Real-Estate Conveyancing Lawyer

Property Purchase Attorney - Solicitor - Notary

Buying property in the Dominican Republic is unrestricted now for foreigners and you don't even need to be resident here. All aspects of the property buying procedure can be handled by our lawyers who will ensure that all legal matters are handled correctly.

Factors such as checking that the land title is in good order, that no liens are on the property, that all taxes and bills are paid are all aspects that our competent Dominican lawyers will complete.

To find out more about our real estate conveyancing services, contact us, or read on for some more information about the process.

What fees should you expect to pay when purchasing property in the Dominican Republic?

• Lawyer’s fee of around 1% or more of the purchase price. If the lawyer is asking for 4% on a US$200,000 property - look elsewhere! You can often negotiate slightly lower than 1% on properties over US$500,000. Bear in mind that a good lawyer does have a lot of work to do and is worth the money you pay them.
• 3% transfer tax
• 1.3% document stamp tax (RD$232 pesos for the first RD$20,000 pesos and RD$13 for each RD$1000 after this).
• 2% Registry Tax, applicable to properties valued at RD$5 million pesos or more
• Minor expenses such as tax on certified check, sundry stamps and tips at the Registry.
• Surveyor's fees ($150+ depending on the size of the property)
• Power of Attorney costs if the buyer is not present at the closing
• 16% Government tax will be added to all legal fees.

Also bear in mind, these taxes are based on what the tax authorities assess the property to be worth - which may not be the same as what you are paying for it.

What does the lawyer do for his fee?

• Checking that the Title of the property is correct and valid.
• Due diligence (checking all relevant documentation to check for inconsistencies, unpaid taxes, liens and other potential problems).
• Negotiation, preparation, authentication and recording of the deed of sale.
• Escrow service (which keeps your deposit safe in case of a problem not of your doing arising).
• Obtaining from the Internal Revenue Department the appraised value of the property so that the correct amount of transfer taxes are paid on time.
• Payment of all relevant taxes.
• Recording of the Deed of Sale at the Registry of Titles.
• Obtaining the new Certificate of Title in the name of the buyer.

Instructing a competent lawyer to carry out these tasks is essential to ensure that your purchase goes through smoothly with no nasty surprises.

There have been and probably will be in the foreseeable future, properties listed for sale where more than one party claims to be the owner, or where the property has more than one (undisclosed) owners, or where boundaries or other aspects are in dispute. If the title is not checked thoroughly, you could end up buying something different or less than you were led to believe.

The Process of Buying Real-Estate in the Dominican Republic

When you agree to purchase a property, often you will be expected to sign a preliminary agreement and pay a deposit of around 10%. This initial agreement is not essential, but it does help to clarify exactly what both parties believe the situation to be.

It’s usually prudent to get a lawyer involved before you sign anything. So after you have verbally agreed with the seller on the price, a lawyer can prepare a “Promise of Sale” which is signed by both parties.

The Promise of Sale should include:

1. Full name and particulars of the parties. This should also include any spouses.
2. Legal description of the property to be purchased.
3. Purchase price and payment terms.
4. Default clause.
5. Date of delivery of the property.
6. Due diligence required or done.
7. Representations by the seller and remedies in case of misrepresentation.
8. Obligation by seller of signing the Deed of Sale upon receipt of final payment.

It is essential that you do not hand over a cash deposit directly to the seller. This is where a good lawyer will provide an escrow service, protecting your interests should later information contradict what you were initially told.

The “Contrato de Venta”, or as we’d more normally refer to it, the Deed of Sale is the legal document that conveys the property from the seller to the buyer. This is signed by both parties in the presence of a Notary Public and is legally binding on both parties.

The Deed of Sale is then 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.

When the property has been appraised and all 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.

At the Title Registry Office, the sale is recorded and a new Certificate of Title is issued in the name of the buyer.

What You Need To Check Before You Buy

As in all countries, there are a number of checks you need to make to ensure the property you are buying is as described and has no surprises lurking. This is where a good lawyer will assist you.

The first thing to confirm is the Title. This is a certificate of ownership registered at Title Registry Office in the area where the property is located. Usually the owner will have a copy of this they can produce, but it’s important that your lawyer makes other checks to confirm that all is correct with the Title Certificate. It should confirm whether there are any mortgages, liens or encumbrances that are likely to affect your purchase of the property.

The Property Registry Law in effect since April 4, 2007, has created a new 2% tax on all conveyances in order to establish an indemnity fund, which should be used to pay claimants who due, for example, to an error of the Registrar, were deprived of their property. It is also possible to buy title insurance from private insurers.

You should also ask for a copy of the official survey to the property or “plat plan”. This will determine exactly where the property boundaries are, which may be different to what is initially apparent.

The other thing to check is that the property tax payments (IPI) are up-to-date.
The seller should be able to provide receipts for payments or a certificate stating that the property is exempt from property tax.

If you are buying the property from a corporation, then you or your lawyer should check the corporate documentation, including bylaws, up-to-date registration at the Mercantile Registry and resolution authorizing the sale, and check that the corporation is current with its tax obligations, especially Income Tax and Tax on Assets.

If you are buying a condo or property legally linked to other properties, then there should be documentation relating to this you can check.

A condo should have a condominium declaration, a set of regulations and approved construction plans. Check also that the seller is up-to-date with their condo dues.

It may also be worth checking the minutes of the last couple of condo meetings, so you can see what’s really going on.

With all recently built properties, it’s important to check that the property’s construction was legally approved and that the building matches the plans.

Are there Annual Property Taxes in the Dominican Republic?

Most properties in the Dominican Republic are subject to an annual property tax. The annual tax rate (IPI) is 1% of the appraised value over RD$5,000,000. This may well be different from your purchase price. The exceptions are land with no buildings and farms outside of city limits. Owners aged over 65 years old who have owned the property for over 15 years are exempt, assuming it is the only property they own.

Many foreigners set up a Dominican Corporation specifically to buy their property, even if they intend it to be their sole home. The reasons for this are that corporations are treated differently from individuals, and do not have to pay property tax. They do however have to pay 1% tax on all corporate assets. Other expenses and taxes paid by the corporation can often be offset against this which could work out to be more advantageous than owning the property as an individual.

Real-Estate Inheritance

Foreigners can inherit real-estate with no restrictions. There is an inheritance tax of 3% of the Government appraised value of the property. If the beneficiary is not a legal Dominican resident, the tax goes up to 4.5%.

There are also various Dominican laws that have a bearing on the inheritance process. One law stipulates that if a foreigner has a child, then on death, 50% of the estate must go to the child, regardless of what the will says, or the law of the foreigner’s home country.

This is another reason why many choose to set up a corporation to buy the property, thus avoiding the inheritance laws.

If the process seems daunting - don't worry! We're here to make it simple and guide you throug hevery step of the process.

To find out more about our real estate conveyancing services and an informal chat, contact us.