What are the
steps to follow to purchase real estate in the DR?
According to Fabio Guzman, of the Guzman Ariza & Asociados law firm (
drlawyer.com),
the required steps to convey or transfer ownership of real estate from a
seller to a buyer are the following:
1. 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.
2. The authenticated Contract of Sale is then taken to the nearest
Internal Revenue Office for payment of the appropriate taxes.
3. 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.
4. 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 closing, many attorneys in the DR will limit themselves to obtain a
certification from the Title Registry Office. Guzman, of the Guzman Ariza
& Asociados law firm recommends that due diligence be carried out on
real estate transactions to avoid any surprises in the future.
To start the due diligence, the seller should provide the buyer or the
attorney with the following documents:
1. Copy of the Certificate of Title to the property.
2. Copy of the survey to
the property or plat plan.
3. Copy of his/her
identification card ("Cédula") or Passport.
4. Copy of the receipt
showing the last property tax payment (IVSS) or copy of the certificate
stating the property is exempted from the IVSS tax.
5. If the seller is a
corporation:
- Copy of the corporate
documentation, including bylaws and resolution authorizing the sale.
- Certification from the
Internal Revenue Office showing the corporation is current with its
income tax filings.
6. 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 showing the seller is current with his condo dues.
- Copies of the minutes of
the last three condominium meetings.
7. 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:
1. Title Search: A certification should be obtained from the Title
Registry Office regarding the status of the property, whether any 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.
2. 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.
3. 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.
4. 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 DEFINPRO, a department of the Central Bank.
5. 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.
6. 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.
7. Power/water/telecommunication/cable TV/condominium maintenance bills
pending: The attorney should check that the seller does not have any
power/water/garbage bills pending. A visit to the appropriate power
distributor (Edesur, Edenorte or AES Distribuidora del Este), as well as
to the CAASD (Santo Domingo) or appropriate water company, and to Codetel/and
to the present distributor to ascertain that the dwelling does not have
pending bills that would have to be inherited if not previously cleared.
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