Here are some tips to help you avoid a bad real estate deal in the Dominican Republic.
Sadly, there are enough stories out there about bad real estate deals. Most of the time it´s about people that act with lack of knowledge. A significant challenge in Dominican Republic is that there is no mandatory licensing for real estate agents so you have to do your homework before choosing one. Also, make sure you hire a licensed conveyancer.
Also, because there is no regulating agency overseeing real estate transactions, the lack of uniformity in real estate transactions has led to a situation where everyone does what they think is right, and this may not always be the best option for you.
This time, our goal is to lay out the process for purchasing real estate, step by step and will lay out relevant regulations and good practices for people to have a safe and secure transaction.
How to Buy Real Estate in Dominican Republic
There are two things to keep in mind when dealing with the seller and the real estate agent:
They will tell you anything to close a deal, be careful. Both are eager to sell what they have and might not actually care about your needs as much as the money coming in, remain skeptical.
They want to rush you through the deal. Dominican Republic, specifically Punta Cana is currently a buyers’ market. There thousands of properties for sale and many developments under construction. Do not feel rushed by the seller or the agent, take your time.
1.Get your own attorney
The first thing to do when you are actively looking for real estate is get yourself an attorney. An experienced lawyer will help with the research and information necessary before making any offers on properties of interest, which can save time in later negotiations. You should know that if you use the attorney of the real estate agent or the seller, the lawyer may be inclined to want to close the deal and not observe all the details that may not suit you. So you need someone that advocates for your best interest
There are even those who recommend that you never use the attorney of the real estate agent or the seller. However, we believe that if you get your own real estate agent, it is Ok to use that agent’s attorney. But it is not recommended to use an attorney related to the seller or the seller’s agent.
2.Make a real estate offer
As noted, Dominican Republic is currently a buyer’s market. So it is possible to get a certain discount on the property. Do the offer in writing, and have an attorney review it prior to sign it and sending to the seller. We have seen a lot of offers that are poorly drafted and the buyer is forced into terms that are not ideal, like very short closing dates not allowing you to complete the property verification or due diligence. As noted earlier, do not pressure yourself and take your time to review and make the correct offer. A poorly drafted offer will bound you to comply to purchase into a problem.
3.Do the Real Estate Due Diligence
The due diligence process is for you to find any substantial issues with the property as far as clean title goes. During this period, your attorney should research the property and make sure to:
1. Check the legal status of the property for any liens or encumbrances.
2. Check if the property has any taxes due (IPI).
3. Check if the plot is approved by the government (land demarcation).
4. Verify at the Title Registry Office all the files regarding the property to verify if there is any dispute over the property.
5. If the seller is a corporation, review the corporate documentation including the bylaws, the resolution authorizing the sale, and the certificate of good standing.
6. Verify if the seller is up to date with the taxes in the Internal Revenue Office.
7. Check if the property has any utility bill or HOA fee pending.
8. Confirm if the seller is in legal possession of the property
If you did not find any issues during the due diligence process, go ahead and proceed with closing.
This is the day both you and the seller will sign the transfer of the deed. It is very important that your lawyer starts the transfer process (conveyance) in the government institutions immediately, avoiding the risk of any creditor of the seller attempting any action against the property.
Once these steps have been completed, you will be the owner of a new property. Hopefully, you will take precautionary measures to avoid being victim of real estate fraud, or to avoid tax liabilities.
Please note that this is a brief summary with the purpose to understand some basics about purchasing real estate in Dominican Republic. This information should not be interpreted as legal advice. It is strongly suggested to seek independent legal advice. If you have further questions about this issue, please feel free to reach us and we will answer all your questions.
Our professional team has the experience and competence to represent our clients in a variety of legal matters including real estate law, personal injury, labor law, commercial law, immigration to Dominican Republic.