The TerraLex Cross-Border Real Estate Guide provides crucial insights into international real estate law, aiding TerraLex members and clients in understanding the regulatory and operational environments across various jurisdictions. This concise guide covers ownership and registration processes, investment vehicles, taxation, leasing terms, and construction regulations, making it an essential resource for those involved in global real estate transactions.
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In the Dominican Republic adopted the Torrens Australian registration system, which is characterized for being in rem (over the thing). It is ruled by special laws of Real Estate Registration and with special Courts. The administration of this system is executed by National Directorate of Title Registration and the General Directorate of Cadastral Measurements
For a real estate right to be recognized by third parties, it must be registered. According to our law, the following documents and procedures are registrable: i. Those that constitute, transmit, declare, modify, or extinguish real rights over real estate; ii. Those that impose charges, liens, and provisional measures on them; iii. Those that establish administrative and legal limitations of a particular nature on real estate, such as easements, declaration of cultural heritage and others that in some way limit or restrict the freedom of disposal of the property; and iv. The rights of the condominium owners over their exclusive unit, as well as the proportional share in the common areas.
The process may vary according to the structure of acquisition desired by the investor, bus in general it should include the following:
Our law 16-95 allows various types of foreign investment for real estate acquisition, and they are all very frequently used. The most popular include the creation of a Dominican subsidiary company which might take the form of a limited liability company or a stock company. On the other hand, investors also create local branches of their foreign company to simplify the structure of investment without a new corporate vehicle. In the last years, the real estate trusts have also become very popular and explored by investors as a great way to segregate patrimony with independent administrators, while having the benefits of local financing as they are managed by local fiduciaries.
All registered contracts before the Registry of Titles are transferred to the new owner, as the Dominican system is in rem. As well, the taxes applicable to the property are transferred as soon as the contract is registered before the tax administration.
Objective civil liability or theory of created risk is considered to the owner of real estate property, where the person is presumed responsible for the damage caused regardless of the fault or fault of the author or whether he or she has acted lawfully. This responsibility arises due to the use, control or possession, custody, or ownership of the dangerous thing, which causes harm to another person and who, due to the link of causality, is obliged to repair it, unless he proves a legitimate excuse for exoneration.
On the other hand, there is tax liability generated to the owner for noncompliance of the registration, declaration, and payment of applicable property taxes in a timely manner
There are no restrictions for foreign investors to be owners of real estate property. Nevertheless, it is always recommended for them to execute the previous legal Due Diligence process previous to purchase as described on question 3. As well it is always recommended to evaluate possible tax exemptions and benefits in the Dominican laws for specific projects or type of investment.
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Leases in the Dominican Republic are nominated contracts, ruled by the Civil Code. General terms defined by the law include nature of lease contracts, duration, rights, and obligations of the parties as well as the warranties of lessor and lessee, forms of termination. Some of these dispositions are mandatory, other are suppletory as there is the principle of contractual freedom to define the terms of this type of agreements. Within this liberty it is common to include terms about generation of trading point, changes on the property, special clauses in case of breach of contract and penalties, limitation to change of control of the parties, and mechanisms to terminate the contract.
Leases in the Dominican Republic are nominated contracts, ruled mainly by the Civil Code and Decree 4807. General terms defined by the law include price and its variation, duration, rights, and obligations of the parties. Most of these dispositions are ruled by the law as mandatory and protective to the lessee. Within the liberty of the negotiation of contract, in case of personal leases it is recommended to clarify causes of termination and clear definition of the duration of the lease.
In the case of written contract, prevails the consent of the parties. In the case of verbal contracts, termination must be notified 180 days prior to termination in the case of commercial lease, and 90 days in the case of personal lease. Causes of anticipated termination must be clearly established in the contract, as in the case of dispute the Court will determine the effective date of termination. Damages will apply according to the agreement of parties within the contract or determination by the Court.
The tenant has the obligation of locative repairs. The tenant also has the obligation to pay rent and the interest generated according to the agreement in case it is conventionally established, as it responds with its assets and personal goods located in the leased property. The tenant must pay a warranty deposit as determined by the contract and it is applicable to any losses or damages to the property, or the payment of services at its charge, excluding rent.
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The most common is based in a budget prepared by the parties and their technical staff, under a schedule of stages of work, and payment subject to periodic cubations.
Construction contracts are ruled by the agreement of the parties, as the law barely includes at the Civil Code the definition of this type of contract. The main clauses in relation to the construction risks include the identification of the obligation of security and its warranties and the obligation to contract main insurance policies related to civil liability, faithful performance bond and hidden defects guarantees.
Dominican Civil Code, Law 675-44 on urbanization, public ornament and constructions, Specific Decrees and Special Rulings granted by Ministry of Housing, Habitat and Buildings and Ministry of Public Works and Communications.
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Disclaimer: This guide contains summaries of general principles of law. It is not a substitute for specific legal advice and should not be relied upon in relation to the application of the law or subject matter covered.
