BUYING PROPERTY IN DOMINICAN REPUBLIC
In Dominican Republic, most land is titled, and titles are registered and centralized at the offices of the Public Register in Higüey. Most titles are currently organized by the means of a computer system, although some of them, especially the ones for properties that have had no transfers or other transactions affecting them for a long time, are not organized in the computer system and are still registered in an older fashion, which refers to specific books, pages and entries of hard records at the Register.
Property transfer require for buyer and seller to sign a deed before a Dominican Republic Notary Public (whose concept is different than the one in many other countries such as the United States, Canada or the United Kingdom and is required to formalize all transactions dealing with real estate) and for such deed to be recorded at the Public Register.
A. COMPUTER AND BOOK/PAGE/ENTRY SYSTEMS – TITLE SEARCHES
All titled land in the country, notwithstanding of it being registered following the newer digital system or the older book/page/entry system can be accurately and safely title-searched in order to determine all relevant aspects on the specific property, such as ownership, liens, encumbrances, annotations or other issues that may affect ownership rights or the possibility of transferring the land to a third party.
Title searches digitally, properties may be initiated in the computer system, which is accessible on-line, but will then probably require to be continued in the book/page/entry system, especially when the computer search shows liens, encumbrances or other property characteristics that were “inherited” from older transactions on such land before it was transferred to the computer system. Additionally, although the computer system will indicate a list of liens and encumbrances, in most cases a thorough and complete title search will require the review of microfilmed or scanned documents indicating the details of such finds, which are not accessible on-line and can only be obtained at the offices of the Public Register.
Although, as indicated, the computer system is accessible on-line, in general terms private parties lack the legal training to be able to accurately, safely and thoroughly interpret the information, as well as follow-up any required further steps, reason for which we strongly recommend for a knowledgeable professional to be used for performing and reporting the title search.
In addition to the performance of a title search, when the property is owned by a corporate entity, it is essential to perform a corporate search at the Commercial Section of the Public Register, since only this step will allow to verify that the entity transferring the property is in good standing and that the proposed signatory of the transfer deed has sufficient capacities to do so.
B. ADDITIONAL ELEMENTS
1. Form of ownership:
Although titled land can be purchased in Dominican Republic in the name of an individual as well as in the name of a company, and foreign ownership is fully permitted, it is advisable to purchase property through a corporation. This structure allows to have flexibility and more predictability on areas ranging from estate planning (if share ownership is properly structured the investor can avoid his heirs a painful and lengthy long-distance probate procedure), tax management (as an example, rules on corporate expenses are more flexible than the ones on personal ones), and representation (shareholders meetings can facilitate granting special powers of attorney or other types of authorizations for many actions thus not requiring physical presence in the country).
2. Buying the shares of the company that owns the property instead of transferring it through the Register:
A somehow common practice has been to transfer the shares of an existing company that owns the land to be purchased, instead of transferring it through the Public Register to a third party.
Although the share transfer system may sound appealing at first sight, since it allows to save money in notary fees and transfer taxes and may seem like a faster way to achieve the goal of transferring control of the property to the buyer, we do not recommend to take this path and strongly advise to transfer property through the Register under the standard procedure of a notarized deed.
When you acquire the shares of a corporation in Dominican Republic, as in most other countries, you do not only get the company’s assets (in this case, mainly, the land) but also its liabilities, and there is no mechanism to satisfactorily list them or rule out their existence. Such liabilities, if existent, would directly affect the land being acquired.
Under such terms, it is highly recommended that the extra cost is taken and that a normal transfer through the Public Register is made. Many people will consider such extra cost as a type of insurance of the property which will shield them against possible future claims from the seller’s creditors.
3. Buying only a piece of a registered property:
Purchases of portions of a titled property are also possible in Dominican Republic. For such purposes, a registered map for the land to be purchased is required, as well as an authorization for the local government where it is located. Such authorization must appear in the registered map in the form of a stamp.
4. Concession land:
Several areas of the country, mainly the ones affected by the Maritime Zone Law and located adjacent to the ocean, are not subject to private ownership and their possession is granted as a concession which could simplistically be compared to a lease made from the government for a specific period of time.
Concessions are difficult to examine and in many cases the prospective buyer will not be able to get a good level of certainty on what is being acquired. This type of transaction should be avoided if pieces of land with similar conditions and titled can be found; otherwise, additional caution must be exerted.