Real estate transactions in the Dominican Republic are governed by Property Registry Law No. 108-05 and its Regulations, in force since April 4, 2007. Ownership of property is documented by «Certificates of Title» issued by Title Registry Offices.
Because of certain peculiarities of Dominican Real Estate Law, it is recommended that the prospective buyer retain a real estate attorney (solicitor) before signing any documents or making a deposit. Depending on the wishes of the parties, the attorney (solicitor) may proceed with the due diligence first, before preparing the Promise of Sale, or alternatively, prepare the Promise of Sale first, conditioning the purchase to the results of the due diligence to be done in a specified term.
Promise of Sale is a formal document, binding on both parties, and signed by them in the presence of a Notary Public. From a practical point of view, it is more important than the Deed of Sale, since it generally contains a complete and detailed description of the entire transaction up to the time when the purchase price has been paid in full and the property is ready to be conveyed to the buyer. A well-drafted Promise of Sale should contain at least the following provisions: full name and particulars of the parties. If the seller is married, the spouse must also sign, Legal description of the property to be purchased, purchase price and payment terms, default clause, date of delivery of the property, due diligence required or done, representations by the seller and remedies in case of misrepresentation, obligation by seller of signing the Deed of Sale upon receipt of final payment.
Deed of Sale is also a formal document binding on both parties, and signed by them in the presence of a Notary Public. It is used primarily for the purpose of conveying the property from the seller to the buyer. In case of a cash purchase, it is simpler and cheaper to go directly from verbal negotiations to the signing of a “Contrato de Venta”, instead of taking the preliminary step of signing a Promise of Sale.
The authenticated Deed of Sale is 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. The determination of the amount of taxes to be paid may take a few days or weeks, depending on the availability of the property inspector.
Once the property has been appraised and 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. The property belongs to the buyer from the time the sale is recorded at the Registry. The time for 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.
Taxes must be paid before filing the purchase at the Title Registry Office. Taxes and expenses on the conveyance of real estate are approximately 3.1% of the government-appraised value of the property, as follows: 3% Transfer Tax (Law # 288-04) and minor expenses such as cost of certified check required to pay taxes to Internal Revenue, sundry stamps and tips at the Registry. Taxes are paid based on the market value of the property as determined by the tax authorities, not on the price of purchase stated in the deed of sale.
As for legal fees for real estate transactions, the standard is 1 to 1.5% of the gross purchase price, depending on the complexity of the purchase, with a minimum for properties valued at $150,000 or less, and a discount for properties valued at more than a million dollars.
The real estate tax is payable every year on or before March 11, or in two equal installments: 50% on or before March 11, and the remaining 50%, on or before September 11. The amount of the exemption is adjusted annually for inflation.
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