A Step-by-Step Guide to the Legal Aspects of Buying Property in the Dominican Republic

Explore the legal steps required to buy property in the Dominican Republic. From the Promise of Sale to the Certificate of Title, learn how to navigate the real estate process smoothly.

Introduction

Purchasing property in the Dominican Republic can be an exciting venture, whether you’re seeking a vacation home, investment property, or a place to retire. While the process is relatively straightforward, it’s important to understand the legal steps involved to ensure a secure and successful transaction. This guide provides a detailed look at the legal procedures and requirements for buying property in the Dominican Republic, helping you navigate the process with confidence.

The Real Estate Transaction: A Step-by-Step Legal Guide

1. Initial Considerations and Preparations The journey to buying property in the Dominican Republic starts with some essential preparations. Dominican real estate process typically begins with a verbal agreement between buyer and seller. Once an agreement on the terms is reached, it’s advisable to retain a qualified real estate attorney who can guide you through the legal landscape, ensuring that all necessary steps are properly executed.
2. Drafting and Signing the Promise of Sale (Contrato de Venta) The Promise of Sale is a critical legal document that formalizes the transaction. It is drafted by an attorney and signed by both parties in the presence of a Notary Public. This contract outlines all the details of the sale, including the purchase price, payment terms, and the conditions under which the property will be transferred.
   Key Elements to Include in the Promise of Sale:
   • Complete identification of both the buyer and seller
   • Legal description of the property being purchased
   • Terms of payment and any penalties for default
   • Specific date for the delivery of the property
   • Obligations of the seller, including the requirement to transfer the title upon final payment
3. To protect your interests, ensure that the down payment is substantial enough to enforce the agreement.
4. Finalizing the Sales Contract (Contrato de Compraventa) Once the conditions in the Promise of Sale have been met, the next step is to execute the Sales Contract. This document officially transfers ownership from the seller to the buyer and is signed in the presence of a Notary Public. After signing, it is submitted to the Internal Revenue Office, where the property is appraised for tax purposes.
5. Registration at the Title Registry Office With the Sales Contract in hand and taxes paid, the next step is to register the transaction at the Title Registry Office. This step involves submitting the original title from the seller along with the newly executed Deed of Sale. The Registry Office will then issue a new Certificate of Title in the name of the buyer, legally completing the property transfer.
6. Conducting Due Diligence Due diligence is a critical aspect of any property purchase, ensuring that all legal and regulatory requirements are met. This process involves verifying the property’s title, checking for any liens or encumbrances, and ensuring that all taxes and fees are up to date. It’s essential to work with a trusted attorney who can thoroughly investigate the property and confirm that it is free from any legal issues.
   Documents Required for Due Diligence:
   • Copy of the Certificate of Title
   • Survey documents (Deslinde)
   • Seller’s identification and, if applicable, corporate documents
   • Tax clearance certificates
7. Due Diligence Requirements:
   • Title Search: Obtain certification from the Title Registry Office to confirm the property’s ownership and check for any existing mortgages or liens.
   • Survey Verification: Ensure that the property’s boundaries match the official survey (Deslinde), even if the seller has provided a government-approved plot.
   • Property Inspection: Have a qualified professional inspect any buildings on the property to verify their condition and ensure they match the provided plans.
   • Permit Verification: Confirm that the property can be used as intended by checking all relevant permits.
   • Possession Check: Ensure that the seller has clear possession of the property, with no undisclosed claims or rights attached to it.
8.  

Additional Considerations

Understanding Property Taxes and Fees

Before the purchase is finalized, the buyer must pay the property transfer tax, which is calculated at approximately 3% of the government-appraised value. 

Properties held in an individual’s name are subject to an annual property tax, known as “IPI” (Impuesto al Patrimonio Inmobiliario). This tax is calculated at 1% of the government-appraised value of the property that exceeds RD$7,710,158 pesos (approximately US$150,000).

If the property is owned by a corporation, no annual property tax is due. Instead, the corporation is required to pay a 1% tax on its assets, though any income tax paid can offset this obligation.

Legal Implications for Foreign Buyers

The Dominican Republic imposes no restrictions on foreign property ownership, making it an attractive destination for international buyers.

Conclusion

Buying property in the Dominican Republic involves several legal steps, but with the right guidance, the process can be smooth and rewarding.

 By understanding the legal aspects of the transaction, conducting thorough due diligence, and working with experienced professionals, you can confidently navigate the Dominican real estate market and make a sound investment.

Ready to explore property options in the Dominican Republic? Contact us at Amavi Real Estate for expert advice and guidance through every step of the buying process.