IN THE DOMINICAN REPUBLIC do not always follow the North American. For example, instead of writing an offer tendered by the buyer to the seller followed by the sellers written acceptance, the customary is a verbal agreement reached by the buyer and seller on the price. Then a binding Promise of Sale is prepared by an attorney or notary public which is signed by both parties. Interestingly, PUBLIC NOTARIES in the DOMINICAN REPUBLIC are required to have a law degree.
Because of the nuances in the DOMINICAN REPUBLIC REAL ESTATE LAW, it is recommended that the prospective buyer works with a real estate attorney. Usually the PROMISE OF SALE conditions the purchase to the results of the due diligence to be done by the attorney.
• PROMISE OF SALE - A formal document/contract signed and binding to both parties, and the document is notarized. A well-drafted Promise of Sale should contain at least the following provisions:
(a) Full name and particulars of the parties. If the seller is married, the spouse must also sign.
(b) Legal description of the property to be purchased.
(c) Purchase price and payment terms.
(d) Default clause.
(e) Date of delivery of the property.
(f) Due diligence required or done.
(g) Representations by the seller and remedies in case of misrepresentation.
(h) Obligation by seller of signing the Deed of Sale upon receipt of final payment.
• DEED OF SALE - “Contrato de Venta” is the final contract at closing It also a formal document binding and signed to both parties, and is also to be notarized. It is used primarily for the purpose of 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 a DEED OF SALE instead of taking the preliminary step of signing a PROMISE OF SALE.
• TRANSFER & REGISTRY TAXES - The authenticated Deed of Sale is taken to the nearest Internal Revenue Office where a request is made for the appraisal of the property. The Internal Revenue Office checks if the seller is in compliance with his tax obligations and selects an inspector to do the appraisal. The determination of the amount of taxes to be paid may take a few days or weeks, depending on the availability of the property inspector.
• REGISTRY OF TITLE - Once the property has been appraised and taxes paid, the Deed of Sale and the Certificate of Title of the seller are deposited, along with the documentation provided by Internal Revenue, at the Title Registry Office for the jurisdiction where the property is located.
• CERTIFICATE OF TITLE - At the Title Registry Office, the sale is recorded and a new Certificate of Title is issued in the name of the buyer. The property belongs to the buyer from the time the sale is recorded at the Registry. The time for 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.
To start the due diligence, the seller should provide the buyer or the attorney with the following documents:
• Copy of the Certificate of Title to the property.
• Copy of the official survey to the property or plat plan. Under the new Property Registry Law, the sale of properties without a government-approved plot/survey (deslinde) can not be recorded at the Registry, except in the following cases:
(1) Sales executed before April 4, 2007, which may be recorded during a two-year period ending on April 4, 2009, and
(2) Sales of the entire property executed after April 4, 2007 (sales of portions are not allowed), for just one time.
• Copy of his or her identification card (Cédula) or Passport and that of the spouse, if married.
• Copy of the receipt showing the last property tax payment (IPI) or copy of the certificate stating that the property is exempt from property tax, and certification from the Internal Revenue Office showing the seller is current with his or her tax obligations.
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 tax obligations, specially Income Tax and Tax on Assets.
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 with his or her 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 that the seller is current.
Once the documentations listed above are obtained, the attorney should address every item on the following checklist:
• TITLE SEARCH: A certification should be obtained from the appropriate Title Registry Office regarding the status of the property, stating who the owner is and whether any mortgages, liens or encumbrances affect it. The buyer should insist that his or her attorney confirm the results of the Registrar Search by investigating the pertinent files at the Title Registry Office.
• INSPECTION OF IMPROVEMENTS: 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 that 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 areas, 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 influenced 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, 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.
TAXES, EXPENSES & LEGAL FEES OF PROPERTY TITLE TRANSFER
Taxes must be paid before filing the purchase at the Title Registry Office. Taxes and expenses on the conveyance of real estate are approximately 3.1% of the government-appraised value of the property, as follows:
• 3% Transfer Tax (Law # 288-04).
• Minor expenses such as cost of certified check required to pay taxes to Internal Revenue, sundry stamps and tips at the Registry.
PROPERTY TAXES in the DOMINICAN REPUBLIC are paid based on the market value of the property as determined by the tax authorities, not on the price of purchase stated in the deed of sale. 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 7,710,158.20 DOP (about $140,000). For unbuilt lots, the 1% tax is calculated on the actual appraised value without the exemption. The REAL ESTATE TAXES is payable every year on or before March 11, or in two equal installments: 50% on or before March 11, and the remaining 50%, on or before September 11.
PROPERTIES EXEMPT FROM TAXES The following properties are exempt from paying real estate tax: (a) farm properties; (b) homes whose owner is 65 years old or older, and has no other property in his or her name; and (c) properties owned by companies, which pay a separate tax on their company assets.
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 by foreigners.
INHERITANCE OF REAL ESTATE OWNED 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.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 new conflict of law statute, enacted in December 2014, allows foreigners to have their national law determine the rules of inheritance in connection with REAL ESTATE IN THE DOMINICAN REPUBLIC. For this reason, it is strongly recommended that non-Dominicans who purchase Dominican real estate seek legal advice on how to benefit from this provision.
We draw from our experience and passion for the REAL ESTATE market in the DOMINICAN REPUBLIC to provide our clients the most pleasant experience and favorable results.
We stay involved at every step of the BUYING | SELLING
process, and strive to exceed expectations every step of the way.
Effective Realtoes • Effective Results
We speak English
Nous parlons Français
SEND US A MESSAGE