Dominican real estate due diligence is the first step for verifying that the title to a prospective real estate property is clear and marketable.

The purchase of Dominican Republic real estate property is governed by Real Estate Property Law 108-05 of 2005 and its regulations as well as the Dominican Civil Code and other special laws which may apply depending on each particular case.

Persons, be either Dominican nationals or foreigners desiring to buy, resell or in any way dispose of real estate in the Dominican Republic should note that Dominican Republic real estate laws and regulations particularities make it preferable to conduct a due diligence and review process through independent and experienced counsel in order to verify legal and tax status of the property before any formal decisions or payments are made.

At the outset, the due diligence process consists, but is not necessarily limited, to the following:

Legal Status of the Property

The verification of the legal status of Dominican Real Estate Property, generally does not conclude, but rather begins the process of procuring and obtaining full amount of verifiable legal information regarding the purchase, selling, or disposition of Dominican Real Estate property.

As a matter of fact, there are no guarantees that the legal status of the properties will remain as such until the closing of a purchase, sell or disposition transaction and do not reveal the terms and conditions which may be attached in the agreements and regulations, which may limit, delay or prevent a full transfer or disposition of Dominican real estate property rights in favor of a new purchaser or beneficiary.

On the other hand, it is also important to verify that there is no pending litigation, certifying that the prospective Dominican real estate property is not currently the subject of any legal claims or suits.

Finally, a title search should be made to ensure that other possible risk factors not reflected in other deed or real estate property documents can be identified. Sometimes older documents require a special request for retrieving such of information.

Tax Status of the Property

The verification of Good Tax Status of the Dominican real estate property itself and of the seller or owner is paramount for conducting a proper closing on Dominican Real Estate.

This process begins by obtaining tax information from the seller or owner of Dominican real estate to allow for a proper verification of this information. Information delivered by seller in this regard should be verified by a qualified and independent attorney at law not related to the seller or the intervening broker, to avoid conflicts of interest which may affect the proper verification of the information.

Only recently validated information should accompany the closing of any Dominican real estate transaction, as most remain valid as to their attested information for a very short period of time.

Factual Status of the Property

The verification of the factual status of the property is essential to ensure that there are no squatters or other factual matters affecting the right to fully enjoy and use the real estate property.

In the case of real estate properties consisting of empty lots or green fields that have not been surveyed, it is advisable to acquire the services of a qualified and independent land surveyor to work with our legal advisors to perform the survey and to verify the property situation.

In condominium and closed gate projects under construction, it is important to verify existing or future works and pending rights of way within condominium or project location, which may not be in final blueprints, to ensure it does not affect property rights.

In sum, a visit to the property to identify and address factual matters, conducting necessary field works and reviewing proposed agreements and project documents in light of existing condominium and construction laws and regulations, is not only advisable but often indispensable.

Conclusion

In conclusion, the making of a due diligence process motivated by the potential purchase, sale, reselling or disposition of real estate in the Dominican Republic should be strongly considered by purchasers, sellers or beneficiaries, to ensure that most, if not all, risk factors which could affect the right to transfer, own, use and fully enjoy of the property can be timely and properly identified before any formal decisions and payments are made in consideration of the property.

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ABOUT THE AUTHOR: Dr. Felipe Isa Castillo is a Partner leading the Foreign Investment, Real Estate & Tourism areas at Arthur & Castillo Law Firm and Attorneys in the Dominican Republic. He specializes in foreign investment, real estate and international business (International Legal Studies LLM in Georgetown University Law Center in Washington, D.C. & Masters in International E- Business in Universitat Pompeu Fabra in Barcelona) with more than 20 years of experience in Foreign Investment, Free Trade Zones, International Business and Cross Border Real Estate practice. Dr. Castillo is a Certified Bankruptcy Conciliator and Liquidator and Legal Interpreter.

Email: [email protected]

 Disclaimer: This publication is not intended to provide legal advice or suggest a guaranteed outcome as individual situations will differ and the law may have changed since publication. For specific technical or legal advice on the information provided and related topics, please contact the author.

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