Free Legal Advice for Property Buyers
As part of my commitment to helping you along with your real estate plans in the Dominican Republic, I would like to offer this free legal advice. Please note that information provided within has been valid at the time it was published. While I’m offering it as free legal advice for property buyers, keep in mind that I myself am not a lawyer, I’m just passing on the information that was given to me by the lawyers. Use this free legal advice guide as a guideline it is meant to be and consult with actual lawyer in the Dominican Republic to ensure you have up to date information. I can not offer any guarantees that this free legal advice will be applicable in the future. The Dominican Government can change the laws at any time. I will strive to provide updates as soon as I am aware, but please note that I hold no guarantees and can not be held responsible if you act strictly based on free legal advice you find here, without consulting a lawyer. All that being said, I made every effort to ensure that all information provided is accurate. Unless the laws change, this is the way it is in the Dominican Republic as far as real estate business is involved:
Getting up to a Sunrise at Playa Bavaro, Punta Cana, Dominican Republic, Photo: Space Ritual's gone fishin', Flickr
Free Legal Advice #1: Foreigners’ Guide to Buying Real Estate
There are currently no laws in the Dominican Republic that would prohibit or limit the sales of real estate to foreigners. On top of all that – buying real estate in the Dominican Republic is really easy. If property title is clear and the buyer has funds ready, the transaction can be finalized in under two weeks. All both seller and buyer need are valid passports and a sales contract that doesn’t have to be complicated.
Foreign nationals can own the Dominican Republic real estate (both land and property) and have it in their own name even if they are not residents of the Dominican Republic. Click HERE for a guide to residency and citizenship – becoming resident of the Dominican Republic and obtaining citizenship is really easy. However even if you decide you don’t want to live in the Dominican Republic, you only want to take advantage of great real estate prices and increasing interest in those, you still can legally own property in the Dominican Republic and you can take the money out of the country. There are no restrictions in this regard.
Free Legal Advice #2: Money Transaction Guide
Once you have found the property you would like to buy, you will be expected to put down 10% of the sales price as down payment. You pay this down payment to the notary public or in some cases to a licensed real estate agent. If you came from abroad and will need to go back home in order to arrange for 10% down payment, it is customary in the Dominican Republic to leave a good faith sum payment. It’s usually $1,000 and shows that you are serious about buying this property.
The best way to lay down the down payment is either by cash or by bank transfer. The down payment is placed into a bank account and a promise of sale is drawn up. The promise of sale specifies the length of time a buyer has to finalize transaction by completing the payment. During that time, the seller must hold the property for the buyer and cannot sell it to anyone else. Buyer can make payments by cash, bank transfer or certified check. Personal checks as well as traveler’s checks may not be accepted. Even though sometimes they are, it is not recommended to use them as it delays the transaction. The Dominican Republic banks take upwards of 40 days to fully clear those.
If payment is not completed by given time, the buyer will have lost the down payment. If property’s title doesn’t clear, the down payment will be returned to the buyer. If the payment is completed by the buyer and property’s title is cleared, final sales contract is signed.
Free Legal Advice #3: Financing
You don’t wanna look for financing in the Dominican Republic. Local interest rates are extremely high and range from 14% to 30%. You truly don’t want to take a loan that comes with this type of interest. Furthermore – local banks won’t loan any money to people who are not residents of the Dominican Republic and even residents won’t get approved unless they already own assets in their name.
Depending on what real estate you are buying, in house financing may be available. The prerequisite however is a down payment of up to 50% of the purchase price. Interests are more favorable and range from 8% to 10%.
The best option of all is to apply for a home equity loan in your own country and use that loan to buy real estate in the Dominican Republic. That’s the route you should look into if you need financing to purchase property in the Dominican Republic.
The Royal Suites at the Grand Palladium on Bavaro Beach in Punta Cana, Photo: Space Ritual's gone fishin', Flickr
Free Legal Advice #4: Clear Title
It is absolutely essential to do your due diligence and verify that the property you are looking to purchase has a clear title. As a buyer, you will receive a copy of the title after down payment was paid. Always make sure, that upon receiving the copy, your lawyer or the Real Estate company conducts thorough search to ensure the property does not have liens, mortgages or other restrictions preventing it from being sold. In some cases this research can take up to six weeks. Unless your lawyer advises you otherwise and can back up his/her reasons for it, do not ever buy a property without a clear title. If there is no title at all, get your hands off this property immediately. Take back your down payment and look elsewhere.
Free Legal Advice #5: Property Taxes
As a buyer, you will have to pay the Dominican Republic government the “transfer tax” on the sale of the property. This transfer tax is approximately 3% of the final amount for which the property is being sold. Seller is responsible for all property taxes up to this moment. Property survey of the lot (deslinder), plans of the property and copy of the title are to be provided by the seller.
At present time, government property taxes only apply to more expensive homes. If the property is worth more than Rd 5,000,000.00, 1% annual property tax may be imposed upon it. There have been talks of changing this law. Verify with your lawyer to find out most up to date information. All empty lots have a minimal tax on it.
It is not uncommon in the Dominican Republic to have the lawyer draw up two sales contracts. One is an actual contract that will be followed by the seller and buyer, and another one is to show the government and has a reduced price on it. This way it’s possible to lower or eliminate the government “transfer taxes”. This form of cheating the government is risky as the government sometimes sends a surveyor to verify if the suggested sales price reflects the real value of the property being sold.
Free Legal Advice #6: Utility Bills
All utility bills, including but not limited to electricity, garbage collection, water, telephone, cable, condo fees, etc. incurred by the property prior to contract closing are the responsibility of the seller and the receipts need to be presented to the buyer upon closure of contract.
Free Legal Advice #7: Buying from a Married Couple
If you’re buying a real estate from a married couple, the contract must be signed by both hisband and wife. Current law of the Dominican Republic requires it.
Free Legal Advice #8: Condo Fees
The Dominican Republic law makes payment of condo fees obligatory where applicable. If you have purchased a condo or a stand alone house that’s part of an association of owners, you must pay the fees associated with the maintenance of common grounds and pool area, community lights, security guards, building administration, necessary repairs, etc. If you fall behind on condo fees, your property could be foreclosed on. As member of an association of owners, you can voice your opinion and vote on important issues concerning the community during an annual meeting.
Free Legal Advice #9: Power of Attorney
You can pass the Power of Attorney to a lawyer or a trusted person who will act on your behalf if you are unable to sign the transaction. The Dominican Republic law requires that the Power of Attorney must legalized by the Dominican consulate in the country of your residence. Make sure that the title and property numbers match those of the property in the Dominican Republic.
Free Legal Advice #10: Becoming the Owner of the Property
After your lawyer verified that the property is clear and free, you can go ahead and pay the remainder of the final sales price to the seller. Once full payment has been finalized, final sales contract is drawn up and you will receive the original title. You pay the “transfer tax” to the government of the Dominican Republic and then you have everything ready to have the title transfered to your name. Congratulations, you have just become the owner of a beautiful ral estate in the Dominican Republic. Enjoy the paradise.
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