Real Estate Rights in the Dominican Republic

The following information about buying real estate was provided by my attorney in the Dominican Republic, Sara V. Sicard Sanchez, partner at Sanchez Raful Sicard & Polanco.

The acquisition of real property rights by foreigners is not subject to any special condition, falling under the same legal regime applicable to Dominican nationals.

Registration System

Law 1542 of 1947 on Land Registration establishes the Torrens system of real property registration.

Real property rights registered under this system are deemed to be known by, and thus biding on third parties. Therefore, the presentation by the seller of a Property Certificate issued on his behalf by the corresponding Registry of Titles should in principle be enough to prove that the seller is entitled to transfer the ownership rights of the property. Any mortgages or charges would also be mentioned in the certificate.

However, it is always advisable to verify the status of the property directly at the Registrar’s offices, whose records are open to any interested party, and even obtain a written confirmation on the result of these findings, before purchasing the property. This is usually achieved requesting a certification on the status of the property in question to the Registry of Titles.

The Dominican Republic registration system protects the buyer against any sale or mortgage that, although previously signed, has not yet been registered when the buyer files its purchase agreement for registration.

For these same reasons, the prompt registration of the sale is very important.

In order to do so, the buyer must file at the Registry of Titles the following documents:

a) An original of the purchase agreement, which should be legalized by a Public Notary.
b) The Property Certificate issued on behalf of the seller, which will be canceled and exchanged for a new one on behalf of the buyer.
c) Certification stating that the Tax on Luxury Real Property and Empty Urban Lots (IVSS tax) has been paid, or that the property in question is exempt from such tax payment. Article 13 of the 2004 Tax Reform amends the first three articles of Law 18-88, extending the exemption of this tax from three to five million pesos, and from no exemption to a five million pesos exemption for urban lots.
d) Proof of transfer tax payment.

If the seller in question is a legal entity, the buyer will have to file additionally:
a) Certified copies of the shareholders minutes of the seller, designating its current Board of Directors.
b) Certified copy of the minutes of the Board of Directors approving the sale of the property in question and authorizing a person to sign on it behalf.

Transfer Duties

As mentioned above, the registration of the transfer of a real estate property at the corresponding Registrar of Titles requires the payment of the following taxes and duties:

3% of the market value of the property. This tax also applies to real property transfers for a value exceeding one million pesos that have been purchased with loans of financial entities. This amount is subject to inflation adjustments; and,
Stamps under Law 80-99, calculated as follows: market value minus 20,000 and the result/ 1,000 x 13 + 232.00. This value is subject to annual inflation adjustment.

These taxes amount to approximately 4.8% of the market value of the property.

Another aspect to take into account is Law 18-88 of February 5th 1988, on Tax on Luxury Houses and Urban Lots, amended by Law 288-04 of the Tax Reform, which establishes an annual tax on houses and apartments whose value exceeds five million pesos amounting to 1% of the surplus of such sum. The amendment enlarges the scope of this tax by including commercial properties and urban lots were previously excluded. However, property owners older than 65 years who have owned the property for at least 15 years and who do not have any other property are exempted from the payments of this tax. Furthermore, rural land used in agriculture, as well as equipment, machinery, generators, goods and other personal property located in the properties, is also exempted.