Buying property in the Dominican Republic

The Dominican Legal System is based in the Napoleonic Code. This means that the process of buying a property in the Dominican Republic is quite similar to the French or Spanish System.

Parties usually start their legal relationship by signing a reservation form or “reserva”. The main purpose of such reservation is for the purchaser to be assured that the property has been taken off the market (usually for a limited period of time) and for the seller to ensure that the purchaser is really interested in proceeding.

The reservation implies that the “promissory contract” (contrato de promesa de venta) will be signed within a pre-determined period and if that does not happen, the property will be again placed on the market.

Although not mandatory, normally both parties enter into a promissory agreement identifying the property to be sold and detailing conditions of the transaction: this is the Promissory Contract of Sale and Purchase. This type of contract is used in almost 100% of transactions in the Dominican Republic. The “contrato de promesa de venta” is legally binding on both sides.

Before the purchaser signs the “promesa de venta”, his lawyer must carry out some searches and be satisfied with the title.

Flats and some dwelling houses in the Dominican Republic are organised in Condominiums. An administration company manages the Condominium. The annual expenses are determined according to the size and situation of the property. This will be mentioned in the Condominium declaration and regulations.

The formal act of sale takes place before a Notary in The Dominican Republic. This act known as the signature of the “Contrato de Venta” takes place in front of the selected Notary.

The Contrato de venta is then taken to the Inland Revenue office to pay the taxes and then registered with the Title Registry Office. A new Certificate of Title is issued in the name of the new owners.

AVERAGE COST OF A PROPERTY PURCHASE

1. Legal fees – around 1-1.5% of the purchase price

2. Surveyor fees – around $350-$450

3. Transfer taxes – around 4-5% (if applicable)

Due to the many irregularities with the property titles in the Dominican Republic it has become the norm for purchasers to take out Title Insurance. The general cost is around 1% of the purchase price.

If you would like legal help buying a property in the Dominican Republic you can contact Kobalt Law LLP